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Apple is set to break the average iPhone price record twice in the coming months

Apple is expected to break its average iPhone price record twice in the coming months as consumers opt to buy more expensive “Pro” models that boost the tech giant’s margins.

According to Counterpoint Research, demand for the new iPhone 14 unveiled earlier this month is already robust enough to project that the global “average selling price” or ASP will rise to a record $892 in the September quarter and $944 in the December quarter. A data provider, it bases its projections on customer demand, market intelligence and negotiations with suppliers.

The current record is $873, achieved in the fourth quarter of last year.

The average selling price of iPhones is a key Apple metric for Wall Street, as smartphone sales still account for roughly 50 percent of the group’s revenue. The upward trajectory of these prices, from just $690 at the end of 2015, is all the more significant — Apple decided not to raise the prices of its devices at its major annual product launch earlier this month, a decision some analysts called the biggest surprise of the event.

Driving the trend is the popularity of the iPhone 14 Pro and Pro Max models, which feature a faster chip, a 48-megapixel camera and a new information center called the “Dynamic Island.”

When research group Evercore ISI surveyed nearly 4,000 consumers this month, 56 percent of likely iPhone buyers planned to buy the Pro model, compared with 41 percent last year. ASPs are expected to be around $940 next year, which is about 10 percent higher than the iPhone 13 cycle.

“We are raising our iPhone revenue estimates for the next four quarters on the back of stronger-than-expected ASPs,” Evercore analyst Amit Dariani told clients.

Line chart showing average iPhone selling price surpassing $900 for first time per unit ($) G1500_22X

Figures suggest Apple is in a better position today than in January 2019, when it was forced to issue its first revenue warning in 16 years on the back of weak iPhone sales in China.

It has gained more market share in China thanks to the launch of 5G-enabled iPhones in 2020 and Huawei’s fall from selling 5G phones following US sanctions.

According to Counterpoint, between the end of 2020 and the end of 2021, Apple’s market share in China increased from 15.9 percent to 23 percent.

“Other Android manufacturers – Vivo, Oppo and Honor – have all entered the premium segment, but cannot build premium brand status overnight,” Counterpoint analyst Archie Zhang said.

Globally, the premium market for phones priced above $400 has outpaced overall sales for nine straight quarters, with Apple taking a 57 percent market share last quarter, Counterpoint data shows.

The ultra-premium segment — phones priced above $1,000 — nearly doubled last quarter from a year ago, with Apple capturing 78 percent of the market.

The upward trajectory in iPhone ASP reflects the success of a strategy Apple began in 2018 when it stopped reporting how many iPhones it sold each quarter. That move has sparked “peak iPhone fears,” but Apple argued that it was shifting focus from volume to revenue and margins.

Today, analysts believe Apple is in yet another transition from ASPs to “lifetime user value” – a strategy to drive revenue from the more than 1bn iPhone users.

In late 2020, the company launched the Apple One, offering a bundle of Apple services, including music and iCloud, at a discounted price. The next logical step would be for the iPhone itself to become part of the bundle, allowing users to pay a monthly fee in exchange for services forever and a new smartphone every year or two with no upfront cost.

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