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iPhone X Lift up Apple’s ASP to a Record High in Q4 2017

by Yiwen Wu | Feb 05, 2018

Apple posted a mixed quarter in Q4 2017. iPhone X hit the market finally and it lifted up Apple’s ASP to a record high. However, Apple’s profitability didn’t improve. Meanwhile, iPhone shipments dropped -1% YoY this quarter. It is the first time ever for Apple to post a negative growth rate during holiday season. In fact, Apple’s global iPhone volumes have declined on an annual basis for 5 of the past 8 quarters.

Apple maintained growth momentum in Western Europe and Asia Pacific, but declined in other regions. It also posted annual growth in China for the past two quarters. Japan posted a robust annual growth as well. However, their growth could not offset the vendor’s decline in other major smartphone markets including United States, India, and Brazil.

iPhone X hit the market from early November. Regardless of its US$1000+ retail price tag, initial feedback was encouraging. Mainly driven by greater portion of iPhone X, iPhone wholesale ASP this quarter approached a record high. The performance of iPhone X failed to meet industry expectation. Higher price tag, modest battery life, continuing issues on Face ID system and AMOLED module, and less aggressive promotions by top tier carriers worldwide are the main causes.

Despite impressive ASP growth, we note global iPhone volumes have actually declined. Looking forward, iPhone X is likely to encounter a soft demand in the following months. In addition, the company also needs to carefully potential brand damage from its battery replacement program and slowing down old iPhones.

In order to expand shipment volumes and grow its installed user base, Apple needs to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve. It is expected a successor version of iPhone SE will be launched in the first half of 2018. Meanwhile, three new iPhones models are underway and expect to be launched during 2H 2018, including one low-cost LCD model. Having this said, we expect global iPhone shipment will marginally increase in 2018.

Our latest report Q4’17 : Apple : iPhone X Lift a Record High ASP has been published. WSS clients could access the report here.

iPhone portfolio 2017Q4

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