Following the release of the iPhone 11 and iPhone 11 Pro, analysts are diving deeper into the effects the new devices might have on Apple’s financial numbers. Analysts from Deutsche Bank have suggested that the popularity of the lower-cost iPhone 11 might drive down the average selling price of iPhones this year.
In a note to investors today, Deutsche Bank explained that the average iPhone selling price could drop by between 4 percent and 6 percent during the fiscal 2020 year. The firm estimates that the iPhone 11, iPhone 8, and iPhone 8 Plus could account for 40 percent of iPhones sales over the next 12 months.
Theoretically, that would mean the iPhone XR, iPhone 11 Pro, iPhone 11 Pro Max would account for 60 percent of iPhone sales. The lower $699 price point of the iPhone 11 compared to the $749 iPhone XR last year is what would ultimately help push down the average selling price (via Bloomberg).
While other analysts have suggested that Apple could make up for the lower average selling price with higher volume, Deutsche Bank analyst Jeriel Ong isn’t quite sure of that yet:
Ong noted that cheaper prices could yield higher unit sales, although “we do not yet have a strong enough sense of how pricing, in conjunction with the new feature sets of the new iPhones, will impact overall unit demand.” He added that he was unsure whether the decline in ASPs “can be adequately offset by a commensurate rise y/y in units.” Deutsche Bank has a hold rating and $210 price target on Apple shares.
Meanwhile, Piper Jaffray said that the expectation of 5G support in next year’s iPhone is driving down demand of the higher-end iPhone 11 Pro this year. Instead, users are opting for the lower-priced iPhone 11.
As for Apple’s continued Services push, Deutsche Bank points out that Apple could collect an additional $252 per year from iPhone users through Apple Arcade, Apple TV+, Apple Music, and iCloud (via Kif Leswing) Apple TV+ launches on November 1st for $4.99 per month, while Apple Arcade launched last week also for $4.99 per month.