Apple Considers Raising Price of iPhone By $100

Apple Considers Raising Price of iPhone By $100

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Apple has reportedly been negotiating a possible $100 price increase for the iPhone 6 with carriers, according to Jefferies analyst Peter Misek.

Initial response from carriers has been "no"; however, Misek says carriers realize that there is no other game-changing device this year and Apple may be able to negotiate a lesser increase. A $50 bump in price would offset the gross margin impact of the new device.

"The possibility may at first seem far-fetched in light of investor concerns regarding possible carrier subsidy and handset price cuts due to smartphone saturation and lack of differentiation," Misek comments. "But we think this general lack of differentiation could be the reason why Apple may be able to get a price increase. Carriers realize that the iPhone 6 will likely be the only headline-worthy high-end phone launched this year and that they will lose subs if they do not offer it."

Carriers would likely have to take much of the hit themselves; however, the growth of equipment installment plans would pass the cost to the consumer.

Misek says, an ASP increase could offset iPhone 6 gross margin headwind:

"Our prelim iPhone 6 BOM est indicates GM could be up to 450bp lower than the 5s (pricier display/AP partially offset by general 5%-10% price concessions). Our current estimates assume a 430bp decline, which we feel is conservative unless some of the components run into yield issues. We estimate a $50 ASP increase on the iPhone 6 would raise GM by 375bp and $100 by 700bp so a $50 ASP increase would offset most of the iPhone 6 COGS pressure."

A $50 price increase would raise earnings per share by 2%/11% and a $100 increase price bump would raise revenues EPS by 6%/24%.

Would you be willing to pay more for a larger iPhone 6? Let us know in the comments!

[via StreetInsider]

Apple Considers Raising Price of iPhone By $100

qba - April 17, 2014 at 3:27pm
Apple wants to keep the apple green, but guess what is turning red and TimDontKnowHowToCook
abq - April 17, 2014 at 4:07pm
And you want to keep that rotten brain brown, but guess what's turning pallet and QbaDontKnowHowToFckOff
moremyths - April 16, 2014 at 2:51pm
Let's switch to Samsung. Not.
Great! - April 15, 2014 at 1:54pm this is one of the reasons why the iPhone rules!
Samsheep - April 15, 2014 at 1:11pm
Not as bad as I ever was living with the same shit slightly paying more for plastic toy and keep dropping it from trying to use one hand and keep believing in wannabe galaxy instead of premium quality that can't be beaten. Kudos to Samsung for not explaining why they keep NIT explaining why they keep increasing size I like, I'll even love it when it finally doesn't fit a single pocket. That's how we roll.
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