“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.'”
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MacDailyNews Take: Apple offers affordable luxury. They always have.