Apple's magical 'average selling price' not so magical anymore

Apple's magical 'average selling price' not so magical anymore
One of the things that financiers admire Apple for is its incredibly high ASP, or average selling price. It is simply the average price it's selling its products at. For example, if we sell you one $400 phone and one $200 phone, our ASP will be $300.

Now, the story is that Apple's sky-high ASP has been going down lately. According to the Consumer Intelligence Research Partners, or CIRP, users have bought more last-gen iPhones and iPhones with lower storage capacities compared to previous years. We can probably explain this by acknowledging the fact that Apple currently has a line-up of very attractive products, including the iPhone 4, which is currently available for free on contract. The cool legacy models available, plus consumers going for smaller capacity iPhones have caused Apple's notoriously high ASP to go down a bit during the recent months.

The short-term lose of profits, however, might translate into a long-term win, as by offering customers iPhones for free, Apple is effectively expanding its market reach, meaning that more consumers may get entangled in its software ecosystem. And once a user invests a considerable amount of money in apps, they are less likely to make a switch to another platform. Whether that is the reasoning behind Apple's tactics, though, we cannot be sure.

via: AllThingsD

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50 Comments

49. chinamagictricks

Posts: 1; Member since: Dec 07, 2012

A lot of magician become the people idol,some simple magic tricks Integration into the people's lives and enrich people's enjoyment of life.The magic props increasingly welcomed by people. Welcome to the Magic Cabin.

48. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

Ah yes... My mom and step-dad just each upgraded their old EnV Touch and Droid Bionic to an iPhone 4 taking advantage of these cheap iPhone deals. Neither of them are very happy right now. They're finding a distinct lack of functionality in the IOS ecosystem, unless of course they want to lock themselves by buying non-transferable apps in the walled garden. Another issue for them being they're finding that some of what they're looking for has made it's way onto newer iPhones/newer versions of iOS. My step-dad's exclamation was, "I thought they said Droid was the fragmented one!" (And then he went on a string of what would be deleted expletives.)

47. Reluctant_Human

Posts: 915; Member since: Jun 28, 2012

Most people that I know that have iphones only use it for simple things such as instagram, facebook, pinterest etc.so it makes sense that a lot of these people opting for 8 and 16GB phones instead of 64 and espcially since the price difference is pretty insane.

46. yajia1

Posts: 151; Member since: Aug 22, 2012

LOL. Stupid writer. I have been working in customer service for quite a while now, there has long been "free" iPhones. I wrote "free" because Apple is still getting $$$ from them, it's the carriers at lost. Not Apple. If I am ever to credit anyone for "free" iPhones, I sure, am not going to put it on Apple. Apple is all about the money. Always has been and always will be.

45. phil2n

Posts: 519; Member since: Apr 30, 2012

2013 apple is on the level of RIM.. Android # 1 WP # 2

39. rusticguy

Posts: 2828; Member since: Aug 11, 2012

Google's aggressive prcing will force it further down :)

23. -box-

Posts: 3991; Member since: Jan 04, 2012

What isn't explained is the subtext. Investors aren't happy because not only is the ASP going down, but that means that (1) customers aren't as enthralled with the latest models, and therefore not spending the extra money for them, (2) the customer base who the company is used to spending money on apps and stuff are spending less and using free options when they can, if they even bother downloading apps, (3) even with these phones being cheaper to purchase, they're still witnessing folks with phones that cost the same that are much more capable, with larger screens and extra features that apple only recently started offering (like LTE) or don't (or won't) offer (NFC, better and larger screens and cameras, etc.) (4) apple still hasn't fixed the underlying problems with the 4 and 4S models causing the same high return and exchange rates (especially for the 4), and (5) as a result apple's profits are going down, and they're getting more desperate.. There's a few other subtleties, but these are the more notable ones.

21. networkdood

Posts: 6330; Member since: Mar 31, 2010

Apple has been selling a 99c model iphone and a 99.00 iphone for quite some time now. People are NOW just realizing that the 199.99 is not worth the price? Wow...talk about slow on the take.....

17. remixfa

Posts: 14605; Member since: Dec 19, 2008

Ray, you know better than to think Apple is going to give away products in hopes that people will get tied into their ecosystem. That is a Google move. Apple's MO has been profits profits profits at the cost of everything else including market share. That has never changed. The move is desperation to stay relevant in the market as it continues to lose to the android onslaught and has new challenges from MS... both of which take up all sides of the spectrum. The move is forced and desperate. If there wasnt incredible pressure on them, there would still be no such thing as a free iphone.

25. SuperAndroidEvo

Posts: 4888; Member since: Apr 15, 2011

Apple lockdown approach is their claim to fame. Because of that mentality they almost were left for dead in the mid 90's, but then came the iPod & they were saved. Then the iPhone put them in the forefront & they are at an all time high. It seems history is repeating & it looks like their days of innovation are over. The late 80's are starting now for Apple & the decline of the early 90's is going to start VERY soon if it hasn't started already. Android is toppling Apple now, as Microsoft did to them in the late 80's & 90's.

35. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

Man I bet apples shaking n their boots after reading that lol. NOT

38. SuperAndroidEvo

Posts: 4888; Member since: Apr 15, 2011

Perfect example of the 80's/90's mentality. Did you really just throw me a "NOT" joke? How 80's/90's of you. lol

44. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

Hey I grew up n the 80's lol. I still say totally

40. Aeires unregistered

A couple of years ago I read an article where one of the top Apple engineers made a statement about early adapters. He said if they don't get them to buy an iPhone, they'll likely buy an Android phone and forever be locked into that ecosystem. A large dose of the Apple profits come from repeat customers, and they'll do what they feel they have to in order to keep them. While it goes against Apple's image to have phones free on contract, they know they'll make it up in iTunes and app sales, just like Amazon does with the Kindle Fire series. Desperation or adaptation to an every changing market? Debatable and certainly interesting to follow.

16. -box-

Posts: 3991; Member since: Jan 04, 2012

I'd hardly call any lineup of iPhones "attractive". Ray, you're slipping again.

30. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

That's ur opinion. Millions more can, and do.

15. fistigons

Posts: 368; Member since: Feb 11, 2012

What is wrong with you people the 20 articles a day that phonearena writes about Windows/Android/everything else aren't good enough for you? You have to bash every single Apple article? Get a life. PS The iphonearena comment is getting old too.

29. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

Yes the iphonearena comments r getting old, have gotten old but u have to understand is that this site is overrun by closed minded, narrow minded anti apple android users, who wake up every morning, and troll PA for apple/iOS/iPhone articles to bash apple and disrespect iOS/iPhone users. You'd think if they hate apple so much, they wouldn't even bother clicking on the article, but the fact that they do lets u know what they're all about. So get used to it...I have

33. quakan

Posts: 1419; Member since: Mar 02, 2011

Amen.

34. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

They crack me up though with their uncreative comments, that they think matter.

36. quakan

Posts: 1419; Member since: Mar 02, 2011

Many of them are just over-the-top trolls looking to get the most thumbs up on an article.

37. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

Exactly, I've been saying that forever.

14. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

I think this is a smart move by apple, with android dictating the low cost market with some great low cost devices, apple should do the same. Android has become an excellent platform, just as good as iOS and n some cases even better, I feel apple should not only sell legacy devices, but also release a all new low cost off contract iPhone. One thing I like about Sammy and Htc is that they have had low end versions of flagship phones, like the gs3 mini, and Htc evo design 4g. This would only diversify apples portfolio.

28. KennyWRX unregistered

I disagree. You can already get Android flagships for dirt cheap, why even bother? Not to mention, delays in OS upgrades is directly proportional to the number of phone configurations offered.

42. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Oh, i see what you've been up to! Now you say a lesser, cheaper, more pocket friendly version of the Android flagships are good. And if Apple did the same on their phone line-up, it would "only diversify Apple's portfolio"... I thought Apple's single, straight, similar and stagnant build was iconic and should remain untouched...according to you Darkky.

43. darkkjedii

Posts: 31816; Member since: Feb 05, 2011

Never said that Nathan, and if u find where I did, please provide the link so everyone can see me put my foot n my mouth.

11. rickywinataa

Posts: 262; Member since: Apr 05, 2012

google had been bashing the standard on phone prices nowadays. nexus 4 for $350, nexus 7 for $199, it makes people think why can't apple sell their devices for less price (not necessarily the same price because apple is still a profit based company by selling devices)

10. Slammer

Posts: 1515; Member since: Jun 03, 2010

This has been the reasoning behind Apple for 30 years. Proprietary paid accessories, programs and now itunes and Apps. This all leads to being locked into their system and leads to throwing all that away and the money you spent if you leave. This is the number one reason why friends and colleagues haven't ditched Apple. Most have thousands of dollars wrapped up into the ecosystem. A few have cut their losses and happily moved on. Our generation left Apple by the curb for trash due to this controlled lock down practice. Thanks to savvy marketing, this generation fell for pretty things without thinking about how Apple swindles cash out of their consumers and has made it one of the richest companies in the world within such a short time. Good job people. John B.

19. SuperAndroidEvo

Posts: 4888; Member since: Apr 15, 2011

Yes but it's only a matter of time before the circle repeats itself. No one likes to be locked down & that is Apple's bread & butter like you said for the last 30 years. Apple is savvy (I give you that) but that savvy attitude can only get you so far. (It will fail sooner or later.) It's only a matter of time until the new people see this & leave Apple by the curb for trash as you stated. +1

7. voxmarc

Posts: 339; Member since: Aug 22, 2012

Ho-hum....uhu iphonearena uhuh...cough cough

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