Legacy iPhones Biting Apple in the ASP
The launch of Apple's iPhone 5 was unquestionably a successful one. The company sold more than five million units during the device's first three days of availability, setting a new opening-weekend sales record. Yet, by some metrics …
Context & Ripple Effects
The arc here runs from anticipation to accounting. In September, AllThingsD asked how many iPhone 5s Apple could sell in a opening weekend, and comScore data showed the device matching the iPhone 4S's entire first month of online sales in just three days. The five-million-unit record answered the volume question decisively.
The December 3 story flips the metric: confirmed reporting shows legacy iPhone sales dragging down Apple's average selling price even as the flagship sets records. Meanwhile Apple is pushing distribution wider — an iPhone 5 China launch set for December 14, South Korea on December 7, more than 50 additional markets through the month, and the iTunes Music Store newly live in 56 countries including Russia and Turkey.
First-order effects
- Apple's December-quarter revenue math now depends on mix, not just units: every iPhone 4S or iPhone 4 sold alongside the iPhone 5 pulls the average selling price below what the record launch weekend implied.
- The simultaneous rollout into 50-plus markets — with China's December 14 launch the marquee date — means the legacy-versus-flagship mix decision is being made country by country in real time this quarter.
Second-order effects
- In newly opened markets like China and Korea, where the iPhone 5 arrives mid-December, cheaper legacy models are positioned to carry early share — extending the ASP drag geographically rather than letting it fade after the launch spike.
- The iTunes expansion into 56 new countries monetizes the growing base of older, lower-priced iPhones, so each discounted legacy unit sold carries more attached-services value than it did when the lineup was younger.
Third-order effects
- If the pattern holds, Apple's economics shift from maximizing price per phone sold toward revenue per active device: keep legacy handsets in the lineup to widen the installed base, then earn back margin through content and services — a structure the iTunes rollout directly serves.
- For the broader handset market, the metric that matters migrates from opening-weekend unit records toward blended ASP and installed-base monetization, pressuring rivals who cannot subsidize a multi-tier lineup the way Apple can.
The trend: Smartphone economics are shifting from launch-weekend unit records toward average selling price and installed-base monetization, with Apple's tiered iPhone lineup and expanding iTunes footprint as the leading example.