Apple Inc. (NASDAQ:AAPL) may not be releasing official presale numbers, but that doesn’t mean we’re totally in the dark. Data collected by Slice Intelligence suggests that this time around, consumers are shelling out the extra for the iPhone 7 Plus.
Slice Intelligence compiled data from e-receipts for new iPhone sales from online retailers during the first 48 hours of availability to prepare this report on iPhone 7 pre-orders.
The data shows a significant shift in consumer demand, and it’s one that favors AAPL stock.
For the first time, the larger iPhone option is outselling the standard size, with the iPhone 7 Plus accounting for 55% of pre-order volume. In comparison, the original iPhone 6 Plus accounted for 35% of presales, and the iPhone 6s Plus took 41%.
If you’re hoping for black, you may have to wait a bit. The numbers suggest 69% of buyers are opting for either Black or Jet Black.
More iPhone 7 Plus Sales Good News for Apple
Apple’s larger iPhone has traditionally carried a larger profit margin for AAPL than the standard-size model. The company has priced the iPhone Plus at a slight premium, reflecting its flagship status.
For example, the iPhone 6 cost $200 to make with a $649 price tag for a 69% profit margin. The 6 Plus cost $216, but sold for $749 — a 71% margin.
This time around, we don’t have specific parts costs yet, but it’s a safe assumption that the same basic math applies. The new dual lens camera in the iPhone 7 Plus might be bumping its production cost slightly compared to previous years. In addition, Apple increased storage on new iPhones across the board from 16GB to 32GB. However, the Slice Intelligence data suggests 67% of all iPhone buyers to date have paid the extra for the 128GB storage upgrade, offsetting any additional expenses AAPL may have incurred in boosting base storage.
This year, AAPL also boosted the starting price of the iPhone 7 Plus to $769 — likely accounting for that camera.
When the numbers are crunched, expect the iPhone 7 Plus to once again carry a higher profit margin. That means the trend toward customers going big when they choose their new iPhone is good news for AAPL.
Why Is the iPhone 7 Plus More Popular?
Tablets sales have been steadily dropping and one of the factors blamed for this has been the use of phablets. Large smartphones — like the iPhone 7 Plus — can take the place of a tablet for many people. The increased iPhone 7 Plus sales may reflect this trend continuing, with iPhone upgraders opting to buy a smartphone that will replace both their older iPhone and their aging iPad.
The dual-lens camera in the iPhone 7 Plus is is the most likely culprit, though.
In previous generations, AAPL has offered optical image stabilization only on the Plus. That’s a nice feature, but other than that the camera systems on the two phones has been identical. In contrast, this year the iPhone 7 Plus has a dramatically superior camera with optical zoom capability — something no iPhone (and very few smartphones in general) ever offered previously.
With stunning photos taken with the iPhone 7 Plus making headlines, it seems likely that consumers are impressed enough to start snapping up the more expensive new iPhone.
Whatever the reason, Apple has to be happy with the current trend. If the presale numbers from Slice Intelligence continue to hold up and the iPhone 7 Plus continues to be the most popular new iPhone, that represents a nice boost to AAPL’s bottom line.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
