Apple is in uncharted territory regarding its average sales price (ASP) declines of both iPhones and iPads. Over the past two quarters, the iPhone ASP has dropped by $61 - the biggest decline in the history of the device. The June quarter level of $581 is still something just about any other phone vendor would kill for - but the speed of that sixty buck drop raises the question of whether consumers are now globally moving towards cheaper price points with force that will turn out to be irresistible for even Apple. The fact that Apple managed to maintain a smartphone ASP level between $624 and $660 in the time period spanning F1Q11 to F1Q13 will go down in history books as one of the most amazing feats of pricing power in the consumer electronics history. Keeping the iPhone ASP level above $550 over the next four quarters would be a remarkable defensive victory considering the global smartphone ASP is likely to drop close to $300 by next summer.
Maybe the most interesting aspect of the sudden iPhone ASP plunge in March and June quarters is the fact that it happened simultaneously with a steep iPad ASP drop. Of course, the biggest drop in the iPad ASP took place in the December quarter of 2012, when the arrival of the iPad mini took the category's average sales price to $467 from $535 in one fell swoop. But the iPad ASP continued its brisk slide over the following two quarters, ending up at $436 in the June quarter.
What makes the September quarter iPad trend so interesting is Apple's odd pricing decisions regarding its new winter tablet slate. Pricing the ancient iPad 2 at $400 seems curiously ambitious considering that Apple has lost thirty points of global tablet market share in a year. Pricing the cheapest iPad mini at $400 also seems like a really bold move, even with the dazzling new display tech it features. It appears that one of Apple's biggest goals right now is to put a floor under its iPad price erosion. Just how low did the iPad ASP drop in the September quarter? That could be a pivotal question not only about Apple's tablet margin performance but wider consumer behavior trends. Particularly now that many of Google's partners are rolling out highly sophisticated models under $270. If global demand is decisively shifting towards cheaper tablets, attempting to battle that trend by pricing all new devices at $400 or above is going to be a very tricky maneuver to pull off.
