Ahead of Apple, Inc.’s (NASDAQ:AAPL) iPhone 15 launch event, Bloomberg’s Mark Gurman delved into a strategy that the company has implemented with much success.
Apple’s Strategy Shift: Apple will look to boost iPhone revenue by going upscale, said Gurman in his weekly Power-On newsletter. This is a strategy, the company first contemplated in 2016 when iPhone unit sales plateaued to around 200 million to 220 million devices annually, he said.
The iPhone X launched in 2017 was priced at $999, deemed hefty at that time, and followed up with a larger iPhone XS Max with 512 gigabytes of storage for $1,449 a year later, Gurman noted. This strategy worked as despite the unit sales remaining stagnant for the past seven years, revenue has grown about $70 billion, he said.
“The shift also brought a change in the way Apple measures success. It stopped reporting device unit sales in fiscal 2019, focusing instead on how much money each product brings in,” said Gurman.
Will Apple Stick To Plan? Gurman said he expects the price of top-end iPhones to increase in select markets, thanks to more expensive components like titanium frames, new camera sensors, and additional storage. “The niceties will give users more reasons than ever to splurge on Apple’s priciest phones,” he said.
Apple will differentiate its iPhone 15 Pro models from the standard models by giving them better battery life, faster USB-C data transfer speeds, thinner borders, and nicer screens, said Gurman. The Pro versions also will get a customizable action button and a faster chip, he added.
These features could make the $200-to-$300 gap between the regular iPhone and the Pro model worth for some customers, the Apple writer said. If the company promotes the difference as only $10-$15 more a month on installments, the price bump may not matter much, he said.
Apple will differentiate between the two top-end models, with a wider range of optical zoom via a so-called periscope lens in the Pro Max model, the Apple writer said. The new approach shows Apple is getting more aggressive with its premium strategy, he said.
Gurman also expects the company to push customers toward its more expensive accessories. The new Apple Watches will all get a major performance upgrade, but users will need to opt for the pricier Ultra to get a titanium case, larger screen and longer battery life and if customers want AirPods that support USB-C charging, they’ll need to buy the costlier model, at least for now, he said.
“For Apple, the hope is that a feature-packed (and pricier) iPhone lineup will help the company weather any challenges,” said the columnist.
Produced in association with Benzinga
Edited by Priscilla Jepchumba and Newsdesk Manager