ASP could rise from iPhone 11


Apple CEO Tim Cook reveals the new iPhone 12.

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Apple announced new iPhones Tuesday in a video presentation just over an hour long covering the new devices’ faster chips, 5G speeds and capabilities, and improved cameras.

But one of the most important pieces of information for investors and customers got significantly less stage time: Changes to the iPhone lineup’s segmentation and pricing.

Apple changed its iPhone lineup so that the new model advertised at $699 is now a Mini device with a smaller screen. The iPhone 12, the direct successor to the iPhone 11, got a price bump to $799. Some people will pay even more — the phone costs $829 if it’s not paired with wireless service from Verizon or AT&T, according to Apple’s website. (The iPhone 12 Mini also costs $30 extra without cell service.)

Here’s the full line-up, including the low-end iPhone SE and previous models with price cuts:

  • iPhone SE (2020) — $399
  • iPhone XR (2018) — $499
  • iPhone 11 (2019) — $599
  • iPhone 12 Mini (2020) — $729
  • iPhone 12 (2020) — $829
  • iPhone 12 Pro (2020) — $999
  • iPhone 12 Pro Max (2020) — $1099

Apple now has an option at every $100 starting from $400 and ranging up to $1,100, enabling it to compete against Android devices in the low-to-mid range market without cannibalizing its pricey, high-end models. The lower-cost options also give Apple strong products for consumers in emerging markets who might be less inclined to embrace thousand-dollar phones.

This is the second time in two years that Apple has tweaked the pricing of its highest volume phone. Last year, the iPhone 11 got a price cut to $699, $50 less than its direct predecessor, the iPhone XR. Cook said that Apple “hit the right price” with the iPhone 11 in January when discussing the device.

Consumers like bigger screens

Last year, the middle-of-the-road iPhone 11 was the best-selling iPhone in the holiday quarter, Apple CEO Tim Cook said in January. If the iPhone 12 becomes the most popular of Apple’s current models, as is likely, the increase could boost the average iPhone selling price, a key metric for Apple investors.

Apple no longer reports the iPhone’s average selling price on a quarterly basis, so investors will have to back the details out from executive commentary and other market research. But a higher average selling price for iPhones would likely boost total revenue for the segment, which Apple still reports.

Apple does have a new device at $699, the iPhone 12 Mini, which the company says has all the same features as its larger sibling. It just has a smaller 5.4-inch screen, as opposed to a 6.1-inch screen. In fact, the Mini has the smallest screen on any new iPhone introduced since 2017, although it’s still larger than the screen on the low-end iPhone SE, which was based on the iPhone 8 design.

Smartphone consumers have shown strong preferences for larger screens. The iPhone 12 is expected to be the best-selling iPhone among the new models, with about 40% of shipments, predicted TF Securities analyst Ming-Chi Kuo in a note on Monday before the phones were officially announced.

In fact, one way to look at Tuesday’s event is that Apple now has a wider range of devices at more prices than it ever has in the past, offering consumers an option at every major price. It just happens that the device that is expected to be the best-selling of the lineup has received a price increase.

The iPhone lineup

Source: Apple Inc.

Expanding product lineups is a trend for Apple this fall — last month it released a less-expensive Apple Watch, the SE, which gave Apple a clear three-device wearable lineup with options at the entry-level (the $199 Apple Watch 3), sweet spot (the $279 Apple Watch SE) and enthusiast tier (the $399 Apple Watch 6.)

The biggest news for Apple investors may be that the company is getting even better at segmenting its customers.

WATCH: Apple’s pricing is key for growth



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