Apple’s Big Product Launch: It Was All About The iPhone Price

For those who missed it, and to be honest there was not much if anything new…

… as even Steve Job’s daughter joked, here is a snapshot of everything that was announced at yesterday’s iPhone 14 reveal, courtesy of Goldman:

  • Pro pricing unchanged, Satellite connectivity, new premium Watch, all as expected Apple’s big Fall event revealed mostly incremental improvements (in GIR’s opinion) as the company launched a new iPhone, Watch, and AirPods.

  • Apple kept its USD pricing for all models of iPhone unchanged and inserted the new 14+ at the price we had expected. Rod believes this is likely the best pricing outcome for Apple as it avoids increasing the risk of Pro downgrades to non-Pro models and preserves some ASP with the 14+ at a higher pricepoint.

  • With regards to international prices, the company did partially adjust pricing for USD strength in international markets though the partial adjustment suggests a possible tradeoff of margin for unit demand.

  • As for other features, Apple launched a new Emergency SOS service via satellite connectivity in all new iPhones and is surprisingly offering the service free for 2 years.

  • The company also launched a new premium Watch Ultra priced at $799 which features a larger 49mm titanium case and a redesigned digital crown among other things. This had been heavily speculated in the press and the product is more or less in line with those reports.

  • Since the Apple Watch Ultra is a completely new product we expect most press to focus on this as the product release nears on September 23. We are particularly interested in how consumers react to the significantly larger size though the feature set looks attractive for outdoor enthusiasts.

  • Finally, the company also rolled out an upgrade to its popular AirPods Pro product with longer battery life and better sound quality. Apple’s stock was up slightly on the day but Rod sees little reason for incremental positivity on a product launch that was largely as expected

Apple now has an iPhone for (almost) every wallet, starting with the budget-friendly iPhone SE from $429 and ending with the top-of-the-line 1TB 14 Pro Max for a whopping $1,599 in the United States (and significantly more in other parts of the world).

You will find more infographics at Statista

Looking at the reactions from the broader analyst community, Apple analysts said the biggest takeaway from the company’s product event was its pricing strategy, after the iPhone maker unveiled new versions of its smartphone and watch:

Piper Sandler (overweight, PT $195)

  • Most importantly, average selling prices for these new phones were kept consistent with last year’s models
  • “Given the constrained economic environment we think this is an incremental positive”

Canaccord Genuity (buy, PT $200)

  • Apple met investor expectations with its product launch and “has a strong lineup to deliver healthy holiday sales”
  • The company’s ecosystem approach, which includes an installed base that exceeds 1.8B devices globally, “should continue to generate strong services revenue”
  • “Longer term, we expect the higher margin services revenue growth to outpace total company growth and drive gross margin expansion”

KeyBanc Capital Markets

  • The addition of incremental 4G/5G bands in the new iPhones is a “moderately positive for the RF group” that includes AVGO, QRVO, SWKS
  • Meanwhile, Apple’s decision to standardize eSIM might be a negative for wireless carriers, particularly AT&T and Verizon, as it makes switching carriers easier

Wells Fargo Securities (overweight, PT $185)

  • The announcements “again prove to be more evolutionary than revolutionary,” and therefore the lack of change in the pricing strategy for Pro and Pro Max models is important; “we think investors were expecting up to a $100 price increase on the new high-end devices”
  • Apple’s expanded Apple Watch line-up is “an incremental positive”

Evercore ISI (outperform, PT $185)

  • The announcements were “largely as expected,” though “some may be slightly surprised by the lack of pricing action”

Wedbush (outperform, PT $220)

  • The lack of a price increase was a surprise to the Street
  • “We believe Apple is expecting another heavy iPhone Pro and Pro Max mix shift which is a clear positive for [average selling prices] heading into FY23”

Bloomberg Intelligence

  • “Overall, we don’t anticipate that these new products are likely to spur noticeable sales growth in the company’s next fiscal year”

Read further at ZeroHedge

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