Per a report from Japanese publication Mac Otakara (via MacRumors), Apple (NASDAQ:AAPL) is planning to offer customers another color option for potential iPhone 7 and iPhone 7 Plus buyers: jet white. Presumably, this would be a white phone with the same glossy finish as the jet black iPhone 7 and iPhone 7 Plus models (along with a white face, similar to those found on the silver, gold, and rose gold models).
Mac Otakara doesn’t seem that confident in this report, though, as it cautioned that “this information may be unreliable.”
Let’s take a closer look at whether or not this rumor makes sense.
Apple’s onto something with glossy iPhone finishes
There is a reason that smartphone makers care about building attractive-looking devices: People are likely much more willing — whether they’re aware of it or not — to buy a device that looks sleek and appealing than they are to buy a device that looks ho-hum.
Given how popular the iPhone models in jet black seem to be (KGI Securities’ Ming-Chi Kuo said that 30% to 35% of iPhone pre-orders worldwide, and almost 50% of iPhone pre-orders in China, were for jet black models), it’s clear that customers are attracted to that finish.
If customers like the jet black finish, then it’s reasonable to assume that there might be customers who would like glossy iPhone models in other colors — like white. Such a device could certainly be attractive to customers who would have otherwise gone with, say, an iPhone in silver.
Mid-cycle jet white iPhone release makes sense
Per Kuo, manufacturing yields on the glossy finish used on the iPhone 7 and iPhone 7 Plus models in Jet Black initially weren’t great, coming in between 60% and 70%.
That relatively low yield rate may have been one reason Apple didn’t apply the glossy finish to additional iPhone models. However, as Apple and its manufacturing partners have gotten better at building phones with this finish, yield rates have likely improved.
If manufacturing yields have improved on Apple’s process to produce the glossy finish, and since demand for iPhone models in jet black appears to be strong, then a mid-cycle jet white iPhone 7 and iPhone 7 Plus release would make sense. Here are a few reasons why.
First, Apple is likely to limit the jet white finish to more expensive 128 gigabyte and 256 gigabyte configurations just as it does with the jet black models in order to encourage up-selling.
For example, a potential customer who might have otherwise gone with a 32 gigabyte iPhone 7 Plus in silver might instead opt to go with an iPhone 7 Plus in a 128 gigabyte configuration in order to get the new jet white finish.
This could help to further bolster Apple’s iPhone average selling prices (and thus revenue and profits).
Second, an attractive new finish may simply help to boost demand. There might be users of older-generation iPhone models who are on the fence about upgrading to new models. An attractive jet white model could be what pushes some of those customers over the edge.
The potential impact from a mid-cycle jet white iPhone release likely wouldn’t be a game changer for Apple, but it could be a low-risk/high-reward way for the company to try to both juice iPhone average selling prices and boost demand for iPhones during the current fiscal year.
Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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