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USA: iPhone price cuts will not reduce Apple's margins

USA: iPhone price cuts will not reduce Apple's margins – logomacitynet1200wide 1

Constantly subjected to scrutiny by Wall Street analysts, the new iPhone strategy has not failed to interest professionals, especially as regards the significant price cuts announced and already underway in the United States. iPhone 3G 8GB proposed at $ 99 this already starting a few moments after the conclusion of the WWDC keynote, price halved for the iPhone 3G 16GB version, while those who buy the new iPhone 3GS with a two-year subscription must pay 199 dollars or 299 dollars respectively for the 16GB or 32GB version.

Contrary to what has often happened in the past, in which Apple's strategies have been hesitantly welcomed if not real criticisms, the new Apple iPhone plan has been received almost unanimously. BMO Capital's Keith Bachman said Apple is moving on the demand elasticity curve. It is a technical definition of economics which indicates a fundamental rule of the encounter between supply and demand. By reducing the price of goods, the market responds by increasing its demand, in this way even if the unit margins are lower due to the drop in price, the overall revenue remains unchanged or even increases thanks to the increase in the quantity of products sold.

As for the response following the price cuts, the well-known Gene Munster convinced that by reducing the prices of the half, a strategy in place in the USA, the market will respond with a double increase in demand. In this perspective, the analyst who has never shied away from analyzing and even predicting Apple's things, not always with brilliant results, confirms his optimistic sales and turnover forecasts for Cupertino. In general, Wall Street analysts take the percentage of 34.8% as the benchmark for Cupertino's margins. Samuel Wilson of JMP Securities said that the increase in iPhone sales volumes must be sufficient to cover the $ 1.3 billion non-collection due to price cuts. Wilson thus elaborates a precautionary forecast indicating his customers not to expect an increase in Apple's margins for the current year, forecasting a slight decrease from 34.8% to 33%.

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