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The average sales priced for an iPhone increased nearly 30% from $618 to $793. Services now account for 16% of revenue. Apple is gradually shifting from a devic

The average sales priced for an iPhone increased nearly 30% from $618 to $793. Services now account for 16% of revenue. Apple is gradually shifting from a device maker to an ecosystem company that consumers pay a premium initial fee to enter and pay an additional recurring free to use.

jillesvangurp 8y ago
An ecosystem requires a user-base. Shrinking volumes means less users. Short term raised ASPs mean of course they don't suffer in terms of revenue. However, that may be a short term effect.
diminish 8y ago
Yet services would be better if units sold gets increased. So cheaper models are a must. So it's so far an excellent strategy milking the high end keeping the units sold not fall.
- howlingfantods 8y ago
  Services might be better, but I suspect that budget conscious consumers would also spend less on services, compared to customers willing to spend $1200 on an iPhone XS. I imagine their FP&A team has done pretty thorough analysis that the extra sales from fewer products at higher margins will offset the incremental increase in revenue from more (potentially lower value) services subscribers.
- decasteve 8y ago
  This is also true if people keep their devices longer — which seems to be the case from what I’ve been seeing. The low end now seems to be previous generations phones like 7/8.
- bunderbunder 8y ago
  > Yet services would be better if units sold gets increased. I'm not sure that follows. Apple's a very different company in many ways. Notably, by being dominant in a relatively deep-pocketed userbase, they don't need to worry about the "our profit margin is near zero and likely to shrink further so we have to grow just to stay alive" red queen's race that so many other tech companies find themselves in.
- antaviana 8y ago
  I think that making it more durable, not cheaper, aligns better with the services strategy. More durable means fewer opportunity windows for competitors.
beerlord 8y ago
Or you can just buy that same flagship model 24 months later, still working perfectly well and with many more years of iOS updates, for a fraction of the price. The second-hand market for iPhones and iPads is huge, and iPhone sales in markets like India are primarily or refurbished iPhones brought in from the West at an industrial scale.
onetimemanytime 8y ago
Maybe the latest iPhone is good enough, like a 8 year PC is for most people? Either way, to get $$ from services, you need to have people use your devices and platform. Microsoft went as far as saying, if you're going to pirate an OS, pirate ours. https://www.techrepublic.com/article/microsoft-gives-up-on-charging-for-windows-in-china/ https://www.techrepublic.com/article/microsoft-gives-up-on-c...
- akvadrako 8y ago
  But not just any user - Apple users spend a lot more on apps than Android users. And for developers, fewer users means less support.
baybal2 8y ago
Indeed, they are determined to milk their cash cow dry while they can.
- Terretta 8y ago
  Why wouldn’t you? Since they don’t really “go dry”, turns out “milking while they can” is how any industrious farmer maximizes milk per cow over the natural life of a milk cow.
  - ryanwaggoner 8y ago
    Now I’m just imagining baybal2 running a huge dairy farm where none of the cows get milked so they won’t go dry :)

jillesvangurp 8y ago

An ecosystem requires a user-base. Shrinking volumes means less users. Short term raised ASPs mean of course they don't suffer in terms of revenue. However, that may be a short term effect.

diminish 8y ago

Yet services would be better if units sold gets increased. So cheaper models are a must. So it's so far an excellent strategy milking the high end keeping the units sold not fall.

howlingfantods 8y ago
Services might be better, but I suspect that budget conscious consumers would also spend less on services, compared to customers willing to spend $1200 on an iPhone XS. I imagine their FP&A team has done pretty thorough analysis that the extra sales from fewer products at higher margins will offset the incremental increase in revenue from more (potentially lower value) services subscribers.
decasteve 8y ago
This is also true if people keep their devices longer — which seems to be the case from what I’ve been seeing. The low end now seems to be previous generations phones like 7/8.
bunderbunder 8y ago
> Yet services would be better if units sold gets increased. I'm not sure that follows. Apple's a very different company in many ways. Notably, by being dominant in a relatively deep-pocketed userbase, they don't need to worry about the "our profit margin is near zero and likely to shrink further so we have to grow just to stay alive" red queen's race that so many other tech companies find themselves in.
antaviana 8y ago
I think that making it more durable, not cheaper, aligns better with the services strategy. More durable means fewer opportunity windows for competitors.

beerlord 8y ago

Or you can just buy that same flagship model 24 months later, still working perfectly well and with many more years of iOS updates, for a fraction of the price. The second-hand market for iPhones and iPads is huge, and iPhone sales in markets like India are primarily or refurbished iPhones brought in from the West at an industrial scale.

onetimemanytime 8y ago

Maybe the latest iPhone is good enough, like a 8 year PC is for most people? Either way, to get $$ from services, you need to have people use your devices and platform. Microsoft went as far as saying, if you're going to pirate an OS, pirate ours. https://www.techrepublic.com/article/microsoft-gives-up-on-charging-for-windows-in-china/ https://www.techrepublic.com/article/microsoft-gives-up-on-c...

akvadrako 8y ago
But not just any user - Apple users spend a lot more on apps than Android users. And for developers, fewer users means less support.

baybal2 8y ago

Indeed, they are determined to milk their cash cow dry while they can.

Terretta 8y ago
Why wouldn’t you? Since they don’t really “go dry”, turns out “milking while they can” is how any industrious farmer maximizes milk per cow over the natural life of a milk cow.
- ryanwaggoner 8y ago
  Now I’m just imagining baybal2 running a huge dairy farm where none of the cows get milked so they won’t go dry :)