Michael Simon writes for Macworld:
It’s no secret that the iPhone’s average selling price has creeped up over the past several years. Since the launch of the thousand-dollar iPhone X, Apple has been covering up a slow decline in sales with much higher prices. The cheapest current X-model iPhone, the iPhone XR, starts at $749, and if you want the flagship XS model, you’re paying no less than $999. That’s not going to change.
It’s funny, but Apple was actually ahead of the mid-range curve. Back in 2016, it launched the iPhone SE between the iPhone 6s and iPhone 7. It had the body of an iPhone 5S with the guts of an iPhone 6s for nearly half the price. It was strictly a response to customers who wanted a smaller, cheaper phone… But Apple never paid it the attention it deserved. Rather than continue to update it — like Google will presumably do with the Pixel 3a — it was left to languish for years on end, only receiving the most obligatory of updates.
MacDailyNews Take: If the iPhone SE sold well enough, Apple would have paid more attention to it. Obviously, it did not sell well enough.
There’s a lot to be excited about when it comes to future iPhone releases—triple cameras and reverse wireless charging in September; 5G, and time-of-flight sensors in 2020 — but until Apple starts paying attention to the middle, more and more people are going to start banking their iPhones for something that doesn’t have an Apple logo on the back.
MacDailyNews Take: We do not see proof that people are dumping their iPhones for mid-range Android dreck. And, no, BankMyCell’s data isn’t proof. The sample size is small and consists only of BankMyCell users.
In January, CIRP found iOS loyalty at 91%, its highest ever, and rising.
As X-class iPhones continue to be released, older models (X, XS, XS Max) will remain on the market and drop in price, satisfying the mid-range iPhone buyer.
Again, Apple sells premium products at premium prices to premium customers. Android can have the rest. They’re more trouble than they’re worth as they generally only want things for “free” and they buy demonstrably fewer apps, accessories, and subscriptions.
If you are a family of four, investing $4000 in cellphones is only possible for the wealthy. Claiming that less wealthy families are cheap is, frankly, offensive.
… and arrogant.
I agree, even as a long-term Apple shareholder. I think Apple is ignoring the middle-class (if it still exists). Apple is leaving far too much for the Android manufacturers to simply take as much they please. I’m not saying Apple should be targeting the lowest consumers in India and Africa, but I think Apple should be able to sell $400 iPhones like the SE without it having a significant impact on their higher-priced smartphones. I don’t have any proof of that but I’m basing it on all the people buying Android smartphones in that price range.
I shouldn’t really question Apple’s iPhone strategy because they should know much more than I do. I’m only seeing falling iPhone sales and I may be drawing completely wrong conclusions. I just think it’s in Apple’s power to do something to increase sales but I may be wrong about that, too. There may be nothing left in a saturated market except very low-end sales which would be a total waste of Apple’s time.
I’m just thinking that just a 30% profit margin is much better than 0% profit margin if no one is willing to buy some absurdly high-priced 45% margin iPhone. Better still, Apple should acquire a cloud computing business and partake of an unlimited growth business instead of just dicking around with zero-growth iPhones.
Who buys their phones outright? We’ve had iPhones for years, we just get whatever is free or $50 to $200 on contract depending on who needs what. Seven in our family btw. The monthly contract isn’t any cheaper where I am if I bring my own phone so why would I buy the phone outright? Makes no sense. BTW, the monthly contract isn’t any cheaper with an Android phone so it isn’t any more expensive to get an iPhone over an Android phone. I’m sure it differs in some areas but by and large this seems to be the norm in the first world.
I could not agree with you more! 👍🏻
Condescending, as well.
It is certainly true a family of four putting out four grand for a phone is totally unacceptable except for the RICH.
I don’t have the numbers, but guessing with all the capable smartphones by Android manufacturers with some dirt cheap easily compete with iPhone and their unit sales numbers rule over Apple.
The premium profit segment Apple certainly owns. Read carefully, sales are going down because of the rest of the market Apple does not compete in or own. For example, when the XR is far and away the biggest seller is about one metric, PRICE.
Keep going the elitist premium Apple Tax route, Tim. Keep ignoring all the other segments of users you do not compete in or serve and we shall see sales falling further…
This is the kind of thinking that nearly killed Apple in the 90s. No, you don’t have to sell a bargain basement model, but, yes, you do have to sell mid-tier models. You’ll recall that, under Jobs, apple introduced solid, reasonably affordable consumer models of the Mac (iMac, iBook) and made sure that the iPod had a model accessible for every income (iPod shuffle, mini, etc.). Apple doesn’t have to make an iPhone that they sell at grocery stores, but they can’t ignore the mid-tier consumer entirely. If they do, eventually they will be back at that clinging-to-life with 2 % percent marketshare place that Steve Jobs found them in before.
Which part of the following sentence did you not understand?
“As X-class iPhones continue to be released, older models (X, XS, XS Max) will remain on the market and drop in price, satisfying the mid-range iPhone buyer.”
Sarah, congrats on the snarky! Let’s see if there is intelligence behind it…
When 5G coverage becomes available, will Apple have a model with 5G for less than a grand? Are the “older models (X, XS, XS Max)” going to sprout 5G modems? Or is your snarky retort seriously flawed?
You are not saying much all of the Apple phones going back to the 6s, out perform all of the Android phones see Anndtech, except for one or two flagship phones hardware wise, software wise Android phones are a lost cause.
Unfortunately, those mid-range prices are not so mid-range anymore with $1k phones pulling up the price. If Apple lowers too much on the other hand, it makes the flagships look overpriced. They’ve created a situation where they may have to abandon the true mid-tier pricing.
And yet Apple never pursued “the year old model is good enough” with iPods. Wisely. No one wants a two or three year old phone sold as new. I’ll repeat: Apple tried the “ultra high-end only” model in the late 80s and early 90s and it nearly bankrupted them. No one is saying sell a Yugo-like iPhone into the lineup, but a Honda Accord is essential.
I’ll hang onto my SE unless they come up with a similar-sized option.
“If the iPhone SE sold well enough, Apple would have paid more attention to it. Obviously, it did not sell well enough”
Glad you thought the same thing when you wrote off the Mac Pro since it obviously didn’t sell well enough.
Oh wait, no, MDN’s been lambasting Apple for ignoring the Mac Pro and underserving the pro community–surely a market that sells far fewer Macs than consumer and prosumer iMacs and Macbooks.
The SE sold well enough, and looking at its sales purely as percentage against the rest of the family lineup, as Apple did for far too long with the Mac Pro, is the surest sign of short-sighted beancounters in charge.
Exactly what I wanted to say!
MDN seems to be very selective about when Apple should get the benefit of the doubt.
iPhone SE was not the flagship iPhone. Far from it.
The Mac Pro is the flagship Mac. That’s the difference and it’s a big one.
The SE’s relatively small sales could easily be written off as an experiment that didn’t pan out. That’s why it was written off. It didn’t pan out.
As for the Mac Pro:
Of the new Mac Pro, every Mac user should be proud.
The Mac Pro is sort of like why you fund a space program, if you’re smart. Yes, there are pressing needs elsewhere (and, btw, there always will be; it’s a bad excuse for not investing in exploration), but if you’re not pushing, you’re stagnating. Nothing unexpected can be discovered, no new solutions uncovered when no new challenges are ventured. It’s why smart car companies make esoteric supercars of which only a few will ever be sold and on which the investment will never be recouped. As with supercars, lessons learned from the Mac Pro, the Mac flagship, will percolate throughout and improve all of Apple’s product lines. Yes, Apple worst-selling Mac is their most important.
May the Mac Pro never be dead-ended, abandoned, and ignored again!
Think about what you thought of Apple’s Mac lineup when it had a half-decade-old, neglected, dead-end design as its flagship. The entire Mac lineup was diminished. Apple’s management who allowed this to happen were diminished, too. People could only see the flaws – in the machines and the people. Now, with the new Mac Pro proudly raising the flag high atop the mountain, all Macs, and everyone responsible for making Macs, are lifted up along with it. — MacDailyNews, June 6, 2019
Sorry, but that’s still spin doctoring…especially since Apple had the “iMac Pro” planned as the Mac Pro’s replacement.
And the facts of the midrange customer is that we got replacement batteries last year and confirmed for ourselves that we simply don’t need the “latest and greatest”…and can stay with the iPhone (for now).
Just like automobiles…it’s nice to have it paid off and not have a monthly payment.
“iPhone SE was not the flagship iPhone. Far from it.”
Correct, but I do not read anyone saying that.
The bulk of the posts are spot on that Apple is not serving the non-premium market and sales naturally are slowing as a result.
I bought four small form factor SE powerhouses since the debut for myself and relatives and the day I pay over $1,000 for an overpriced iPhone with gimmicks like face lift is the day I go Android, sorry…
It sure does seem as though high-margin bean-counters are running Apple. Does Apple have even one loss leader product that will attract people into the Apple stores. It’s just my opinion that Apple is letting all sorts of competitors eat their lunch. One can never say about Apple, “Yeah, they’re destroying the competition” like they speak in awe about Amazon. Apple is no longer that fearsome 600lb. gorilla but more like a laughable, stuffed kitty-cat.
You don’t pay much attention to Apple’s earnings report do you, when compared to the Android rabble?
You are far too obsessed with the pricing structure of the iPhones and that means you overlook fit and comfort. For many role the lowest price XR is simply not comfortable in the hand. I have one and it is the least comfortable iPhone I have ever owned. My wife simply refused any iPhone until the SE was released for the same reason. I believe that Apple failed to consider comfort in use when designing the X Range – to they feared Android “big fella” competition. Or maybe they just tested the comfort of their iPhones on men with larger hands.
Apple was the disruptor; that was exciting! Innovative products. If Apple acts like a bloated, clumsy incumbent, they will lose me. I can afford any phone that I want. I want a phone with adequate battery life and USB-C connector. This is not rocket science.
I am not poor and I do not want a $1,000 phone in my pocket. Sometimes I wear a business suit to a trustee meeting. But sometimes I am on a boat where leaning over the rail could send my phone to the bottom in a few seconds. Sometimes I am at a construction site where a phone could fall 50 feet on to concrete. And sometimes I am traveling — if I leave my phone behind for 60 seconds, it can be gone forever. A $1,000 phone is too much to worry about. I want a phone with current features like USB-C, Face ID, and 5G when it rolls out. If Apple does not respect me enough to produce a product with those features for under a grand? Or a laptop for under $1,400? Then the apple ecosysytem becomes more like a trap. I will sell my AAPL shares and look for alternative products.
You sound poor…..get a Google Pixel.
It’s not just a matter of dumping your iPhone and replacing it with an Android it’s also a situation where you don’t upgrade because you just can’t afford it.
It’s the same thing with Apple’s computers, they just don’t give a “bang for your buck” so you delay your replacement as long as you can and even then you have your existing computer (professionally) upgraded.
I have been waiting for a new SE for a long time, and so has many of my friends; who don’t like the large phones.. we like the smaller size. It isn’t ironic that when it was reported that iPhone sales declined for the first time YOY, was when Apple blew off entry-level size/priced iPhones. And while they are gonna blow sales numbers off the charts, they do fill a financial gap that was clearly seen to be missing. It also allows even more users to enter into Apple’s ecosystem and build upon that. I hope someone with a brain is paying attention, not everyone wants a huge iPad on their pocket. I have been waiting for a smaller phone for years, and I used to update yearly.. since the smaller size has not been offered, I have not purchased a new iPhone for many years… and I bet there are a TON of people that are like me.