Analysts impressed with Services & iPhone 11 pricing, less on iPhone 11 Pro

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in AAPL Investors
Analysts are weighing in on Tuesday's "It's Innovation Only" iPhone 11 launch event, with positive sentiment from industry watchers over the pricing of Apple TV+ and Apple Arcade accompanying the largely-expected iPhone upgrades.

Apple September 2019 event Tim Cook logo

JP Morgan - "Positive Surprises through Competitive Pricing"

It was a "largely positive" event for JP Morgan, led by Apple's lowering of pricing of the iPhone 11 relative to the iPhone XR, which "could act as [a] positive driver for volumes in [the] entry level premium smartphone segment," while maintaining the price of the Pro models. Specifications were "largely in-line" with expectations.

The other big point for the analysts was the favorable pricing for Apple TV+ and Apple Arcade. The Apple TV+ announcement "potentially surprised relative to expectations," as the $4.99 monthly fee is "quite attractive" compared to competing services, along with the offer of a free one-year subscription to new Apple device purchasers.

The Apple Watch Series 5 was a "mild disappointment," due to upgrades largely centering on the casing and display outside of software features previously announced at WWDC. The lowering of the Apple Watch Series 3 to a new starting price of $199 was seen as a better move, as "a strategic step to tap into the value segment."


Cowen - "One more thing, we like the pricing for TV+/Arcade"

The biggest elements of the event were not the iPhone launches, but those of Apple's services, according to Cowen. Heading up the investor note over what is supposed to be an iPhone event, Cowen suggests the $4.99 pricing for Apple TV+ and Apple Arcade is a "positive for driving incremental EPS growth in Services," with the Apple TV+ pricing "more attractive than expected" while the free year for hardware purchases introducing "new paradigms for catalyzing product demand."

The $4.99 price and 100 launch titles could make Apple Arcade "a more compelling offering than most (casual) gamers expect."

For the iPhones, the refresh was "largely in line with our expectations," with the lower iPhone 11 pricing a "positive for driving incremental demand." However, a $100 reduction for older models may cause consumers to "gravitate" towards earlier releases and away from the new launches.

The extra cameras on the back are actually a sign Apple is focusing more on "software refinement to improve photography," complete with a better user experience, low-light imaging, and the "future enablement of Deep Fusion."


Rosenblatt Securities - Cautious on iPhone 11, but iPhone XR still attractive

The launch of three new models at the same time, rather than splitting the group as in 2018, will "make Q3 shipments to Apple slightly stronger than seasonally normal," Rosenblatt suggests, though also believes this is already reflected in Apple's existing quarterly guidance. Estimates for shipments remain unchanged at 60 to 65 million units for the second half of 2019, but current production "may need to be trimmed after the initial launch."

Rosenblatt maintains its "cautious view on new iPhone sales," expecting challenges paired with "already low expectations." While the iPhone 11's price is lower than the iPhone XR's initial retail price, the XR is thought to continue to be more attractive based on its current retail price.

The Apple TV+ pricing is "competitive," but Rosenblatt doesn't have much faith it will make an impact immediately. "We believe this service will not bring meaningful upside in the near term," the analysts suggest.

On the subject of the September 1 tariffs, where there is a 15% fee on imports of AirPods, the Apple Watch, and iPads, this is thought to have led to Apple producing more of the products. "So far, there has been no impact on retail prices in the US," the firm observes, but warns to "expect AirPods, [Apple Watch], and tablet shipments to slow in Q4 from Q3."
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Comments

  • Reply 1 of 31
    MplsPMplsP Posts: 1,725member
    Apple was forced to make the 11 pricing more competitive. The smartphone market is maturing/has matured. Unlike 8-10 years ago when every new model had major improvements, many of the changes/improvements in the last few years have been relatively minor. Incremental improvements in the camera and better processor speed really don't matter to a lot of people. My wife has a 6s and would like a better camera but her phone is plenty fast for what she does, and she's not alone. I think they also realized that $1,000 is a psychological barrier for many people. 

    If you really want the extra features of the 11 pro, you can pay $1000+, otherwise you can still get the 'plain' iPhone 11, which is a very good phone at a good price.
    chemengin1watto_cobra
  • Reply 2 of 31
    Try 2499 Aud  for the pro max 512 gb here in Oz the mind spins and spins 
    entropys
  • Reply 3 of 31
    Overall impression.  Event was okay.  Nothing surprising.  No real highs.  No real lows.  Simply good enough.  The biggest positive take-away for me was competitive pricing on the services.  ATV+ is priced to compete and I think it was really smart to give it away with purchase while still building up the content.   Good to see the base iPad updated. Drab green color for iPhone is sweeeeeeeeet.   My one slightly negative nit-pick: stop naming everything under the sun.  Every component and process doesn't need a catchy new name.  Super Retina XDR?  C'mon Apple.  Plenty of others too, but the worst offense belongs to the terribly named "slofies".  Whoever came up with that name should be put in time out and made to feel bad.  The person who approved it should feel worse.

    All in all, it was a'ight.  
    cflcardsfan80chemengin1
  • Reply 4 of 31
    Always on Apple Watch is a deal maker for me, as I was holding out for this... I think Series 5 will outsell expectations... Now the harder choice is stainless steel or titanium... price is very close.
    edited September 11 StrangeDaysSpamSandwichwatto_cobra
  • Reply 5 of 31
    Wonder if Apple will come up with a faster 4K ATV. Would fit in nicely with Apple Arcade, so I expected it in this event. 
    But they might as well launch it silently: it wouldn’t not be such a big thing. 
    Not launching a faster ATV is holding me from upgrading my ATV 4. 
    watto_cobra
  • Reply 6 of 31
    rob53rob53 Posts: 2,102member
    Does anyone even care about what the analysts have to say? They never actually care about anything any manufacturer makes, only about what they feel they can make money on (by manipulating the stock market). Are any of these analysts actually qualified to make and technical evaluations of anything? Probably not so why does anyone even give them any recognition?
    cflcardsfan80JWSCStrangeDayswatto_cobra
  • Reply 7 of 31
    Rosenblatt saying ATV+ won’t make much of a difference is strange: the attractive price can potentially lure a significant part of the 1.5 billion Apple users into the world of paid subscription tv services. 
    No matter how you put it: that IS a big thing, especially regarding the free 1 year (family!) subscription with the purchase of a new Apple device. Quite a potential: 1 addicted family member is enough. 
    sidricthevikingwatto_cobra
  • Reply 8 of 31
    flaneurflaneur Posts: 4,521member
    Jordanf1 said:
    Try 2499 Aud  for the pro max 512 gb here in Oz the mind spins and spins 
    When I think of my mind spinning here in California, it’s from left to right, counterclockwise. I wonder if it’s the same direction in the Southern Hemisphere?

    Anyway, just kidding, my sympathies. Is it mainly the exchange rate?
    watto_cobra
  • Reply 9 of 31
    The Pro models should have started at 128GB storage.
    cflcardsfan80muthuk_vanalingamsidricthevikingjumecaladaniandoctwelveboltsfan17
  • Reply 10 of 31
    Ok I think that the event was more of apple doing some strategic realignment in preparation for 2020. From an excitement perspective, going from a 2 year cycle (refresh and s year) to a 3 year cycle is exhausting. All eyes are on 2020. - Starting with services was a bold move and reinforces apple's commitment to the space moving forward. I was also pleasantly surprised at the prices for these subscriptions. VERY reasonable. I would be very curious if they would offer bundled options. I already have Apple Music family plan, perhaps I can bundle the other services to make the value proposition even better. - Establishing cheaper (or maintained) pricing across the board was appreciated. - Ipad refresh was minimal but the inclusion of a cheaper price was appreciated. - Apple Watch series 5 was not deserving of its time spent on stage. - iPhones were slight refreshes. iPhone 11 price drop was appreciated. We will see how it performs (probably the best selling model) - No apple tile competitor. - No reverse wireless charging - No 16" MacBook announcement I think the most newsworthy item was the astounding 4-5 hrs battery life improvement on the 11 pro and 11 pro max. This is remarkable to me. Battery technology has not been keeping up with the improvement of all other components. This is not just an incremental improvement but a step function. And the fact that that most of this can be pinned to the amazing A13 Bionic energy efficiency improvements really shows that apples vertical integration of hardware, software, and services is the right way to go. I honestly did not know that SOC's could have that dramatic of an effect on battery life. Also, is the battery size bigger as well? Additionally the night mode for photos looks great as well. Making a great camera even better. I am very curious to see how all of this additional hardware and their advances in computational photography will stack up against the Pixel line of phones. Ultra wide looks great as well. I don't think the "by innovation only" was an appropriate tag line for the event giving the overall incremental nature of the updates across their product line up.
    cflcardsfan80watto_cobra
  • Reply 11 of 31
    FolioFolio Posts: 652member
    In India, AppleTV subscription priced at 99 rupees a month ( less than US$1.50), according to Bloomberg. Range of handset offerrings, Mumbai store in 2020... long time coming, but finally looking better
    sidricthevikingavon b7watto_cobra
  • Reply 12 of 31
    FolioFolio Posts: 652member
    Reviewing yesterday's program, what would make an Android devotee finally switch? The fancy multicamera video app for iPhone 11 Pro...the applewatch health benefits (that video surprised me: it's not only older folks benefiting)... the all you can eat Arcade buffet offerrings for $5/month....so many enticements and entry points. iPad/Arcade combo may prove most popular
    watto_cobra
  • Reply 13 of 31
    $5 for a 100 titles. M'kay. That does not attract me in the slightest. Then again, I'm not interested in Apple TV at any price.
  • Reply 14 of 31
    mjtomlinmjtomlin Posts: 2,028member
    MplsP said:
    Apple was forced to make the 11 pricing more competitive. 

    Yeah, no.

    More than likely, the cost to produce Apple's Liquid Retina displays have come way down. They were brand new displays when the XR was released, so the cost was relatively high, hence the price "bump" last year. They've since produced tens of millions of them. "Economies of scale" at work.
    edited September 11 StrangeDayswatto_cobra
  • Reply 15 of 31
    space2001 said:
    Always on Apple Watch is a deal maker for me, as I was holding out for this... I think Series 5 will outsell expectations... Now the harder choice is stainless steel or titanium... price is very close.
    And they’ve doubled the capacity to 32 GB, too. Nice. 
    StrangeDayscaladanianwatto_cobra
  • Reply 16 of 31
    The Pro models should have started at 128GB storage.
    LOL, same old story. No way. I use iCloud services and aren't even using all of my 64gb, usually somewhere around 50%+. Why on earth should I have to pay for extra storage I'm not using? Not everyone keeps local copies of all our music or photos on-device.
    edited September 11
  • Reply 17 of 31

    Rajka said:
    $5 for a 100 titles. M'kay. That does not attract me in the slightest. Then again, I'm not interested in Apple TV at any price.
    Yes because 5-cents a game is too much! /s

    Also, you make it sound like you don't think they'll continue to add new games for the life of the service.
    edited September 11 watto_cobra
  • Reply 18 of 31
    The Pro models should have started at 128GB storage.
    LOL, same old story. No way. I use iCloud services and aren't even using all of my 64gb, usually somewhere around 50%+. Why on earth should I have to pay for extra storage I'm not using? Not everyone keeps local copies of all our music or photos on-device.
    Ya know, this is something I recently struggled with. Like some others, I have a collection of music I would like to have with me in the car. Given that I refuse to pay a subscription for music I already have (and that I detest subscriptions) Apple Music is out. There are no real alternatives to having connected CarPlay at the same time as having access to this music unless you put it all on your iPhone. Meaning...you need a lot of storage space on said iPhone.

    I even toyed with running iTunes on a server in the car. Doable for sure, and an interesting project. But with 128GB storage on an iPhone as an option, that is not real attractive.
    watto_cobra
  • Reply 19 of 31
    The Pro models should have started at 128GB storage.
    LOL, same old story. No way. I use iCloud services and aren't even using all of my 64gb, usually somewhere around 50%+. Why on earth should I have to pay for extra storage I'm not using? Not everyone keeps local copies of all our music or photos on-device.
    Pretty sure the implication from @rogifan is the Pro models should start at 128GB of storage for the same price.  Pretty sure anyone making that suggestion is implying a higher starting storage tier for the same price.  I'm also pretty sure you know that.  ;)  Now, based on Apple's history with storage tiers, the chances of that happening are slim to none and slim got arrested for drunken disorderly so he's out the game.  

    From a business perspective it's easy to see why Apple does what they do.  There's revenue and profit in up selling storage, either on device or in the cloud.  From a consumer perspective, Rogifan's right imo.  For a $1000, storage should start at 128GB and go up.  
    edited September 11 avon b7muthuk_vanalingamgatorguy78Banditmobird
  • Reply 20 of 31
    avon b7avon b7 Posts: 4,295member
    The Pro models should have started at 128GB storage.
    LOL, same old story. No way. I use iCloud services and aren't even using all of my 64gb, usually somewhere around 50%+. Why on earth should I have to pay for extra storage I'm not using? Not everyone keeps local copies of all our music or photos on-device.
    Why should I pay Apple (iCloud) and use my carrier (data allotment to use the content) when I could have it sitting on my phone?

    Starting at 128GB in 2019 on a Pro phone isn't asking for anything unreasonable. It should have been the entry point from the get go.
    muthuk_vanalingamcaladanianmobird
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