“In a recent report, DigiTimes claimed that pre-orders for Apple’s latest iPhone X smartphone was falling short of expectations in some regions, such as the U.S., Singapore, and Taiwan,” Ashraf Eassa writes for The Motley Fool. “DigiTimes said Apple is ‘rumored to adjust its pricing for iPhone devices in early 2018.'”
“If Apple is thinking about cutting iPhone pricing, then the company probably thinks it can grow iPhone unit shipments by enough to more than exceed to loss of revenue, as well as per-unit gross profit margin, from the price reduction,” Eassa writes. “This seems like a reasonable strategy: Apple introduced its new iPhones earlier this year and captured the significant early demand that there often is for the company’s new devices.”
“If demand for Apple’s iPhones during this cycle turns out to be weaker than Apple had hoped, I’d be inclined to think that a price adjustment is more likely in the next generation of devices rather than a mid-generation cut,” Eassa writes. “For example, the direct successor to the iPhone X could come in at a lower price point than the one the iPhone X did. Apple could try to offset that lower entry price point by introducing more or larger storage options at the high end of the stack.”
Read more in the full article here.
MacDailyNews Take: The DigiTimes report doesn’t say Apple will cut iPhone prices across the board. If there’s any truth to the rumor, Apple could simply be adjusting iPhone SE pricing – which makes sense, especially if they introduce an updated iPhone SE model in early 2018 as many expect.
(iPhone SE was released on March 31, 2016.)
I have a 256GB iPhone 7 Plus. I want an iPhone X with a screen the size of the 7 Plus body with 512GB of storage. That’s why I didn’t buy the iPX. I did however upgrade from the original Space Gray WATCH to a Gold WATCH Series 3 for the 16GB storage and to get in the Apple Stanford Heart Study – not for the LTE capability which I don’t plan on ever using. So the price of the iPhone X didn’t have anything to do with why I didn’t choose to upgrade my iPhone this year for the first time in 9 years since I bought an iPhone 3G a year after the original iPhone came out.
Also bought the new WATCH for the major speed bump from the original. It’s very fast. 😃
Does time fly on a fast watch?
Had to check my calendar, I was sure it wasn’t April 1 yet.
I expect an iPhone X price drop would make early buyers upset, like with the iPhone 1.
Jobs immediately gave a $100 credit to early iPhone 1 buyers when he reduced the price a few months after the introduction…I know because I got one*.
* and promptly spent it all at Apple Store. 🙂
but I don’t think the iPhX is overpriced, considering involved technology and design. My bet, Apple will not/should not downward revise iPhX price.
Someone earlier joking questioned, “Does it make better calls,” for price paid. Silly, imo…few phones are primarily used as such. Judge it for it’s much broader connectivity/communication services. The best of screens is hardly relevant for a dumb phone, but it’s the bomb for media (all sorts) consumption.
I don’t see how rumors about pricing can have any substance. Pricing is determined by a very small handful of execs and they’re certainly not talking.
With the tax cuts, Apple can reduce prices while maintaining their profits. Seems like a sensible, customer-valuing course of action. It’s something other corporations may also do.
Here I fixed the story for you:
In a recent report, DigiTimes claimed that pre-orders for Apple’s (NASDAQ:AAPL) latest iMac Pro computer was falling short of expectations in some regions, such as the U.S., Singapore, and Taiwan.
Thanks to the “weak performance” of the iMac Pro, DigiTimes says, Apple is reportedly prepping three new computers for 2018 — two modular types with expandable RAM and Storage and another All in One model.
A mosaic of iMac Pros.
Considering these models have been rumored for quite some time, I’m skeptical to believe DigiTimes’ sources when they claim that next year’s models will be a direct reaction to “weak performance” of the iMac Pro.
In addition — and this is the most interesting bit — DigiTimes said Apple is “rumored to adjust its pricing for iMac Pro devices in early 2018.”
Let’s go over why Apple might do that and what it could mean for Apple’s iMac Pro business.
The impact of price cuts
The reason companies cut prices is simple — they want to boost demand. However, it’s important for investors to understand that iMac Pro revenue is a function of two factors: iMac Pro unit shipments and iMac Pro average selling prices.
If Apple is thinking about cutting iMac Pro pricing, then the company probably thinks it can grow iMac Pro unit shipments by enough to more than exceed to loss of revenue, as well as per-unit gross profit margin, from the price reduction.
This seems like a reasonable strategy: Apple introduced its new iMac Pros earlier this year and captured the significant early demand that there often is for the company’s new devices.
However, as the competitive environment intensifies from competitor product launches and customers recognize that Apple’s next generation of iMac Pros continues to creep closer, demand for Apple’s latest computers — especially at full price — is naturally set to wane.
By cutting prices, Apple may hope to stimulate demand for its devices and, in doing so, maximize the amount of revenue and profit it generates from these devices over the product cycle.
Now, figuring out by just how much to cut prices, if Apple decides to do it at all, is not trivial. If Apple cuts prices by some percentage, it has to have a reasonable degree of confidence that total unit shipments will grow by greater than that percentage.
Too small of a price cut, and Apple risks simply seeing a minimal increase in demand while it loses a significant amount of revenue and, importantly, profit. Too large a price cut, and Apple might see significant unit shipment and possibly even revenue growth, but it could so dramatically eat into its profit margin that it’d have been better for Apple to not cut prices at all.
The point is that a lot of thought is going to need to go into any potential price reductions.
The 2018 product strategy
If demand for Apple’s iMac Pros during this cycle turns out to be weaker than Apple had hoped, I’d be inclined to think that a price adjustment is more likely in the next generation of devices rather than a mid-generation cut.
For example, the direct successor to the iMac Pro could come in at a lower price point than the one the iMac Pro did. Apple could try to offset that lower entry price point by introducing more or larger storage options at the high end of the stack.
Apple is also expected to be preparing a larger-size version of the iMac Pro successor next year. That device could come in at a higher price point than this year’s iMac Pro did, which could give Apple some wiggle room to reduce the pricing of the direct successor to the iMac Pro while maintaining overall iMac Pro average selling prices.
Apple has a lot of options with respect to the pricing of next year’s iMac Pros to choose from, and I can’t wait to see how Apple sets the pricing of its 2018 iMac Pros.
“just because,” Phred. Prices are reduced in the case of reduced demand, lower productions costs.
I don’t know if Apple realized how serious is the revelation that they deliberately slowed down old phones. This is Volkswagen level dishonesty, even if it does not reach that level publicly. It is a betrayal of their customer’s trust — the most valuable thing a company has. They should have simply provided a warning on the phones and let customers upgrade their batteries or phones as needed. As it is, it appears a clear attempt to make users subtly dissatisfied with their current phone so they would upgrade. This will cause a slow leak in sales — at first. Then, it will become a torrent unless Apple aggressively addresses it. An apology, a software fix, and free onetime battery replacements for older phones might stem the tide. Who would have thunk it? The only thing that could save Windows was a foolish Apple move. SMH.
You do understand that it throttles the processor when your battery is going bad, right? You also understand that when this happens, you also get a warning in under the battery settings clearly stating that your battery is no longer at it’s best. So then you can ether exchange the battery or the phone. Or would you rather the thing simply shut down abruptly with no warning and leave you stranded in a possible bad situation?
@eschatonhemera:
When I purchased a BMW many years ago, it ran great using using unleaded economy fuel (octane 87). About three years later, I needed to buy the mid-level grade (octane 89) so I could get the same level of acceleration as I had become accustomed to with the entry-grade fuel. At the seven year mark, I need to buy purchase premium fuel (octane 93 of 94) to maintain a very similar acceleration curve.
This is due to two things: first, a compression test of the engine would confirm that it’s simply not as efficient as when it was factory new. Second, I’m hauling around more mass: golf clubs, two car seats, and my wife (although she would probably dispute the mass effect!).
According to your logic, BMW should replace my engine with a new one for free and also provide me a generous check for buying more expensive fuel.
If Apple had chosen to let older iPhone model processors to run at full speed, then your post would be a long complaint that “Apple should give me a new battery because the battery life is not the same as when it was new”.
Things degrade over time. Do you not yet realize that it’s an imperfect universe? Or is the prospect of public whining the only thing that gets you out of bed every morning?
One more confirmed diagnosis of ABS (adult baby syndrome).
omg how self righteous narrow minding argument, suppose you would take same position on your aging flashlight batteries, woe is me I was left in the dark, what poor design
I’ve had the X for a month and it has been wonderful! Personally I wanted the big screen but not a big phone. The rest was Gravy.
If I paid a modest amount for a bad experience, I gripe about what a waste of money it was. If I paid a lot for a wonderful experience I remember the good times and forget about the sticker shock.
The iPhone X like 2018 phone with an LCD display will likely be cheaper than the OLED version. A new SE 2 will likely mean a cheaper SE 1 as well. So there may indeed be a lower price mix, but that does not mean a price reduction for the OLED X.
Cutting prices? OK. Very good, Apple. Now pull your head out your ass and listen to consumers, too.
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