ASP increases, blurred lines over iPad as computer are giant positives for AAPL

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in AAPL Investors
The Apple special event went "largely as expected," claims Loup Ventures analyst Gene Munster, but announcements made during the presentation, such as the launch of the iPad Pro, were "incrementally positive" to Apple's overall story.

The 2018 iPad Pro demonstrated on-stage by Adobe
The 2018 iPad Pro demonstrated on-stage by Adobe


In a blog post following the event, Munster suggests the updates to the iPad Pro line are "an indication of the blurring the lines between the iPad, the Mac, and the iPhone." Additions ported across from the iPhone like Face ID, as well as full Adobe apps, Xbox-level graphics, and a USB-C port that is more of a Mac trait makes the iPad Pro categorization as a tablet "more ambiguous."

The line-blurring may help Apple increase its addressable market by producing a lower entry point for owning a full-fledged "computer," Munster suggests.

It is estimated that the products announced during the vent will account for approximately 8 percent of Apple's total revenue for the full year 2018, with an expectation of a similar percentage share of revenue the following year. The full unit growth estimates for 2019 remain unchanged, however as Mac and iPad units are tipped to grow 1 percent over the year.

"This does not take away from the fact that the products announced today represent Apple's impressive speed and depth of constant innovation," advises Munster. "The company continues to push the boundaries of consumer tech products."

The trend of increasing the Average Selling Price (ASP) is said to continue with the latest offerings, with the entry-level MacBook Air's price increasing 20 percent to $1,199, the iPad Pro by 23 percent to $799, and the Mac mini by 60 percent. "We are leaving our ASP estimates unchanged to layer in a level of conservatism," the firm writes.

Apple's retail efforts are declared to be an "underappreciated competitive advantage," with 70,000 employees versus Microsoft's second-largest technology retail footprint of 6,000 employees. The addition of 60 new Today at Apple sessions are said to further the number of experiences offered at retail stores.

For Thursday's quarterly financial results, Munster suggests the results could serve to validate three of four pillars in a new paradigm of "Apple as a Service." He expects the focus of the call to be around the iPhone ASP for 2019, which Munster predicts will be $791 compared to Wall Street's consensus of $756, with Apple thought to be finding new ways to make more money from iPhones while long-term growth slows to low single digits.

Services growth of 20 percent are suggested, in line with Street expectations but down from the previous quarter's 28 percent growth. A return in capital of around $25 billion is predicted, which would support a three-year path to "net cash neutral," ahead of the Street's expectations of five year or more.

Deemed to be a "non-event," the iPhone units of 48.1 million against Street predictions of 47 million will apparently be evidence of the iPhone becoming a stable business, and "performing more like software than hardware."

Comments

  • Reply 1 of 11
    Blown away…. absolutely love the 12.9 pro And the new Pencil!!! (They pretty much resolved all the Pencil issus I found ridiculous in the previous version) Upgrading my older 12.9 and old Pencil right away.🕺 And sorry to say.. but Adobe will finally make me take the bait and subscribe Photoshop on new iPad pro Rocks + the AR…… then Adesk Autocad…and whole slew of desktop level apps to come. To me, the iPad that i had been waiting for has finally Arrived !👊👊 ( wish there were more color choices though )
    caladanianracerhomie3watto_cobra
  • Reply 2 of 11
    Increasing prices is good for a company’s stock price. News at 11.
  • Reply 3 of 11
    mwhitemwhite Posts: 184member
    Increasing prices is good for a company’s stock price. News at 11.
    Why are you always so negative???
    SoliSpamSandwichracerhomie3watto_cobra
  • Reply 4 of 11
    "an indication of the blurring the lines between the iPad, the Mac, and the iPhone." 

    Apple is playing an interesting game here. In the past, many people would buy a MacBook and an iPad. Now, with the iPad Pros being so capable (and expensive), people may choose between one or the other.

    Just an aside, while Apple is trumpeting the game playing performance of its new iPad Pro vs XBox, Microsoft is taking a much more holistic approach and developing  game controllers for disabled people:
    https://www.polygon.com/2018/5/17/17363528/xbox-adaptive-controller-disability-accessible
  • Reply 5 of 11
    Mike WuertheleMike Wuerthele Posts: 4,346administrator
    hentaiboy said:
    "an indication of the blurring the lines between the iPad, the Mac, and the iPhone." 

    Apple is playing an interesting game here. In the past, many people would buy a MacBook and an iPad. Now, with the iPad Pros being so capable (and expensive), people may choose between one or the other.

    Just an aside, while Apple is trumpeting the game playing performance of its new iPad Pro vs XBox, Microsoft is taking a much more holistic approach and developing  game controllers for disabled people:
    https://www.polygon.com/2018/5/17/17363528/xbox-adaptive-controller-disability-accessible
    Fun fact? It works with open-source HIDs on the Mac.
    racerhomie3watto_cobra
  • Reply 6 of 11
    mjtomlinmjtomlin Posts: 1,821member
    Not that it matters much to me, but while AAPL is still above a trillion market cap, the market “golden” boy AMZN which was expected to hit that mark “anytime” now, is now sitting way down at US750 billion. That’s a HUGE drop.
    SpamSandwichracerhomie3watto_cobra
  • Reply 7 of 11
    mjtomlin said:
    Not that it matters much to me, but while AAPL is still above a trillion market cap, the market “golden” boy AMZN which was expected to hit that mark “anytime” now, is now sitting way down at US750 billion. That’s a HUGE drop.
    Yeah, they missed on the high end of their numbers, so the usual game rules apply: Destroy the stock and buy at the new lower price. 🧯💨
    watto_cobra
  • Reply 8 of 11
    I've never understood why Wall Street completely ignores Apple's retail stores and considers them having zero value. Apple has spent plenty of time and money placing those stores all over the globe. That feat hasn't been duplicated by any other computer/tech company and those stores would seem to be quite valuable in terms of customer loyalty. I have never heard anyone on Wall Street praise Apple for having so many Apple retail stores. One would think those retail stores would be recognized as a moat of some sort for Apple because they're rather unique.
    watto_cobra
  • Reply 9 of 11
    mjtomlin said:
    Not that it matters much to me, but while AAPL is still above a trillion market cap, the market “golden” boy AMZN which was expected to hit that mark “anytime” now, is now sitting way down at US750 billion. That’s a HUGE drop.
    Don't worry. Wall Street will again start pumping Amazon stock higher with their usual call of "Buy Amazon while it's still cheap." That strategy never fails to get greedy big investors back into Amazon. They believe in Lord Bezos to keep buying more and more companies to take over every market he can to put other companies out of business. I'm guessing big investors don't think Amazon will ever be targeted as being a monopoly. As wealthy and powerful as Bezos is, it's doubtful even the Feds will come after him. I'm willing to bet in a few months the FANG stocks will again rise in power. Those FANG stocks have been carrying the market for a couple of years, so I'm sure all of those FANG stocks will be pumped by analysts to keep the money flowing. Everyone believe Amazon is too big to fail, so the stock will be again be "blessed" as golden once again. Nearly all of Wall Street wants Amazon to dethrone Apple as the highest market cap company. Amazon is considered a god CEO unlike Tim Cook who is considered an idiot.
    watto_cobra
  • Reply 10 of 11
    Increasing prices is good for a company’s stock price. News at 11.
    Hey for other companies beside Apple that have no software differentiation that could descrease sales quite a bit.
    watto_cobra
  • Reply 11 of 11
    Rayz2016Rayz2016 Posts: 4,556member
    Increasing prices is good for a company’s stock price. News at 11.
    Apple making too much money?
    Their kit making their customers disgustingly satisfied?
    The company fails to crash and burn no matter how much you wish it?

    Friend, you need one of these:



    ButtHurtAway – for the days when Apple is killing it a little too much.
    edited October 2018 Cesar Battistini Mazierowatto_cobra
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