iPhone 11 ProSource: Apple

What you need to know

  • Apple announced its 2019 Q4 earnings yesterday, but not everyone is happy.
  • One analyst is concerned about Apple's falling iPhone ASP.
  • It's likely any fall is due to iPhone 11.

Despite Apple's largely promising earnings call yesterday, not everyone is happy. Barclays analyst Tim Long is concerned that Apple's iPhone average selling price (ASP) is slipping.

In a note to clients picked up by CNBC (via Cult of Mac) Long says that while iPhone revenues were where they were expected to be, ASPs are "weaker."

"IPhone revenues were in-line, but we believe ASPs [average selling prices] were weaker," Barclays IT hardware analyst Tim Long said in a note to clients Thursday. The note was titled, "Services Strength Masks ASP Pressure."

Overall iPhone revenue for the quarter sat at $33.6 billion against an estimate of $32.42 billion, but that isn't enough for Long. Instead, he's concerned that iPhone ASP will fall 10% year over year for the final quarter of the 2019 calendar year.

The reduction in ASP is very likely due to the arrival of iPhone 11 and the fact iPhone XR remains in the lineup at a lower price point. And despite initially backing Apple's lower iPhone entry price, Long now says he didn't expect quite so many people to go for iPhone 11 over iPhone 11 Pro or iPhone 11 Pro Max.

Long was originally bullish on Apple's lower pricing strategy. He said "the lower price points are helping Apple after a few challenging quarters." But he said he didn't realize average prices would come in this low as more consumers go for the cheaper phones.

"We have discussed the mix down in iPhones that has been occurring all year," said Long. "ASP [was] worse than our model."

One way Apple could improve ASP is to release a 5G iPhone in 2020, as has been rumored. But even then Long doesn't believe that the company would be able to charge enough without negatively impacting the demand for the product.

Some analysts are bullish on the prospect of new 5G iPhones set to be released next year, but Long doesn't think Apple will be able to charge enough without hurting demand.

There's just no pleasing some people.