The most expensive smartphones will be the center of attention on Wednesday as the company unveils the iPhone 14 lineup amid a global slowdown for all but the most expensive gadgets.
The company’s Pro models – 6.1 and 6.7-inch display versions – have helped fuel record sales and profits over the past two years as the tech giant unveiled its first Late 2020 5G-enabled iPhones.
These versions, which start at $200 more than the base offering, are about to get some of the most notable upgrades in a cycle that should be more evolutionary than revolutionary for the iPhone.
Apple’s first in-person produced event since Covid-19 upended modern life will feature reporters at the company’s headquarters in Cupertino, Calif., and will be simulcast via its website beginning at 1 p.m. in New York.
The question many investors are asking is how long demand, which is at record highs, can last for the iPhone in times of economic uncertainty and rising prices.
Apple has remained convinced that there is always an interest in converting to the latest technologies. “Around the world, 5G penetration is still low,” Tim Cook, Apple’s chief executive, told analysts in July. “And so I think there’s reason to be optimistic.”
So far, Apple has weathered an industry-wide decline in smartphone shipments, which fell nearly 9% in the last quarter from a year earlier, according to researcher International Data. Corp. $900, according to Counterpoint Research.
Since the arrival of 5G phones in late 2020, American buyers have paid more for their iPhones. Average iPhone retail prices rose to $954 in the June quarter from $783 in the September 2019 quarter when the iPhone 11 was introduced, according to consumer survey estimates. consumers from Consumer Intelligence Research Partners.
Indeed, more and more buyers have opted for the more expensive Pro models and spent more to add more storage to the device, which keeps more data-rich photos and videos on the phone.
The iPhone 13 Pro comes with 128 gigabytes, while an extra $100 bumps it up to 250 gigabytes. For an additional $500, buyers can get 1 terabyte. According to Consumer Intelligence Research Partners, more than 50% of iPhone buyers upgraded their storage in the 12 months ending June, up from less than 40% in 2019.
“This combination of phones has become more premium in recent years,” said Josh Lowitz, co-founder of Consumer Intelligence Research Partners. “For me, it was not planned.”
Continuing to sell more expensive phones could help Apple boost revenue even if the rate of unit sales slows or stagnates in the coming fiscal year. 5G phones fueled an estimated unit growth of 27% in fiscal year 2021, according to data from FactSet. Apple does not publish unit sales.
Analysts say this fiscal year, which ends in September, is expected to see iPhone sales slow to 2.5% and grow just 0.8% next year. But those analysts expected, on average, iPhone revenue to rise 6.7% to a record $204.9 billion this fiscal year, followed by an expected increase of 2 .7% in fiscal year 2023.
On Wednesday, the biggest changes are slated for the more expensive Pro builds. These models are expected to have more powerful cameras and better video performance and receive Apple’s new A16 chip, according to people familiar with the plans.
Base models will receive an upgraded version of the current A15 processor. The base line is also expected to get the larger 6.7-inch screen with the cheaper 6.1-inch version, while the iPhone 14 line won’t get the Mini version with the 5.4-inch screen this year, said people familiar with the plans. .
The Pro phones, which started at $999 and $1,099, could also see a $100 price increase, while the base models remain the same, making the difference between a base model and a 300 flagship. $, analysts predicted.
Pricing is always a complicated business, made even more difficult this year by rising parts costs and declining consumer purchasing power. But people continue to spend on high-end phones.
These more expensive phones have been made more palatable to buyers, thanks to a war between US mobile carriers battling to retain market share as they strive to shift as many customers to new 5G connectivity. faster.
These carriers invested heavily in 5G technology, and they saw the first iPhones capable of using the technology as a potential catalyst to poach customers, triggering record upfront spending to offer customers to upgrade their phones.
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In the last three months of last year, after the full launch of the iPhone 13 lineup, US carriers collectively spent a record amount on incentives totaling $5.7 billion and the average customer received around $300 in profits, according to consulting firm BayStreet Research LLC.
Carriers are effectively subsidizing Apple’s high iPhone prices to entice people to buy the Pro models, said BayStreet founder Cliff Maldonado. He said he expects record incentives again when the latest iPhones arrive.
With iPhone buyers on an upgrade cycle of just over three years, iPhone 11 owners will emerge in a radically different market than where carriers have spent an estimated $2 billion on incentives over the past the last three months of 2019.
“The iPhone 11 was a big cycle,” Maldonado said. “It’s the last big group of people who don’t have 5G.”
Write to Tim Higgins at [email protected]
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