4 Million Reasons Investors Should Love the iPhone 4S

Apple (NAS: AAPL) is starting to make this look too easy.

Cupertino has just announced that more than four millioniPhone 4S units moved into the hands of eager buyers over the launch weekend. The company had a decent head start with more than a million preorders heading into the weekend bonanza. Last year's iPhone 4 launch saw 1.7 million in unit sales, so this shatters the previous record by more than doubling it. Google (NAS: GOOG) Android phones certainly don't stir up this much buzz.

Last quarter's average selling price, or ASP, was $654 per iPhone. This generation of iPhones now comes in three flavors: 16 GB, 32 GB, and 64 GB. These three models retail for $650, $750, and $850 at full retail prices respectively. Apple's pricing strategy of adding on $100 for additional storage capacity is pure genius.

Doubling onboard storage dramatically widens the possibilities of how you can use the device, while the incremental cost to Apple from swapping out NAND flash memory chips is less than $1 to move from 16 GB to 32 GB, and less than $3 to max out at 64 GB, based on current spot prices. That extra $100 becomes almost pure profit and boosts gross margins substantially on higher-end models.

I wouldn't be surprised if Apple was able to get iPhone 4S ASPs up to $750. Investment firm Piper Jaffray conducted a poll of buyers at retail locations on Friday and found that 19% of respondents were going for the gold and picking up the 64 GB model.

Even if Apple were "only" able to get ASPs up to $700, that would still make it a $2.8 billion weekend; an ASP of $750 brings that figure up to $3 billion. In three days. In comparison, beleaguered Research In Motion (NAS: RIMM) pulled in $4.2 billion in revenue in three monthslast quarter.

I must confess that I partook and picked up a new iPhone as well, despite protests from common sense. Initially, I was going to skip it this year and thus didn't preorder. I was surprised how easy it was for me to waltz in and pick one up; the entire process only took 15 minutes. The experience made me question if Apple could hit four million, since there was little to no line. It shows how successful Apple has been in expanding its retail distribution footprint through partners like Best Buy (NYS: BBY) , Target (NYS: TGT) , and Wal-Mart (NYS: WMT) .

Apple is set to release fourth-quarter and full-year 2011 results tomorrow. Its fiscal year closes in September, so the results won't include this past weekend's selling spree. Apple has a tendency to break records practically every single quarter, and I expect tomorrow's release to reveal more of the same.

At the time thisarticle was published Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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