08 May 2018

Strategy Analytics: “Apple iPhone X becomes World’s Best-Selling Smartphone Model in Q1 2018”

We estimate the Apple iPhone X shipped 16.0 million units and captured 5 percent marketshare worldwide in Q1 2018. For the second quarter running, the iPhone X remains the world’s most popular smartphone model overall, due to a blend of good design, sophisticated camera, extensive apps, and widespread retail presence for the device. Apple has now shifted almost 50 million iPhone X units worldwide since commercial launch in November 2017. The Apple iPhone 8 and iPhone 8 Plus shipped 12.5 and 8.3 million units, respectively, for second and third place. The previous-generation iPhone 7 shipped a respectable 5.6 million units for fourth place. Combined together, Apple today accounts for four of the world’s six most popular smartphone models.

Linda Sui

Let’s do a quick plausibility check on these numbers. Apple released their second quarter results last week, so we have the official sales and revenue numbers for the iPhone (52.217 Mio. units and $38,032 Mio. revenue, ASP $728.35). We know the prices for each iPhone model, so combined with the sales estimates above we can calculate an estimated revenue and ASP for these four models. I say ‘estimated’, because we don’t know how many people opted for basic storage or for the larger capacity, as this also impacts the sale price and ultimately ASP. I calculated two versions, one based on the (unlikely) assumption that sales went 100% to lower capacity phones, and another one assuming 15% of consumers chose the more expensive phone with more storage.

Global Smartphone Shipments by Model in Q1 2018, source Strategy Analytics

The results are… interesting, to say the least. Combined, the four iPhone models cited above would generate revenues of $34,430 Mio. at an ASP of $812 under the first assumption; or respectively $35,340 Mio. at an ASP of $833 with a mix of storage capacities. As the total revenue reported by Apple this quarter from iPhone sales was $38,032 Mio., this leaves 9.8 Mio. iPhones generating only $2,700 – $3,600 Mio. revenues, at an ASP lower than the official sale price of the iPhone SE ($349), currently still the cheapest iPhone on sale. That doesn’t sound very plausible to me. So, either the sales numbers above are being artificially inflated to give the impression of a strong quarter (for the X model in particular), or iPhones are generally selling at a sizeable discount compared to Apple’s list prices. Neither of which supports an iPhone X success story.

During my time looking at Apple’s sales numbers, I noticed a long-lasting trend of the iPhone ASP: no matter what Apple launches, the ASP hovers close the the sale price of the iPhone flagship with base storage – for a couple of years $649, recently increased to $699 – and never surpasses the price of the flagship with the next storage tier. This makeshift rule was respected last quarter as well: the record-high ASP of nearly $800 was lower than the sale price of the 256 GB iPhone 8 ($849). This makes me think the impact of the iPhone X on revenues will be short-lived – for mass customers, the driving force behind ASP increases is the base flagship (iPhone 8 for this yearly cycle). And I’m pretty sure Apple is aware of this. The base iPhone 8 price was increased by $50 (admittedly with more storage than last year), and this alone accounts for half of the ASP gains from last quarter.

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