Apple yesterday announced its newest, basic model, the iPhone 11, will be priced at $699 rather than $749.
Two Wall Street analysts told CNBC on Wednesday that Apple’s batch of iPhones is a turnaround from its past mistakes.
“Apple has shown an ability to be tactical and understand the market dynamics,” said Wamsi Mohan, senior equity research analyst at Bank of America Merrill Lynch, on Squawk Alley. A Goldman Sachs analyst echoed similar sentiments to CNBC earlier in the day. “The pricing on the iPhone, the base iPhone, is attractive,” said Rod Hall, a senior equity analyst. “I would expect unit share to shift over to that aggressively.”
MacDailyNews Take: If $146.204 billion in iPhone revenue over the past four quarters is a “mistake,” more “mistakes,” please!
And, Apple offers much more “basic” iPhones than the iPhone 11. These include:
• iPhone XR: $549-$649
• iPhone 8 Plus: $549-$599
• iPhone 8: $449-$499
This guy must think Apple just pulls their pricing structure out of… a hat. Apparently it never occurred to him that those prices are likely set after careful study predicting the impact various pricing structures would have on sales and profits.
Though your point is valid, isn’t true that Apple “carefully” positioned prices high because of the need to compensate for diminishing/diminished iPhone sales? This is in-line with “impact,” but it’s as the result of not being on the ball…in light of world-wide smart phone slow down and placing all manufacturing in one huge bucket. In essence, pricing was high to cover the company’s decisions, not because of increased product value. Customer’s loss.
Apple has a specific margin baked into their iPhone offerings and need to be maintained as much as possible. With that fact, Apple couldn’t simply “absorb” iPhone X costs – which were amazingly high:
A. Single sourced from Samsung for the display (gouging Apple at $130 a piece!)
B. FaceID Tech was spanking new and volume production just barely made it – and was expensive out the gate.
C. Phone had an entire remake due to the new tech – again costly.
Now, how do they pay for that cost? Well, the iPhone is going to cost a lot more, and if it costs a lot more they will sell fewer of them, so costs need to cover a decreasing economy of scale factor.
iPhone X’s costs and decreased volumes were going to be there, so the pricing, while somewhat presented value, maybe not quite that a value it shot up to in many consumer’s minds.
Today? Costs are down for FaceID and OLED displays for Apple. That’s reflected in the iPhone 11 which looks to be an even larger seller than the iPhone XR. Again, it presents a solid value. Dual-Camera, better display, longer battery life, faster more powerful product, less money.
iPhone II Pro’s hold the same pricing, but deliver more tech, providing a more even-keel scale in the evaluation of “value.”
Apple is also pulling in the tariffs, not tacking it onto their products. It means costs are down enough to jack tariff costs into iPhone’s to the point where the margins are still there. Or at the very least, margins overall for the company won’t take a hit due to other higher margin areas…
It’s not a revolutionary delivery of tech, but it’s a solid step in improvements that present move value than any of their iPhones since iPhone X came along.
You can make whatever excuse you want but the fact remains that the base new model iPhone should not have been raised to 749 and in fact it hurt sales enough that Apple took notice. The days of Apple being able to get outrageously high prices over it’s competitors is coming to an end. And the sad attempt of trying to justify it by pointing out the lower end phones as an alternative to the buyers of the iPhone 11 is a joke. Many of the people who are buying the iPhone 11 already have an 8 or XR. You are fanboys we get that, so was I at one point in time, probably before you even knew what Apple was. there is nothing wrong with being a fanboy. However a dose of reality once in a while is a good thing. A number of the products offered today have lower price points than would have been expected even a year ago. They reflect the reality that Apple is living in today. For you to make a lame attempt to justify it is just wrong.