Other Apple releases besides the iPhone on Tuesday will drive revenue, says JP Morgan

Posted:
in iPhone edited September 9
Tuesday's anticipated launch of new iPhone models isn't going to be a massively interesting event for investors, JP Morgan suggests, with "limited surprise" for the iPhone forcing most of the attention on pricing and other potential hardware launches.




Announcements at the event related to the iPhone are "unlikely to be a material event for the shares," analysts believe, given the unlikely possibility of surprise features arriving with the new models. Key watchpoints including 2019 iPhone pricing and other hardware announcements "have more opportunity to surprise relative to expectations," the note to investors seen by AppleInsider states.

Pricing for the 2019 models are anticipated to remain consistent with the 2018 batch, with Apple thought to be "prioritizing pricing levers" relative to near-term volumes. The limited updates are thought to make it an "opportune year" for Apple to repurpose typical supply chain savings and make the overall lineup cheaper, but instead "we expect Apple to maintain prices" in the face of the Chinese goods import tariff applied by the US government.

While Apple could maintain the pricing levels in 2019, the expected introduction of an iPhone with 5G in 2020 could afford a "more moderate price increase."

The features list for the 2019 iPhones are expected to be minor technological upgrades, as detailed by rumors and other analysts, including triple cameras in both OLED-based models and a dual camera in the LCD version, along with bilateral wireless charging.

The forecast volumes for the 2019 iPhones by the end of the calendar year will apparently be higher than those seen by the 2018 models in that respective year, but "largely on account of timing changes of launches relative to last year." The 2019 versions are forecast to shift 4 million more models by the end of the year than the 2019 variants, due to the delay in the launch of the iPhone XR last year.

The "refresh and upgrade of Apple Watch and other hardware devices" are important to leverage Apple's install base and to drive hardware revenues, the analysts continue.

"While growth in Services revenue through leverage of the large and growing installed base is key to the investment story for Apple," JP Morgan believes Apple can still continue to drive hardware revenue growth through increases in both volume and pricing for updated models, with new HomePods named alongside an Apple Watch refresh.

AppleInsider will be at Apple's Steve Jobs Theater for Tuesday's "By Innovation Only" event. Follow along with us here, on Twitter, on YouTube, and on Instagram to get all the details of the new iPhone and more!

Comments

  • Reply 1 of 14
    FolioFolio Posts: 636member
    What's new this year? Europe. Europe. Europe. The opportunity to pick up big gains in the prosperous underserved region, due to Huawei woes, which will hurt its handset sales more in EU than China. Let's see if Apple's new offerings can pick up at least 5 percentage point market share by 2020. Now that Apple has many more ways to monetize user after initial handset purchase... Is Europe even on US analysts radar?
    imat
  • Reply 2 of 14
    "While growth in Services revenue through leverage of the large and growing installed base is key to the investment story for Apple," JP Morgan believes Apple can still continue to drive hardware revenue growth through increases in both volume and pricing for updated models, with new HomePods named alongside an Apple Watch refresh.
    So the folks at JP MORGAN think a new Homepod is forthcoming?
  • Reply 3 of 14
    imatimat Posts: 167member
    Folio said:
    What's new this year? Europe. Europe. Europe. The opportunity to pick up big gains in the prosperous underserved region, due to Huawei woes, which will hurt its handset sales more in EU than China. Let's see if Apple's new offerings can pick up at least 5 percentage point market share by 2020. Now that Apple has many more ways to monetize user after initial handset purchase... Is Europe even on US analysts radar?
    As long as Apple considers itself a US company, not an international one, there's no way it can gain anything.
    HomePod release, AppleWatch ECG, AppleTV+ languages of availability, ApplePay rollout in a massive way, Apple News.

    Europe sure is interesting but, from a language standpoint, very fragmented. Either Apple steps up it's "Siri" and Services game or the gains won't materialize. Apple has the resources to do it, I start to think it is a question of willingness.  
  • Reply 4 of 14
    As Apple branches out by shifting sales from Apple Stores (focusing Apple Stores more on customer education and support*) to third parties like Best Buy and Amazon this also gives them much greater pricing flexibility:   They can keep the MSRP steady while enabling those third party vendors to offer discounts -- particularly as the year rolls on.

    In addition, last year they introduced increased trade-in rates (I got $150 for an iPhone 6 that was likely completely worthless to them).  So, they can leverage that initiative as well.

    I suspect that, as the months roll on and Trump's trade war winds down (along with his tariffs), we will begin to see more and more of these types of informal price cuts.

    * I have seen a drastic improvement in service & support in my own local Apple Store since Ahrendts was pushed out.
    muthuk_vanalingam
  • Reply 5 of 14
    mjtomlinmjtomlin Posts: 2,011member
    Tomorrow... iPhone, iPad, Watch, and Mac announcements.

    October... Entertainment/Media Services and Accesories; AppleTV, Air Pods, HomePod, TV+, Apple Arcade, subscription bundling, maybe a surprise or two.
    edited September 9
  • Reply 6 of 14
    Apple would not care even if they would sell half phones what last year in case it would be all switchers. In case all old users would stay. Platform would be growing.

    Do you wonder what will Apple do with hoard of cash? Me as well. :-) Apple Car, some green projects?...

  • Reply 7 of 14
    frantisek said:
    Apple would not care even if they would sell half phones what last year in case it would be all switchers. In case all old users would stay. Platform would be growing.

    Do you wonder what will Apple do with hoard of cash? Me as well. :-) Apple Car, some green projects?...

    Welfare for stockholders.  Nothing productive  -- unfortunately.
  • Reply 8 of 14
    [...] JP Morgan believes Apple can still continue to drive hardware revenue growth through increases in both volume and pricing
    Increased pricing will drive growth? I dunno. I get that Apple buyers tend not to be particularly price sensitive, but Apple has already exceeded my price tolerance. How much further does JP Morgan think prices can go before even the affluent start to question the value proposition?
    JWSCmuthuk_vanalingam
  • Reply 9 of 14
    h2ph2p Posts: 268member
    ... increases in both volume and pricing ...
    ...Apple has already exceeded my price tolerance.... 
    Yup. The-thousand-dollar-phone is the ceiling for many of my friends & acquaintances... past the ceiling so that they didn’t upgrade or got an older phone...

    (It it was for me until I decided to go w iPhone Upgrade Program & 24-month interest free loan)
  • Reply 10 of 14
    I love my iPhone XS Max
  • Reply 11 of 14
    mjtomlinmjtomlin Posts: 2,011member
    h2p said:
    ... increases in both volume and pricing ...
    ...Apple has already exceeded my price tolerance.... 
    Yup. The-thousand-dollar-phone is the ceiling for many of my friends & acquaintances... past the ceiling so that they didn’t upgrade or got an older phone...

    (It it was for me until I decided to go w iPhone Upgrade Program & 24-month interest free loan)

    Last year’s iPhones started at $749 for the XR. Or are you only interested in buying a new iPhone when all new models are under $1000 again?
  • Reply 12 of 14
    JWSCJWSC Posts: 533member
    imat said:
    [...] Europe sure is interesting but, from a language standpoint, very fragmented. Either Apple steps up it's "Siri" and Services game or the gains won't materialize. Apple has the resources to do it, I start to think it is a question of willingness.  

    Oh yea, Apple needs to expend some major calories on Siri.  In all areas.  That is beyond dispute.

    But the old Apple adage of, “It just works”, has degraded in my household from being solid and reliable to:

    • AppleTV locking itself so that I have to select password protect and then delete the password to clear the lock.  Then I can stream from my computer to AppleTV.
    • When playing videos on my AppleTV, it wants to stream a movie directly off the internet instead of streaming from the downloaded file on my iMac.
    • AppleTV remote that learns how to turn my TV monitor on and off but then forgets.
    • iPhones unable to detect lousy home internet connection and seamlessly switch to cellular data, so I have to manually switch.

    Apple assumes the entire world has high speed internet.  But Apple customers don’t all live in the Bay Area.

    muthuk_vanalingam
  • Reply 13 of 14
    pslice said:
    I love my iPhone XS Max
    Until 1TB storage is offered, I’m stickin’ With the Gold 512GB XS Max. I also love ❤️ it.

    And I’m gonna love my Bluetooth 5 S5 WATCH Series 5 running watchOS 6 even more after 2 years with the Bluetooth 4.2 S3 Series 3. Everything’s Comin’ Up 5’s Tomorrow!

    5️⃣
    GeorgeBMac
  • Reply 14 of 14
    Currently, my iPhone X and my SS Watch S3 meet all my needs. In my world there is nothing compelling with the rumored updates to the iPhone and Watch (kinda a "lipstick on a..." release). iOS 13 will extend additional life to my iPhone and nothing rumored as it relates to Watch gets me excited nor is it a "must have" release. Will wait until the 2020 release cycle and go from there.
Sign In or Register to comment.