iPhone XR Is Apple’s Best Seller in US

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Apple Inc. (NASDAQ: AAPL) is due to report results for its first fiscal quarter of 2019 next week. The company will no longer report unit sales, a decision that threw analysts and investors into a tizzy back in October when Apple revealed its plan.

There are still Apple watchers like Consumer Intelligence Research Partners (CIRP), however, that track iPhone sales closely and report sales by model. Without question, the company’s big winner in the quarter was the iPhone XR, the lowest-priced of the three new phones (iPhone XS and XS Max were the others) introduced last year.

Josh Lowitz, co-founder and partner at CIRP, summarizes:

The three new models made up 65% of sales, compared to 61% for the iPhone 8, 8 Plus, and X a year ago. The mix among the new phones is interesting, however. The single iPhone XR model almost matched the combined iPhone 8 and 8 Plus in the same quarter last year.

iPhone XR accounted for 39% of sales in the quarter, about a third more than the iPhone XS and XS Max combined total of 26%. The iPhone XS Max outsold the XS model by more than 2 to 1 according to CIRP data.

While unit sales are important, average selling price (ASP) is the engine that drives Apple’s success. Compared to the same quarter a year ago, more iPhone buyers are choosing to upgrade their new phone’s storage–last year 33% paid to upgrade the storage on their new iPhones; this year the percentage rose to 38%. CIRP co-founder and partner Mike Levin said, “For many years each additional storage level carried a $100 premium. Now iPhone prices increase from $50 to $200 for incremental storage, depending on the phone model and the size of the boost in storage.”

The percentage of iPhone buyers who paid up for increased storage grew to 38% this quarter from 33% in the year-ago quarter. Given buyers moving to purchase more storage and based on CIRP’s estimate of the model mix for the quarter, the analysts estimate that Apple’s average selling price in the quarter was “well over $800.”

Still, a mature US market and lower unit sales in China have weighed on Apple’s revenue and profit estimates. The consensus iPhone revenue estimate for the quarter is $52.5 billion, down 17.3% year over year.

Analysts Gene Munster and Will Thompson at Loup Ventures note that they expect Apple to report record earnings per share for the quarter even though profits are anticipated to fall by 1%. Share buybacks have reduced Apple’s shares outstanding by 7%. Munster and Thompson call this “unprecedented and representative of a resilient business.”

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