Buyers opting for higher capacity iPhones, likely boosting Apple profits, RBC survey finds

Posted:
in AAPL Investors edited June 2015
RBC Capital Markets has raised its Apple revenue forecasts for 2015 and 2016, arguing that iPhone demand could beat expectations for some time into the future, and that people are skewing towards buying more expensive, higher capacity iPhone models.




Citing supply chain checks and an RBC survey of over 6,000 people, analyst Amit Daryanani said in a note to investors on Monday that iPhone sales should not only beat earlier June-quarter predictions, but have the potential to stay ahead of forecasts "through 2015 and beyond." Carrier contracts are reportedly still the most important factor behind refresh cycles, which Daryanani suggests should help the upcoming iPhone 6s, alongside the growth of 4G networks in China.

Newer RBC estimates for the June quarter call for $49.3 billion in revenue and $1.78 in earnings per share, versus previous targets of $47.3 billion and $1.69. A copy of Monday's note was provided to AppleInsider.

Specifically, iPhone shipments for the current quarter are forecast to hit 46.5 million, an increase from the firm's earlier target of 42.9 million. Those projections are lower than rival firm Morgan Stanley, who said last week that it believes Apple is on pace to ship 53 million iPhones this quarter.

The survey moreover indicated that the average selling price of iPhones could rise, as many people are planning to buy phones with a greater amount of storage. Apple turns a bigger profit off of its 64- and 128-gigabyte tiers, as the premiums it charges are significantly higher than the cost of the extra memory.

So far there has been no indication that Apple plans to raise its base tier from 16 to 32 gigabytes with this year's anticipated "iPhone 6s." Some rival smartphone makers, such as HTC and Samsung, have been switching to 32 gigabytes as a default.

For the whole of Apple's 2015 fiscal year RBC is now modeling for $233 billion in revenue and $9.07 in earnings per share, improved from a previous forecast of $231 billion and $8.98. The firm's estimates for fiscal 2016 are currently $247 billion and $10.08, assuming a 3 percent bump in iPhone shipments to 236 million.

RBC has maintained its price target of $150 for Apple stock.
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Comments

  • Reply 1 of 38
    SpamSandwichSpamSandwich Posts: 31,015member
    Pretty confident that AAPL won't hit $150 this year. I'm sticking with $140 for now, although there is an increasing possibility of a large market correction coming soon.
  • Reply 2 of 38
    fallenjtfallenjt Posts: 3,976member
    Pretty confident that AAPL won't hit $150 this year. I'm sticking with $140 for now, although there is an increasing possibility of a large market correction coming soon.
    $140 is my limit sale price, all of them.
    I never believe Apple will drop 16GB. Present of 16GB makes 64GB a better deal. Dropping 16GB for 32GB encourages 64GB owners to go back to 32GB. That's a bad business move.
  • Reply 3 of 38
    rogifanrogifan Posts: 10,669member
    [QUOTE]Apple turns a bigger profit off of its 64- and 128-gigabyte tiers, as the premiums it charges are significantly higher than the cost of the extra memory.[/QUOTE]

    Hence why 32GB was replaced by 64GB but 16GB still remains. Gotta keep those ASPs high and there's more margin to play around with at the higher end. I've said I think that will change this year but the more I think about it the less sure I am. If Apple successfully upsold lots of people to 64GB (who would probably be just fine with 32GB were it an option) no way would they give them a reason to downgrade. Unfortunately I think 16GB is here to stay.
  • Reply 4 of 38
    mac_128mac_128 Posts: 3,414member
    Makes sense to me, I traditionally bought the 16GB models, keep a modest number of apps on my phone, and not a particularly large picture taker, nor kept much music. But I do keep most of my texts, which over time really begin to add up especially if friends and family attach pictures and videos. I found that when I did want to shoot video, I didn't have any space left to do it. Now that the current crop of phones shoot such amazing video and photos, that space will fill up quickly. I have 64GB, and that to me seems like the minimum necessary for piece of mind that I will have the room to shoot video and take lots of pictures when I want to, without constant management of my storage.

    Since they discontinued the iPod Classic, I'm curious to see when they will introduce a 256GB iPhone. Frankly I was surprised it didn't last until the iPhone at least matched its capacity.
  • Reply 5 of 38
    SpamSandwichSpamSandwich Posts: 31,015member
    fallenjt wrote: »
    $140 is my limit sale price, all of them.

    Yeah, I'm considering finally selling all my AAPL too. No matter what steps forward Apple takes, there seems to be an endless barrage of attacks, bad news, lies and political pressures that drag the stock back down. I figure if it hits $140 I'll go ahead and retire. It makes less sense for me to work than ever before and I can't abide supporting with my tax dollars a public or government I consider increasingly Marxist and socialistic. If I'm lucky I'll live another 25-30 years and I'll see the arrival of true artificial intelligence near the end.
  • Reply 6 of 38
    rogifanrogifan Posts: 10,669member
    fallenjt wrote: »
    $140 is my limit sale price, all of them.
    I never believe Apple will drop 16GB. Present of 16GB makes 64GB a better deal. Dropping 16GB for 32GB encourages 64GB owners to go back to 32GB. That's a bad business move.

    I'm tending to agree with this, not because I agree with the policy of course. Apple can make software free, will pay hundreds of millions to give everyone a free U2 album whether they wanted it or not, spends billions on global warming but when it comes to storage pricing they're the biggest penny pinchers on the planet. Of course Apple could easily afford to bump 32GB to 64GB because the margins at the high end are massive. Let's not forget that Apple had the most profitable quarter of any company in history after this change was made. Cook, Schiller and Finance will make software engineering work overtime shrinking the size of the OS and apps before they'll increase storage at the low end. And I don't see Apple changing cloud pricing much either as being able to store more in the cloud for cheaper wouldn't encourage people to buy at the high end (which increases margins and ASPs).
  • Reply 7 of 38
    joelsaltjoelsalt Posts: 827member
    Quote:

    Originally Posted by SpamSandwich View Post





    Yeah, I'm considering finally selling all my AAPL too. No matter what steps forward Apple takes, there seems to be an endless barrage of attacks, bad news, lies and political pressures that drag the stock back down. I figure if it hits $140 I'll go ahead and retire. It makes less sense for me to work than ever before and I can't abide supporting with my tax dollars a public or government I consider increasingly Marxist and socialistic. If I'm lucky I'll live another 25-30 years and I'll see the arrival of true artificial intelligence near the end.



    So, you've never read Marx then?

  • Reply 8 of 38
    SpamSandwichSpamSandwich Posts: 31,015member
    joelsalt wrote: »

    So, you've never read Marx then?

    I really don't care what is your opinion of my opinion.
  • Reply 9 of 38
    sestewartsestewart Posts: 102member

    If Apple doesn't clean up it's act, I'll be on my last apple devices period. Microsoft is looking better each day. 

     

    Device vulnerabilities for over a month un-fixed, political activities instead of securing devices, and rainbows painted all over every digital front and in front of the children, with no parental controls to keep kids from seeing the filth of Apple's new czar

  • Reply 10 of 38
    singularitysingularity Posts: 1,329member
    sestewart wrote: »
    If Apple doesn't clean up it's act, I'll be on my last apple devices period. Microsoft is looking better each day. 

    Device vulnerabilities for over a month un-fixed, political activities instead of securing devices, and rainbows painted all over every digital front and in front of the children, with no parental controls to keep kids from seeing the filth of Apple's new czar
    please shut the door quietly on your way out.
  • Reply 11 of 38
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Stop with the BULLSHIT.  The iPhone was $650 in 2007.  It is still $650 in 2015.  That is EIGHT YEARS of inflation and yet it is the same price.  Can you say the same thing about cars?  In Eight years cars have gone up over 30% in price.  Apple needs to make up that difference somehow with rising labor costs, medical costs, ect.  

    The original 13" MBA cost $1,799, that would be $1,987 in today's dollars. The current 13" MBA, which is better than the original in every conceivable way now starts at just $999. The 15" PowerBook G4 released in January 2001 started at $2,499, $3,355 in today's dollars. You can currently get a 15" rMBP starting at $1,999. Isn't technology supposed to get cheaper overtime? Or does that just not apply to iPhone?
  • Reply 12 of 38
    Quote:

    Originally Posted by Rogifan View Post





    I'm tending to agree with this, not because I agree with the policy of course. Apple can make software free, will pay hundreds of millions to give everyone a free U2 album whether they wanted it or not, spends billions on global warming but when it comes to storage pricing they're the biggest penny pinchers on the planet. Of course Apple could easily afford to bump 32GB to 64GB because the margins at the high end are massive. Let's not forget that Apple had the most profitable quarter of any company in history after this change was made. Cook, Schiller and Finance will make software engineering work overtime shrinking the size of the OS and apps before they'll increase storage at the low end. And I don't see Apple changing cloud pricing much either as being able to store more in the cloud for cheaper wouldn't encourage people to buy at the high end (which increases margins and ASPs).



    Regardless, the 8GB garbage needs to stop. That leaves a pathetically small amount of space for content.

  • Reply 13 of 38
    slurpyslurpy Posts: 5,119member
    Quote:

    Originally Posted by sestewart View Post

     

    If Apple doesn't clean up it's act, I'll be on my last apple devices period. Microsoft is looking better each day. 

     

    Device vulnerabilities for over a month un-fixed, political activities instead of securing devices, and rainbows painted all over every digital front and in front of the children, with no parental controls to keep kids from seeing the filth of Apple's new czar


     

    What the **** does your nasty, vile, hate-filled post have to do with the title of this article, "Buyers opting for higher capacity iPhones, likely boosting Apple profits, RBC survey finds"?

     

    Also, no one gives a shit what device you buy. Stop holding your loyalty above Apple's head, as if they need you. For every customer like you they lose, they'll another hundred. Please buy your precious Microsoft device, clearly they're doing something right with the almost non-existent marketshare they have.

  • Reply 14 of 38
    carthusiacarthusia Posts: 561member

    It was a no-brainer for me to go 128 GB. I don't regret it. 32 GB would not have worked at all and 64 would be too tight for my uses. I don't even think about capacity limits and enjoy my phone so much more. having said that, I also think I'll keep this phone that much longer.

  • Reply 15 of 38
    Quote:

    Originally Posted by sog35 View Post

     That is EIGHT YEARS of inflation and yet it is the same price.  Can you say the same thing about cars?  In Eight years cars have gone up over 20% in price.  The average car in 2007 was $27k, now its $34k.  Apple needs to make up that difference somehow with rising labor costs, medical costs, ect.  

    You know why car prices have gone up? Blame the US Government. CAFE and all the other tech they're mandating are the reason for the huge cost increases. Since then they've added mandatory stability control, TPMS, backup cameras (and those had to be added because of pedestrian standards mandating the beltline of cars move up, making it so people can't even see out of the back of their cars now), etc.

  • Reply 16 of 38
    rogifanrogifan Posts: 10,669member

    Regardless, the 8GB garbage needs to stop. That leaves a pathetically small amount of space for content.

    Yes that is embarrassing. I wonder how many long hours Apple engineers had to put in getting the file size down to support 8GB and 16GB devices. In the WWDC keynote Craig Federighi specifically mentioned that iOS 8 adoption was slower because many people didn't have enough space on their devices to do an OTA update.
  • Reply 17 of 38
    Quote:
    Originally Posted by Rogifan View Post





    Yes that is embarrassing. I wonder how many long hours Apple engineers had to put in getting the file size down to support 8GB and 16GB devices. In the WWDC keynote Craig Federighi specifically mentioned that iOS 8 adoption was slower because many people didn't have enough space on their devices to do an OTA update.



    Too much of WWDC was Apple admitting they've been messing up without actually admitting they've been messing up.

     

    I bought my 64GB 6 just because it was only $100 upfront after the trade-in. If Apple would get the software bloat under control (which seems like it may be a possibility with App Thinning, though iOS is still a pig) then I would be fine getting a 16GB device should I stay in the Apple sector.

  • Reply 18 of 38
    dasanman69dasanman69 Posts: 12,979member
    sog35 wrote: »
    If Apple made the low tier 32GB they would lose literally BILLIONS of DOLLARS in profits.  

    Apple sells close to 300,000,000 million iOS devices a year.  About 65% of those are high memory devices.  If Apple starting the bottom tier at 32GB they would lose about 50,000,000 consumers who would opt out of the 64GB and go with the 32GB.  That would be $5 billion in revenue lost and over $4 billion in profits.

    Stop with the BULLSHIT.  The iPhone was $650 in 2007.  It is still $650 in 2015.  That is EIGHT YEARS of inflation and yet it is the same price.  Can you say the same thing about cars?  In Eight years cars have gone up over 20% in price.  The average car in 2007 was $27k, now its $34k.  Apple needs to make up that difference somehow with rising labor costs, medical costs, ect.  

    So they should be losing billions now that the second tier is 64GB instead of 32GB. It used to be a $200 upgrade to go from 16GB to 64GB, but now it's only $100. Phil Schiller said that the 16GB is the most popular, but this article points to the contrary. Did he lie? Are we to believe the survey, or Phil?
  • Reply 19 of 38
    carthusia wrote: »
    It was a no-brainer for me to go 128 GB. I don't regret it. 32 GB would not have worked at all and 64 would be too tight for my uses. I don't even think about capacity limits and enjoy my phone so much more. having said that, I also think I'll keep this phone that much longer.

    I'm with you on this. My iDevices have become more important to me in my daily life, in addition the imagination of app developers make the iDevices even more "magical." If that wasn't enough to make me want more storage, the whole ecosystem just gets better and better... and then Apple tops it all off with an incentive to quadruple my storage!

    Velly clevel, those Cupertinos....
  • Reply 20 of 38
    netroxnetrox Posts: 720member
    Quote:
    Originally Posted by sestewart View Post

     

    If Apple doesn't clean up it's act, I'll be on my last apple devices period. Microsoft is looking better each day. 

     

    Device vulnerabilities for over a month un-fixed, political activities instead of securing devices, and rainbows painted all over every digital front and in front of the children, with no parental controls to keep kids from seeing the filth of Apple's new czar


     

    I guess you should avoid Microsoft as CEO of Microsoft is praising the gay marriage ruling. 

     

     

     

     

    And Android too. 

     

    You sir are a homophobe. 

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