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Six months ago, Apple
Well, beyond just the Apple iEconomy, JPMorganChase's chief U.S. economist, Michael Feroli, thinks the iPhone 5 will do much more, according to a recent Wall Street Journal report.
Feroli estimates that iPhone 5 sales in the fourth quarter could add as much as 0.25% to 0.5% to the entire nation's annualized GDP figure, saying the device could even provide a cushion for the overall economy to help mitigate other macroeconomic risks as the year winds down.
Let's follow through some of his calculations. Factoring in some estimates from his firm's equity analysts, he figures Apple may sell around 8 million iPhone 5 units in the fourth quarter for an average selling price of $600. Approximately $200 of that sales price comes from imported components, while the remaining $400 should factor into the government's GDP calculations.
That would add $3.2 billion to fourth-quarter GDP, or $12.8 billion annualized, which translates into a boost of 0.33% in the annualized GDP growth rate. JPMorgan's fourth-quarter GDP growth estimate is 2%, so even a cushion of 0.33% would help counter some downside risks.
This sounds insane, but for additional context, Feroli points out that last year, when the iPhone 4S launched, at least half of the 0.8% boost in core retail sales was generated through online sales and computer and software sales. The launch month saw the largest monthly increases in both of those segments, so presumably the iPhone 4S had a hand in that increase.
Apple's newest product: iGDP.
How low can you go?
Let's take this a little further, though. First of all, the iPhone fetches a higher average selling price, or ASP, than $600. Its lifetime ASP sits at $639, but was as high as $659 during the last launch quarter. However, that's the entire product family, and that ASP figure is brought down by sales of older-generation models domestically as well as into emerging markets.
In fact, overall iPhone ASP hasn't been $600 or less since Q2 2009, so his estimate is definitely too low. See for yourself how low a $600 ASP looks relative to the past three and a half years.
Source: SEC filings.
If we were to look at just the iPhone 5, which it seems Feroli is doing, that model's ASP would probably be closer to $700, if not topping it, assuming Apple maintains the existing retail price points of $650, $750, and $850.
Also, the 8 million-unit estimate for the fourth quarter seems low. Piper Jaffray's Gene Munster thinks Apple could sell as many as 10 million units in nine days before the calendar third quarter closes, yet JPMorgan is calling for just 8 million units in an entire quarter? Fortunately, The Motley Fool has a Foolproof proprietary model that I have access to, and I think fourth-quarter iPhone 5 units sales could easily reach 20 million.
Some analysts peg overall iPhone unit sales north of 50 million in the fourth quarter, including all models. Apple never specifically reports its product mix, but selling 20 million iPhone 5 units wouldn't even be half of that figure.
Rivals are hoping to derail these sales by launching their own flagship models ahead of the iPhone 5 announcement -- Nokia
Have no fear
Using 20 million units at $700 a pop and going with Foreli's approximation that about two-thirds contributes to GDP, we'd be at $9.3 billion in GDP boost, or $37.3 billion annualized.
Forget about the fiscal cliff, soaring oil prices, and one of the worst droughts recorded in U.S. history -- the iPhone 5 to the rescue!
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Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Google and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.