Cupertino, California – In a calculated move to boost revenue amid a global slowdown in smartphone demand, tech titan Apple Inc. is poised to unveil the iPhone 15, expected to feature price hikes of up to $100 on select premium models. These anticipated adjustments are projected to accompany a suite of enhancements, including titanium casings, augmented processors, and advanced photography capabilities.
Apple’s mastery in steering consumers towards premium offerings has served as a formidable revenue driver, even amidst stagnant device sales. However, analysts are now cautioning that this pricing strategy may eventually encounter its limitations. Josh Lowitz, a co-founder of Consumer Intelligence Research Partners, posits that the iPhone Pro range may have reached its saturation point, with fewer new adopters on the horizon.
Significant market indicators suggest a shift in consumer behavior. The average selling price of iPhones in the United States experienced its first decline since 2017, dropping to $948 in the June quarter. This dip, compared to the same period in the previous year and the March quarter, underscores the evolving landscape. Moreover, iPhone sales faced a 2.4% decline in the quarter ending July 1, marginally below analyst projections.
Apple’s Chief Financial Officer, Luca Maestri, acknowledged the challenging landscape, stating that the smartphone market in the United States has experienced a decline over the past few quarters.
As Apple gears up for the iPhone 15 launch, a key challenge looms: convincing consumers that the Pro features justify the premium price tag. Michael Gartenberg, a former senior director on Apple’s marketing team, contends that distinguishing these features becomes increasingly challenging for users, as the iPhone 13 already meets the requirements of most consumers.
In addition to incremental processor and camera upgrades, industry pundits anticipate that the new iPhone Pro models will introduce titanium casings for a lighter feel compared to the standard stainless-steel counterparts. Furthermore, a notable shift is anticipated in the mute-ring switch, which will be replaced with a customizable button for quick actions, such as launching the camera app or activating the flashlight.
The more affordable base model of the iPhone 15 is expected to offer fewer advanced features, powered by the same processing chip as the previous year’s iPhone 14 Pro. However, one significant change on the horizon for both the base and Pro models is the transition to a new connector port standardized with USB-C. This shift aligns with European regulations, but it may pose challenges for consumers, as it necessitates a change in cables.
Apple’s pivot towards higher-priced Pro iPhones commenced four years ago as the smartphone market faced a slowdown. This strategy bore fruit, with revenue surging despite modest growth in device shipments. Since 2019, Apple has witnessed a remarkable 44% increase in iPhone revenue, reaching $205.5 billion in 2022 from $142.4 billion in fiscal 2019.
However, Apple’s success was further propelled by carrier subsidies encouraging the adoption of 5G phones, beginning with the iPhone 12 in 2020. These subsidies are expected to persist this year, particularly to promote the iPhone 15. Yet, analysts anticipate their gradual decline as carriers seek improved profitability after three years of subsidizing the 5G transition.
The shift towards lengthier smartphone ownership cycles may also influence consumer decisions. With consumers holding on to their devices for more extended periods, Apple faces potential challenges in sustaining its sales momentum in the coming year.
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Source the Wall Street journal
