Unexpected success of iPhone SE predicted to drop Apple's average selling price to $637
A new survey has suggested 16 percent of U.S. iPhone sales in the June quarter were of the low-end iPhone SE -- a number that investment firm UBS believes will push down the average selling price of the iPhone more than expected.
Analyst Steven Milunovich of UBS issued a note to investors on Tuesday, a copy of which was provided to AppleInsider, revealing the results of a 500-person survey conducted in the U.S. by Consumer Intelligence Research Partners. It found that about 9 percent of domestic iPhone sales were of the 64-gigabyte SE model, while another 7 percent came in the 16-gigabyte capacity.
At an estimated 16 percent of total sales for the June quarter, Milunovich said the iPhone SE is outperforming his expectations. But the analyst told investors that he believes the success will have a detrimental effect on Apple's bottom line, dragging down the average selling price of its most profitable product.
Milunovich's latest estimates call for the iPhone ASP to drop to $637 --?a number he believes is well below Wall Street consensus of about $660.
Another potential factor he cited, as evidenced by the CIRP survey, is capacity. The poll found that the average storage per new phone purchased was down by about 10 percent year over year, which will also affect ASPs.
"A lower ASP is likely due to the success of the SE, most of the channel inventory reduction being 6s, and fewer storage upgrades," Milunovich wrote.
Despite his negative outlook, Milunovich has still maintained a "buy" rating for shares of AAPL, as well as a price target of $115. He believes any struggles seen by Apple will be short-term -- UBS's forecasts call for iPhone sales to stabilize in fiscal year 2017, and grow 15 percent in fiscal 2018.
Analyst Steven Milunovich of UBS issued a note to investors on Tuesday, a copy of which was provided to AppleInsider, revealing the results of a 500-person survey conducted in the U.S. by Consumer Intelligence Research Partners. It found that about 9 percent of domestic iPhone sales were of the 64-gigabyte SE model, while another 7 percent came in the 16-gigabyte capacity.
At an estimated 16 percent of total sales for the June quarter, Milunovich said the iPhone SE is outperforming his expectations. But the analyst told investors that he believes the success will have a detrimental effect on Apple's bottom line, dragging down the average selling price of its most profitable product.
Milunovich's latest estimates call for the iPhone ASP to drop to $637 --?a number he believes is well below Wall Street consensus of about $660.
Another potential factor he cited, as evidenced by the CIRP survey, is capacity. The poll found that the average storage per new phone purchased was down by about 10 percent year over year, which will also affect ASPs.
"A lower ASP is likely due to the success of the SE, most of the channel inventory reduction being 6s, and fewer storage upgrades," Milunovich wrote.
Despite his negative outlook, Milunovich has still maintained a "buy" rating for shares of AAPL, as well as a price target of $115. He believes any struggles seen by Apple will be short-term -- UBS's forecasts call for iPhone sales to stabilize in fiscal year 2017, and grow 15 percent in fiscal 2018.
Comments
Only to the clueless perhaps. Why are analysts so clueless?
I've been saying since day one that the SE would sell a whole lot. That was obvious to anybody with a clue.
Frequently on wi-fi, so didn't mind the lack of LTE radio advancements, personally and second gen Touch ID sensor (for speed) would have been nice, but first gen works fine!
Got the 64 GB myself and I agree; would have paid more for it if it included the other updated components.
Maybe now that Apple has (possibly) seen the demand for the 4" form factor, we'll see a refresh sooner than later!
You're a little off the mark. The SE will remain a compelling offer in the lineup, but not too compelling. It will not get an update this fall, and won't be updated any sooner than next March.
Apple cannot afford to update their lowest price tier at the same time as the highest priced tier. They simply don't do this. Not with iPhone, nor iPad, nor any product. Apple will release the iPhone 7 and 7 Plus...if you want the latest and greatest, you have to pay for it. If size is more important to you than features, than you'll have to settle for SE, or wait for that product to finish its own separate upgrade cycle.
I think it would have sold more if it had a wide range of colors like the 5C and iPod Nanos.
I've been rooting for a slim iPod touch sized iPhone for years, even before the rumors started.
example:
It's not a "cheap" phone. The size is what lowers the price dramatically. It should have all the latest features being released mid-cycle but at the same time I feel like maybe Force Touch wasn't compatible with the screen size and hopefully they fix this.
When Apple finally did release the SE, I put my money where my mouth was, and I recently bought one.
I could have obviously gotten a larger iPhone, like the 6s+, but I just wasn't interested. It's too large for me. A female friend of mine has one, and she keeps it in their purse. I do not carry any purse or any ridiculous man purse.
I just want a small Apple phone that comfortably fits in my front pocket, that is also powerful and awesome, and the SE fits the bill for me, and for many others too obviously.
I knew that the SE was selling like crazy, because I had been following it since first released, because I was trying to buy one, and it was virtually impossible to buy at any retail Apple store in my area. I was checking the stock often, and finally last week, it showed up as in stock in a couple of Apple stores nearby, so I immediately went and got one.
It took many months to get one, and that right there is a pretty good clue for anybody you'd think. I am not the least bit surprised that analysts failed to pick up on this huge and obvious clue, staring them straight in the face.
Never would have happened if Steve were still alive...
No, hang on I'm doing it wrong...
I presume Apple profit margin on the SE will be strong considering how many parts had be designed long ago and had been in production for many years already. (E.g. Screen and casing).
But, even Apple seemed surprised by its sales so I don't expect they would have time to add a 4" to the iPhone 7 line up.
If the 4" joins the same cycle as the other sizes, I expect it will be when the 7S' come out. 18 months after the SE release.