Munster: Apple’s iPhone Prices Suggest Healthy Demand

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Source: Piper Jaffray

Apple’s (NASDAQ:AAPL) unlocked iPhone pricing strategy suggests that the devices have been selling well in the U.S. and various other overseas markets, observed Piper Jaffray analyst Gene Munster in a recent note to investors. Munster tracks unlocked iPhone prices on Apple’s websites for Brazil, China, France, Germany, the UK, and the U.S. on a weekly basis in order to gauge demand. The analyst has been tracking prices on various low-capacity iPhone models since the release of the iPhone 5S and iPhone 5C last September.

According to Munster, the iPhone 4S price dropped an average of 24 percent in the six countries he monitors. He noted that this price drop was “essentially in-line” with price drops on previous legacy models after a new iPhone launch. The iPhone 4S has become the legacy model for most markets, since Apple discontinued making the iPhone 5 when it launched the iPhone 5C and iPhone 5S.

However, Apple also sells the iPhone 4 in some emerging markets. As noted by Munster, the iPhone 4 is still available through Apple’s websites for China and Brazil. After the launch of the latest iPhone models, the price of the iPhone 4 dropped an average of 21 percent. Since then, the iPhone 4 price has essentially held steady. Overall, Munster believes that the stable iPhone prices in these markets suggest that, “iPhone demand has been healthy and Apple has not resorted to lower prices to drive demand.”

Based on these price checks, Munster noted that, “We remain comfortable with our CY14 estimates with the current pricing strategy given our (and Street) estimates appear to be conservative with expectations for 10-12 percent iPhone unit growth in CY14.” Apple is due to report its earnings for the first-quarter of fiscal 2014 on January 27.

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