As I write this, we’re less than four weeks away from Apple’s next iPhone event, believed to be taking place on September 12. And the rumors are stacking up high when it comes to new features we’ll see on the iPhone 15 and the iPhone 15 Pro. But the biggest rumor isn’t even about hardware, it’s about economics.
As multiple reports have made clear, Apple is fixing to increase the price of the iPhone 15 Pro and 15 Pro Max (which may become the iPhone Ultra) handsets to shore up revenue in the face of a projected slump in smartphone sales. An investor note from Barclays analyst Tim Long (via MacRumors) put the figure at $100 to $200 on top of what users paid for the iPhone 14 Pro and iPhone 14 Pro Max. Until now, Apple’s Pro-grade iPhones all started at $999 or $1,099 for the Pro and Pro Max models (since the 11 Pro in 2019) respectively, although other markets (including the U.K.) saw a small price increase last year.
Why is Apple doing this? Well, according to a report in Bloomberg, the company is planning to produce around 85 million iPhone 15 units this year. That’s a drop from the 90 million iPhone 14 units Apple requested from suppliers last year. So, Apple will be producing fewer devices at a time when inflation remains high and customers are noticeably stepping back their purchases of consumer tech devices. In fact, where once consumers would upgrade every one or two years, they are now holding onto their phones for longer before upgrading.
Apple’s best way of protecting its revenue, and therefore fulfilling its duty to shareholders, is to increase the pricing. What’s more, Apple knows it needs only increase pricing on the Pro models as, historically, this is the device that prompts upgrades.
By the end of Q1 2023 Apple’s earnings showed the iPhone 14 Pro Max had a 36% share of iPhone shipments, followed by iPhone 14 Pro at 28% while the regular iPhone 14 brought in 25% and the iPhone 14 Plus brought up the rear at 11%. Tim Cook seems confident Pro-level consumers will swallow the hike, remarking in an earnings call in February that, “I think people are willing to really stretch to get the best they can afford in that category.”
It’s worth pointing out that this is still only a rumor — Apple could come out of the gate on September 12 and announce pricing remains the same. And that seems to be the case for the entry-level iPhone models. But if you want a Pro device for 2024, I’d bet heavily you’re going to have to dig a little deeper into your pockets.
Look on the bright side
Are there any positive aspects to this rumored price hike? Well, yes, as a matter of fact. Disregarding the aim of making money, there are other reasons to raise the price of a product. Chief of which is the inclusion of more expensive materials on the production side.
We’ve heard plenty of other rumors Apple is looking to include several design upgrades for the iPhone 15 Pro and iPhone 15 Pro Max, including replacing the stainless steel sides of the phone chassis with titanium at the same time as reducing the bezels around the OLED screen. Internal upgrades are expected to include a faster CPU, bigger battery and the first change to the ultrawide-band (UWB) chip since the iPhone 11. According to sources, the new UWB chip will be built on a 7nm process – a distinct improvement over the 16nm U1 inside the current iPhone 14 Pro.
And, of course, all these developments cost money and have to be folded into the overall production cost Apple bears. So, if there’s a silver lining to the rumor of a price hike, it’s that it could be the one rumor that proves all the others are true. And that would be no bad thing.
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