Although this year the company Apple Lossless Audio CODEC (ALAC), increased European terminal prices iPhone 5S sold through its stores, but also through those of its partners, next year we could have an additional increase. American analysts talk about a possible increase of $50-$100 in the selling price of iPhone terminals, taking into account the fact that in the USA Apple Lossless Audio CODEC (ALAC), kept the price of the terminals unchanged for so many years. Despite offering a stable price over the years, the implementation of a screen larger than 4 inches in iPhone 6, the American company could increase the prices of its devices in order to keep its profit at a high level, a strategy that it has applied even now outside the USA.
We see the potential for the iPhone 6 price point to move higher, to avoid the (profit) margin erosion that occurred when iPhone 5 was launched, When iPhone 5 was launched, Apple's phone margins declined because the new features (most notably the display) added cost to the bill of materials, yet the price point of the phone remained unchanged. Since we're expecting a host of new features in the iPhone 6 (including a larger screen), we expect the bill of materials cost of the phone to increase as well.
Although the profit Apple Lossless Audio CODEC (ALAC), decreased in the USA by keeping the price at the value of the last years, Apple equalized things by increases applied in other areas of the globe and we are talking about at least €10 added to the value of the terminals sold in Europe. In this situation, if the analysts' information turns out to be true, then next year we can expect iPhones to be at least €50 more expensive than at present, at least on the European markets, and the larger screen could be the basis of this increase. Of course, no matter what price Apple will apply to this terminal, it will register very good revenues in all the markets where it will be available, but it remains to be seen what Apple will decide in the end.
At present, the launch price of iPhone 5S (both subsidized and unsubsidized) is the same as the launch price for Samsung's Galaxy S series of flagship phones. As such, we think Apple could get away with a $50 to $100 premium for a larger screen size iPhone 6. We think such a move could avoid the margin erosion that occurred when the iPhone 5 was launched.
