Apple Boosted Average Selling Price of Products Last Year
Apple (NASDAQ:AAPL) boosted the average selling price of its two best selling mobile devices during the last quarter, according to a recent study from Consumer Intelligence Research Partners. CIRP compiled its data by examining the distribution of sales at the various retail price points. The “price curves” seen in the chart above reflect the variations in the average selling price since 2012. Price curve movement to the right reflects a higher average selling price, while movement to the left shows a decrease in the average selling price.
“As a single number, ASP hides some interesting elements of product pricing,” noted Mike Levin, Partner, and Co-Founder of CIRP. “The curve expands ASP, and shows how much Apple sells at each price point. What’s useful is, it’s independent of specific iPhone or iPad model, so we don’t get distracted by whether customers like the iPhone 16GB 5S or 32GB 5C, since they’re the same price.”
For the iPhone, the overall price curve moved right during 2013, reflecting an increase in the average selling price of Apple’s smartphone during last year. On the other hand, the price curve moved left during 2012, reflecting a decrease in the average selling price. However, as noted by CIRP, the iPhone’s price curve has remained relatively stable during the past two years of sales.
On the other hand, the iPad’s price curve has recorded more fluctuations due to the greater variation in product pricing. The introduction of the lower-priced iPad mini in November of 2012 pushed the overall iPad price curve toward the left. However, the iPad’s price curve has since moved further right due to the introduction of the higher-priced iPad Air and iPad mini with Retina display.
“For both iPhones and iPads, Apple’s newest product lines have succeeded in pushing higher priced models and presumably higher margins,” said Josh Lowitz, Partner, and Co-Founder of CIRP. “While in recent years both lines have been expanded to include closer to entry-level priced models, the moves in 2013 seemed a successful attempt to emphasize margin over volume.”
Apple’s ability to derive higher profits from its premium devices may become increasingly important over the next several years. According to a recent mobile phone forecast report from market research firm IDC, worldwide smartphone shipments will drop off sharply in the coming years. IDC also predicted that the worldwide smartphone average selling price will continue to decline as growth increasingly shifts into emerging markets where low-cost devices are more popular.
However, Apple should still be able to maintain its revenue levels since it primarily sells devices in the more profitable high-end segment of the mobile device market. Although Apple sells far fewer devices than Android smartphone makers, the California-based company still manages to secure the lion’s share of the smartphone market’s profits. In a note to investors obtained by Investor’s Business Daily, Raymond James analyst Tavis McCourt estimated that Apple took 87.4 percent of the mobile phone industry’s profits last quarter.
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