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Apple Inc. Gets Extra Help From the Dual Camera iPhone 7 Plus (AAPL)

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When Apple Inc. (NASDAQ: AAPL ) first introduced its new, big and bigger smartphones - the iPhone 6 and iPhone 6 Plus - the company opted to offer a few minor features for buyers of the largest model. The 6 Plus had longer battery life, and an image stabilized camera. That basic strategy continued with the 6s Plus in 2015. But last year with the iPhone 7 Plus, AAPL included a more significant carrot in the signature Dual Camera feature.

Apple Inc. Gets Extra Help From the Dual Camera iPhone 7 Plus (AAPL)

Source: Apple

The move of making a key feature exclusive to its larger phones appears to have paid off with a big increase in iPhone 7 Plus sales compared to regular iPhone 7 sales.

Having more of the costlier iPhone 7 Plus models in the mix means AAPL can generate more revenue, even if overall unit sales are soft.

Differentiating Between Big and Bigger

Historically, the larger-sized iPhone hasn't sold nearly as well as the "standard" 4.7-inch model.

When AAPL first introduced the two model strategy in 2014, the iPhone 6 Plus had an immediate bump in demand from Apple fans who were hungry for a phablet. It was also very popular in Asian markets, where phablets, which can take the place of both smartphone and tablet, are often preferred. However, overall the bigger and more expensive iPhone 6 Plus only accounted for around 20% of overall iPhone sales globally.

In 2015, AAPL added a little more appeal to the bigger iPhone, adding increased RAM to the optically image stabilized camera for the iPhone 6 Plus. However, that saw just a small uptick in sales of the bigger model.

Last year, Apple rolled the dice: It decided to release a dual camera smartphone, a premium upgrade that it heavily promoted as a must-have feature. With this advanced camera system, users could take DSLR-like portraits and optically zoom in on subjects. AAPL made this key feature an iPhone 7 Plus exclusive, at the same time boosting the price of its larger iPhone. Previously, it had charged $649 and $749 respectively for the two sizes. In 2016, the company still started the iPhone 7 at $649, but to get the dual camera smartphone feature required shelling out at least $769 for the iPhone 7 Plus.

iPhone 7 Sales See Big Increase in iPhone 7 Plus Adoption

The Wall Street Journal is reporting that Apple's iPhone 7 Plus strategy appears to have paid off. Citing numbers from Cowen & Co. UBS, Cowen and Creative Strategies Inc., the WSJ says that in AAPL's first quarter (ending in December), the iPhone 7 Plus is estimated to have accounted for 40% of total iPhone 7 sales , globally.

Breaking the numbers down regionally, it's estimated that 52% of Chinese iPhone buyers opted for the more expensive iPhone 7 Plus, while in the U.S. it accounted for 47% of total iPhone 7 sales.

Why Increased iPhone 7 Plus to iPhone 7 Sales Matter

The difference between the two iPhone models is material to AAPL's bottom line.

It's likely that the iPhone 7 Plus costs Apple more to manufacture than previous Plus versions - it does have more RAM, a larger battery and that dual camera system - but at least some of the additional cost is offset by the boost from $749 to $769.

The profit margin for Apple on the iPhone 7 and 7 Plus probably remains roughly the same. However, with a base price that's $120 higher, having more Plus models in the mix means that even if overall iPhone 7 sales are soft, the average selling price of a new iPhone goes up. As a result, iPhone revenue could get a boost, despite sales that may not meet expectations.

And, as the WSJ article points out, there's another positive point for AAPL in the iPhone 7 Plus numbers. The fact that pricing the iPhone 7 Plus so high still resulted in big gains for the premium smartphone bodes well for later this year when the company will release the 10th anniversary iPhone 8 . The iPhone 7 sales numbers indicate that AAPL has additional room to price the iPhone 8 as an ultra-premium, special edition model if it chooses.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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The post Apple Inc. Gets Extra Help From the Dual Camera iPhone 7 Plus (AAPL) appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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