Why Apple’s New iPhones Are Priced Cheaper This 2019

Why Apple’s New iPhones Are Priced Cheaper This 2019

It’s no secret that Apple’s iPhones are some of the, if not the, most expensive smartphones of this modern world. With the hundreds or even thousands of other choices out there, and despite the ridiculous price point, one has to wonder what it is about these phones that gets people lining up and even camping out for hours at launch, all in the hopes of getting to call one of these their own.

Except Apple has suddenly decided to do the unthinkable for this year’s much-anticipated announcement. During the keynote held at Steve Jobs Theater in Apple Park on September 10, the new iPhone 11 line, which consists of the iPhone 11, iPhone 11 Pro, and the iPhone 11 Pro Max, was revealed to be priced cheaper than the last generation, a practice that Apple has never done before but now.

The iPhone 11 line is matching to the iPhone 8’s $699 price tag when it was first released back in 2017.

According to analysts, the unexpected pricing is nothing but a calculated move on Apple’s part, possibly in the hopes of reviving dwindling smartphone sales that last peaked three years ago, in 2015. Since then, iPhone sales have been plummeting all around the world, most especially in mainland China where other smartphone brands are already starting to dominate the market with their powerful yet affordable offerings.

In an interview with CNBC’s Squawk Alley, Rod Hall, a senior equity analyst at Goldman Sachs, comments that although the iPhone has been getting “more attractive” with upgrades, the premium pricing on it makes it hard to continue raising prices.

He also says that the base unit, basically the cheapest iPhone model of the generation, is expected to do best in terms of sales, “I think the fact that they added that dual-camera really makes that device the focal point for consumers.”

Hall adds, “I would expect unit share to shift over toward that device pretty aggressively.”

JP Morgan also shared some thoughts regarding Apple’s sudden pricing in a research note released last Wednesday. “We came out largely positive from the event… led by lowered pricing of iPhone 11 relative to XR, which could act as a positive driver for volumes in the entry-level premium smartphone segment.”

It seems like investors were pleasantly surprised by this as well, as shares of Apple rose by 2.87% on Wednesday after going up by 1% on Tuesday. Nevertheless, we’ll see how it actually fares in the market when it starts shipping this September 20.

Eric Darby
Eric Darby
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