Launch Line Survey: Most Buying 256GB

Detailed Survey Data. While the lines were longer than we expected, today’s real surprise was the capacity mix, heavily favoring 256GB over 64GB. We surveyed 134 customers, 99 of which (74%) were purchasing a 256GB iPhone X, and 35 of which (26%) a 64GB model. This mix will be favorable for ASPs due to the higher price point of $1,149 vs $999. The most common phone people were upgrading from is the iPhone 7 and 7 Plus with a combined 47% of respondents, which shows the Apple Upgrade Program at work.  Here is a breakdown of our surveys over time:

iPhone X Capacity Mix Drives ASPs Higher. Results from our launch line survey data compelled us to update our model’s ASP assumptions. The survey indicated that many more people than we anticipated – 74% of respondents – were purchasing the 256GB model of the iPhone X (we expected a 60/40 split). We are adjusting our FY18 iPhone mix to reflect the stronger demand for the X and its higher capacity model, with ASP going up from $740 to $769. The resulting uptick in our revenue estimates was to go from $85.7B to $87.8B in Dec-17 (Apple guided $84B-$87B), and for FY18 from $278.9B to $285.5B. Link to model here.

Continued Optimism for Apple Watch. Another positive factor in our data – Apple Watch has room to grow. Of our respondents, which, keep in mind, are fanatics standing stand out in the cold to get their iPhone 3-4 weeks early, only 35% (46) had Apple Watches. Further, 25% (32) of respondents are planning on buying an Apple Watch within the next year, and 80% of those will buy a Series 3 with LTE. On top of 50% sales growth for the third consecutive quarter, we continue to be optimistic that there is a lot of room for the Apple Watch business to grow.

Puts and Takes in iPhone Line Counts:

  • iPhone X is a Redesign (+). iPhone X represents the first new iPhone hardware design since the iPhone 6 (2014), boosting excitement to wait in line for an iPhone X.
  • Pre-orders are more popular (-). Consumers are getting more savvy with Apple’s iPhone pre-order option, and Apple executes it flawlessly, reducing the need to wait in line for a new iPhone.
  • Apple Publicly Confirmed In-Store Units but Suggested People “Arrive Early” (+). Apple’s press release earlier in the week confirmed that they’d have in-store stock, but encouraged customers to “arrive early,” undoubtedly increasing the likelihood of an early adopter waiting in line.
  • Online Lead Times are Long (+). With online lead times now stretching into December, if consumers missed the pre-order, today might be their only chance to get an iPhone before the holidays, increasing the need to wait in line.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Posted in Apple  •