With Apple widely expected to unveil the new iPhone 14 lineup at its upcoming event next Wednesday, a big question mark still surrounds how much, in this economy, the tech giant will charge for its latest-and-greatest smartphones.
Apple has some famously loyal customers. Yet as broader economic forecasts get downgraded left and right, it might be a hard time to convince people to upgrade their iPhones.
“Apple faces a real conundrum of pricing,” said Ben Wood, chief analyst at market research firm CCS Insight. On top of inflation and cost-of-living pressures wreaking havoc on consumers, he noted that Apple simultaneously faces rising costs associated with iPhone components and transportation.
“My expectation is that Apple will probably have to nudge prices up,” Wood told CNN Business. But given the strain consumers are facing, he thinks Apple will also do “everything they can to make that as minimal as possible.”
Beyond the broader signals of a worsening economy, Apple is also facing other headwinds as it prepares for the product launch next week. Supply chain hiccups stemming from China’s zero-Covid policy were partly linked to the company’s 11% year-over-year drop in quarterly profits reported last month. Apple CEO Tim Cook said on the earnings call, however, that there was “no obvious evidence of macroeconomic impact” to iPhone sales. Cook added that the company even set a third-quarter record “for both revenue and switchers to iPhone,” adding that “customers continue to find that iPhone remains the gold standard for smartphones.”
Steadfast iPhone sales are linked in part to other the predictions from some industry insiders that Apple will hike up the price of its newest iPhones – though it is difficult to predict by just how much.
Ming-Chi Kuo, an influential Apple analyst based in Asia, tweeted earlier this month that he expects Apple to raise the average selling price of the iPhone 14 lineup by some 15% compared to the iPhone 13 lineup. (Currently, the regular, non-mini, iPhone 13 starts at $799, the iPhone 13 Pro starts at $999 and the iPhone 13 Pro Max starts at $1,099.)
In a research note Monday, analysts Dan Ives and John Katsingris of Wedbush Securities predicted that Apple would raise the price of its newest higher-end models by some $100. “We believe a $100 price increase on the iPhone 14 Pro/Pro Max is likely in store given component price increases as well as added functionality on this new release,” the note stated. The cameras on the upcoming iPhone Pro models are rumored to be upgraded to possibly justify the price increase, among other enhancements.
The Wedbush analysts also predicted strong underlying demand for the next iPhone, estimating that some 240 million out of 1 billion iPhone users worldwide have not upgraded their phones in over three and a half years.
Wood also noted that Apple’s iPhones are in some ways insulated from macroeconomic pressures. Consumers are also increasingly looking at smartphones as “almost essential,” compared to some other tech gadgets. “Whether you really need an iPhone or not, that’s open to questions, but people who have an iPhone already are unbelievably loyal,” Wood said.
“I think that Apple has some advantages over rivals,” he added. “There are people who are always waiting for a new iPhone.”
Apple, in its famously tight-lipped fashion during the the lead-up to its product launches, did not respond to CNN Business’ request for comment Monday on the latest iPhone prices. The company sent out invites last week for its September 7 event, which has been cryptically dubbed: “Far out.”
The event will be broadcast on Apple’s website from the company’s Cupertino, California, headquarters starting at 1 p.m. ET.
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