HSBC: Apple is a luxury brand like Louis Vuitton

“As Apple Inc. prepares to start selling the $1,000 iPhone X, its most expensive smartphone yet, it seems reasonable to ask if it’s still a technology company vying with the likes of Samsung Electronics Co., or has become a luxury stock,” Narae Kim and Kana Nishizawa report for Bloomberg. “The question has been raised by analysts at HSBC Holdings Plc led by Erwan Rambourg.”

“‘Young Asian consumers willing to spend $1,000 on a gift or a treat for themselves could look to Apple’s latest gadget,’ they wrote in an Oct. 31 note. ‘But alternatives could just as easily be a Louis Vuitton product, a trip, a stay in a luxury hotel, or a Michelin-star restaurant,'” Kim and Nishizawa report. “And his conclusion? Yes, Apple is a luxury stock as an alternative for consumers, but its valuation isn’t pricey.”

“The analysts say Apple’s retail penetration can grow substantially — and it has the people to help it expand: ‘Apple has poached talent from luxury companies, which can give it insights into premiumisation as well as mainland Chinese consumers, the key luxury consumers,'” Kim and Nishizawa report. “The analysts point out a further similarity between Apple and luxury companies: ‘Consumers don’t buy only the technology and the functionality but also the spirit of the brand, the way it makes them feel about themselves.'”

Read more in the full article here.

MacDailyNews Take: Apple offers affordable luxury. They always have.


    1. Apple is more like an “affordable luxury staple”. Like beef: the higher a society’s wealth, the more meat it consumes. Or Starbuck’s coffee (in the USA). Or perhaps even Levi’s jeans. But not “Halston, Gucci, Fiorucci…” as the song goes.

      Many luxury goods are pure conspicuous consumption. Apple products are productivity tools, and thus represent an investment, which is the opposite of consumption.

  1. Jobs is rolling in his grave.

    Apple used to pride itself in accessibility and long term value. Pay a bit more up front, gain huge enduring value over the long haul.

    Luxury brands are all about exclusively and appearance above substance. If this is what Apple now wants to be, bye bye.

    1. He admired “fit and finish” and like “fine”, too. He was once found in the Apple parking lot examining car doors; he raved about the “fit and finish” (and fine tolerances) of German car doors, for example. And he was not above driving one (a fine German car).

  2. Yet the products from Apple have a Total Ownership Cost less than the non-luxurious brands.

    The iMacs are less; when you take into account all the great software that it comes with (All FREE), Pages, Keynote, Numbers, iMovie, Garageband, Mail, Safari, Photos, iTunes, iBooks, Apple Maps, Photo Booth and many others that I might have missed. Don’t forget to include the Built in Monitor (All in ONE design). Also, don’t forget the time it lasts… latest iMac is 2011 and going strong still. And lastly the great end of life resale value. I have sold all previous iMacs for about 45% of original cost. TOC way lower than PC’s.

    iPhones; same story.

    PC guys always forget to add in cost of Windows, cost of Basic Apps, Longevity of the product, Resale value and the product, cost of incompatibility issues in Software and hardware.

    1. I’ve felt this way as well. However with the direction prices are going I’m not seeing the value as easily. It’s crazy to think the first iPhones, which were way more revolutionary than any recent iPhones, only cost $500 & $600 (before being reduced $100 a few months later.) Today that much cash will buy you a replacement glass back when it shatters on the first drop. With those kind of repair costs it’s almost looking like Apple could give the phones away for free and make their profit on repairs.
      I prefer the idea of keeping prices where the phones can get into as many hands as possible and make an ongoing positive impact in the world. But I suppose outdated iPhones will have to fill that role these days.

      1. Tesla needs to make its own money instead of money grubbing the government subsidies. Electric cars are like solar panels…you have to be rich or receive subsidies to rationalize owning.

        1. It would seem you know nothing about solar panels — about how quickly the investement is recovered, after which you can MAKE money by selling power. One customer told me it took to years to make the money back, after which he made a small profit every month.

          1. Rich or subsidies. I said nothing about NOT making back your $$…many people w/o the disposable income don’t have enough to get in and can’t tie up $$ for the time to break even/go ahead.

  3. LV handbags have (as I have pointed out here in the past) elegant and timeless design, workmanship, and durability that result in a low total cost of ownership (TCO) unexcelled by any others.. except by Wilma Flintstone’s purse.. which was made of granite. It doubled as a deterrent to muggers and velociraptors.

  4. As a person who makes a living in the retail/luxury sector, I appreciate this article. I’ve owned iPhones since the 3GS. I work in the jewelry industry. I also do service in the inner-city community. My iPhone is definitely viewed as a luxury in certain environments. When a new one comes out, I get multiple offers to buy my “old” one. I was tired last Friday (from staying up to order my X) and I casually mentioned why I was tired. I was met with huge eyes and the question, “You mean the $1000 phone!?”. I ignored the question and moved on to other more pressing issues. Here in the USA, iPhone is still aspirational. It is still a status symbol. Now, I will have an “X”. The trick for me is to use it as a tool to continue to help kids, educate them about technology, and show them that they can own cool things if they work, stay out of trouble, and become good citizens. I appreciate everything Tim Cook does to help me in that regard.

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