6 Takeaways From The Apple Event That Differed From Expectations

Following the launch event by Apple Inc. (NASDAQ: AAPL) for the iPhone 7 and Watch Series 2, Goldman Sachs’ Simona Jankowski mentioned that both products were mostly consistent with the consensus expectations.

Jankowski reiterated a Buy rating on the company, with a price target of $124.

What Differed From Expectations

Some aspects differed from expectations, such as:

• 1. The shipping of the iPhone 7 will begin on September 16, one week ahead of expectations as well as of the 2015 shipments.
• 2. The starting price will be $769, a $20 rise from the launch price of the iPhone 6 Plus and iPhone 6s Plus.
• 3. “Apple doubled the storage for the iPhone 6s and 6s Plus and for the iPad Air 2 and Mini 4, not just for the iPhone 7 and 7 Plus, as was expected,” the analyst stated.
• 4. The AirPod wireless headphones were launched for $159.
• 5. The Watch S2 starts at $369, again $20 above expectations. The original Watch has been rebranded at S1 and now comes with a faster processor and priced at $269, down from the earlier $299.
• 6. The new fast-charging technology that had been widely expected was absent from the launch details.

Positive Takeaways

Jankowski pointed out that “the week earlier launch coupled with the extra 14th week implies 2 more weeks of shipments vs. last year,” while adding, “the $20 price increase for the 7 Plus helps to partially offset the gross margin impact of doubling the storage capacity, adding the dual-lens camera, and the Lighting port adapter.”

However, the analyst also believes that the price hike was unlikely to significantly reduce demand at the high-end.

Jankowski expects every 10 percent attach rate to the iPhone 7 and 7 Plus to generate $2 billion or 1 percent of incremental sales in FY17.

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