1 step can increase Apple's iPhone revenue

1 step can increase Apple’s iPhone revenue

Pre-order trends indicate that apple‘s (AAPL 0.23%) The iPhone 14 lineup could become another successful smartphone brand from the tech giant.

Delivery times for the latest iPhones are already beginning to stretch, even in price-conscious markets like India and big smartphone markets like China and the US, and what’s more, Apple has asked its suppliers to ramp up production of the higher-priced iPhone 14 Pro and Pro Max models, a move that will work. on improving the company’s average selling price (ASP) and giving its top line a good boost.

Apple may produce more iPhone 14 units in 2022, compared to the 80 million iPhone 13 units it made last year. Supply chain rumors suggest the company could end up making 95 million iPhone 14 units this year. However, Apple may have missed a trick this time around that could have helped it move more units from its latest iPhone lineup and helped it enter the fast-growing smartphone niche.

Apple misses this lucrative smartphone trend

Counterpoint Research points out that foldable smartphones are gaining impressive traction among consumers. The market research firm estimates that 9 million foldable smartphones were shipped last year. This form factor is expected to grow by 73% in 2022 and reach shipments of 16 million units.

The shipments of foldable smartphones are expected to rise next year as well. Counterpoint expects to ship 26 million units in 2023, which would be a 62% increase from this year. The impressive growth of the foldable smartphone market indicates that consumers are preparing for this style and are also willing to pay a premium.

This is evidenced by Samsung’s strong share of the foldable market. Counterpoint estimates that Samsung captured 62% of that space in the first half of 2022, although its share could jump to 80% in the second half thanks to the recent launch of the Galaxy Z Fold 4 and Flip 4. It’s worth noting that the Galaxy Z starts The Flip 4 starts at about $1,000 and the Flip 4 starts at about $1,800. Even the older Galaxy Z Flip 3 is now selling for $795, while the previous generation Fold 3 starts at $1,390.

This means that premium prices are not stopping people from buying foldable devices at a time when the broader smartphone market is under pressure due to high inflation. Globally, ASP smartphones are expected to be priced at $402 this year, according to market intelligence provider IDC, so foldable devices command a solid premium.

In 2021, the ASP price of the iPhone was $825. It wouldn’t be surprising to see Apple’s ASP header higher this year, as the more expensive iPhone 14 Pro models remain in stronger demand compared to the regular device versions.

All of this suggests that Apple could have made the most of the foldable trend by introducing its foldable device this year. Such a move would have allowed the company to increase trading volumes and pay ASPs, especially given that it has strong pricing power in the smartphone market.

There is still time for the tech giant to penetrate this market

Supply chain rumors and patent filings suggest that Apple may launch a foldable device by 2025. While some analysts believe such a device could enter the market in 2023 or 2024, Apple analyst Ming-Chi Kuo noted that its launch in 2025.

So it may take some time for Apple’s foldable devices to arrive, and the company may miss the growth of this market over the next two or three years. But Apple investors should not be disappointed. That’s because foldable devices still make up a small portion of the overall smartphone market. The 2022 Counterpoint shipment estimate of 16 million units is a small spot compared to the year’s total estimated smartphone shipments of 1.27 billion.

In simpler terms, foldable devices still have to gain critical mass. That’s why Apple could take its time, fine-tune the foldable iPhone, and enter that market at a time when the device can move the needle for it in a bigger way. The company did something similar with its iPhone 12 lineup, the first 5G iPhone series launched in 2020. Apple was late to jumping on the 5G bandwagon, with the Samsung Galaxy S10 5G arriving in April 2019.

However, Apple’s late entry did not affect the sales of iPhone 5G devices. The company ended 2021 controlling 31% of the 5G smartphone market.

Can pleats move the needle too much for Apple?

ABI Research indicates that foldable devices could account for 10% of global smartphone sales by 2030. IDC estimates that global smartphone shipments will grow at a compound annual rate of 2.3% through 2026. Assuming a similar growth trajectory through 2030 means that shipments of smartphones will be at a compound annual rate of 2.3% through 2026. Global smartphones may exceed 1.5 billion units annually by the end of the decade.

So, if we follow ABI’s predictions, 150 million foldable coils could be shipped annually in 2030. If Apple could contain a third of that market (as it did with 5G smartphones) and ASP generated at least $1,000 in that time from each foldable This fast-growing smartphone could add $50 billion to Apple’s annual revenue.

This would be a huge boost considering that the iPhone generated $191 billion in revenue for Apple in fiscal year 2021. It gives the tech giant a huge reason to enter this market.

cruel shuhan He has no position in any of the mentioned shares. Motley Fool has and recommends positions at Apple. Motley Fool recommends the following options: long calls in March 2023 worth $120 on Apple and short calls in March 2023 worth $130 on Apple. Motley Fool has a disclosure policy.

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