Malcolm Owen
Analysts are weighing in on Tuesday's "It's Innovation Only" iPhone 11 launch event, with positive sentiment from industry watchers over the pricing of Apple TV+ and Apple Arcade accompanying the largely-expected iPhone upgrades.
JP Morgan - "Positive Surprises through Competitive Pricing"
It was a "largely positive" event for JP Morgan, led by Apple's lowering of pricing of the iPhone 11 relative to the iPhone XR, which "could act as [a] positive driver for volumes in [the] entry level premium smartphone segment," while maintaining the price of the Pro models. Specifications were "largely in-line" with expectations.
The other big point for the analysts was the favorable pricing for Apple TV+ and Apple Arcade. The Apple TV+ announcement "potentially surprised relative to expectations," as the $4.99 monthly fee is "quite attractive" compared to competing services, along with the offer of a free one-year subscription to new Apple device purchasers.
The Apple Watch Series 5 was a "mild disappointment," due to upgrades largely centering on the casing and display outside of software features previously announced at WWDC. The lowering of the Apple Watch Series 3 to a new starting price of $199 was seen as a better move, as "a strategic step to tap into the value segment."
Cowen - "One more thing, we like the pricing for TV+/Arcade"
The biggest elements of the event were not the iPhone launches, but those of Apple's services, according to Cowen. Heading up the investor note over what is supposed to be an iPhone event, Cowen suggests the $4.99 pricing for Apple TV+ and Apple Arcade is a "positive for driving incremental EPS growth in Services," with the Apple TV+ pricing "more attractive than expected" while the free year for hardware purchases introducing "new paradigms for catalyzing product demand."
The $4.99 price and 100 launch titles could make Apple Arcade "a more compelling offering than most (casual) gamers expect."
For the iPhones, the refresh was "largely in line with our expectations," with the lower iPhone 11 pricing a "positive for driving incremental demand." However, a $100 reduction for older models may cause consumers to "gravitate" towards earlier releases and away from the new launches.
The extra cameras on the back are actually a sign Apple is focusing more on "software refinement to improve photography," complete with a better user experience, low-light imaging, and the "future enablement of Deep Fusion."
Rosenblatt Securities - Cautious on iPhone 11, but iPhone XR still attractive
The launch of three new models at the same time, rather than splitting the group as in 2018, will "make Q3 shipments to Apple slightly stronger than seasonally normal," Rosenblatt suggests, though also believes this is already reflected in Apple's existing quarterly guidance. Estimates for shipments remain unchanged at 60 to 65 million units for the second half of 2019, but current production "may need to be trimmed after the initial launch."
Rosenblatt maintains its "cautious view on new iPhone sales," expecting challenges paired with "already low expectations." While the iPhone 11's price is lower than the iPhone XR's initial retail price, the XR is thought to continue to be more attractive based on its current retail price.
The Apple TV+ pricing is "competitive," but Rosenblatt doesn't have much faith it will make an impact immediately. "We believe this service will not bring meaningful upside in the near term," the analysts suggest.
On the subject of the September 1 tariffs, where there is a 15% fee on imports of AirPods, the Apple Watch, and iPads, this is thought to have led to Apple producing more of the products. "So far, there has been no impact on retail prices in the US," the firm observes, but warns to "expect AirPods, [Apple Watch], and tablet shipments to slow in Q4 from Q3."
Charles Martin
Andrew O'Hara
William Gallagher
31 Comments
Apple was forced to make the 11 pricing more competitive. The smartphone market is maturing/has matured. Unlike 8-10 years ago when every new model had major improvements, many of the changes/improvements in the last few years have been relatively minor. Incremental improvements in the camera and better processor speed really don't matter to a lot of people. My wife has a 6s and would like a better camera but her phone is plenty fast for what she does, and she's not alone. I think they also realized that $1,000 is a psychological barrier for many people.
If you really want the extra features of the 11 pro, you can pay $1000+, otherwise you can still get the 'plain' iPhone 11, which is a very good phone at a good price.
Try 2499 Aud for the pro max 512 gb here in Oz the mind spins and spins
Overall impression. Event was okay. Nothing surprising. No real highs. No real lows. Simply good enough. The biggest positive take-away for me was competitive pricing on the services. ATV+ is priced to compete and I think it was really smart to give it away with purchase while still building up the content. Good to see the base iPad updated. Drab green color for iPhone is sweeeeeeeeet. My one slightly negative nit-pick: stop naming everything under the sun. Every component and process doesn't need a catchy new name. Super Retina XDR? C'mon Apple. Plenty of others too, but the worst offense belongs to the terribly named "slofies". Whoever came up with that name should be put in time out and made to feel bad. The person who approved it should feel worse.
All in all, it was a'ight.
Always on Apple Watch is a deal maker for me, as I was holding out for this... I think Series 5 will outsell expectations... Now the harder choice is stainless steel or titanium... price is very close.
Wonder if Apple will come up with a faster 4K ATV. Would fit in nicely with Apple Arcade, so I expected it in this event.
But they might as well launch it silently: it wouldn’t not be such a big thing.
Not launching a faster ATV is holding me from upgrading my ATV 4.