How Much Revenue Could the Apple iPhone SE Generate in 2016?



Sales of iPhone SE expected to cross 40 million units

RBC Capital Markets analyst Amit Daryanani stated that shortages of the iPhone SE (AAPL) in stores and online bodes well for investors. Daryanani expects Apple to sell more than 40 million 4-inch iPhones in 2016 and projects it to drive 15 million units of incremental sales for Apple this year.

Daryanani said that with the bill of materials estimated at $260 and a starting price for the 16GB (gigabyte) iPhone SE model at $399, Apple will achieve gross margins of 35%. This is lower compared to gross margins for the iPhone 5s and iPhone 6s for which gross margins are estimated to be around 45%.

The iPhone SE would drive revenues by $6.8 billion, or $0.23 per share, in 2016 with an ASP (average selling price) of $450.

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Apple is unwilling to sacrifice profit margins to penetrate Indian markets

Apple launched the iPhone SE in India (INDA) on April 8, 2016. It commands a 36% price premium compared to the United States. After taxes, the 16GB iPhone SE costs 39,000 Indian rupees (or $586) compared to $430 in the United States. The iPhone 6s is priced at 62,000 Indian rupees (or $930) compared to $700 in the United States, keeping the phones out of reach for most Indians.

Apple accounts for 2% of the Indian smartphone market, as almost 80% of smartphones are priced under $150. Apple is seeking approval to import and sell used iPhones in India, but other smartphone manufacturers such as Intex, Micromax, and Korea’s (EWY) Samsung (SSNLF) are opposing it.

According to IDC (International Data Corporation), Samsung (SSNLF) continues to lead the smartphone segment in India with a 24% market share. Samsung is followed by domestic players Micromax and Intex with market shares of 16.7% and 10.8%, respectively. China’s (FXI) Lenovo (LNVGY) has a market share of 9.5% in India.

Next, let’s see why Apple iPhone sales are expected to fall in 2016 but rise next year.


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