The iPhone 5 made up 68 percent of total Apple (NASDAQ:AAPL) smartphone sales during its first month in the market, substantially less than the 90 percent share of the iPhone 4S at its debut last year. That meant that lower-priced legacy models of the iPhone hurt Apple’s new release, Consumer Intelligence Research Partners told AllThingsD.
Did the iPhone 5 Sell As Well as Its Predecessor?
“This is all about how the pie is sliced,” CIRP’s Josh Lowitz told AllThingsD. “In the current launch, the 4 and 4S slices are bigger, relative to the 5 slice than the 3GS and 4 slices were relative to the 4S slice during the prior launch. Similarly, the 64 gigabyte slice is smaller, relative to the 16GB and 32GB slices of the 5 than the 64GB slice was relative to the 16GB and 32GB slices of the 4S when it was launched.”
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Effectively, the numbers mean that Apple sold more iPhone 4 and iPhone 4S units during the launch of the iPhone 5 than it sold iPhone 4 and iPhone 3GS units during the launch of the iPhone 4S. Additionally, lower-capacity devices were more successful.
Can This Trend Hurt Apple?
While the iPhone 5 may still be seeing strong demand, Apple is selling more units at a lower price. This trend could gradually bring down the iPhone’s average selling price and negatively affect Apple’s high profit margins. While through continuing to offer less-expensive iPhone models, Apple is expanding into newer market, the move could eventually affect its revenue and profits.
“ASP compression naturally leads to margin compression, which is a big fear of Apple shareholders as their markets become more competitive,” CIRP’s Michael Levin told AllThingsD. “They had record margins in the recent quarters, healthy and even growing at times, which is unheard of for a company of Apple’s size and market share in smartphones and tablets. These margins may have started to moderate somewhat with the launch of the iPhone 5.”
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