With Apple said to be unveiling the new iPhone 14 lineup at its upcoming event next Wednesday, a big question mark still surrounds how much the tech giant will charge for the smartphones. its latest and best in this economy.
Apple has some famously loyal customers. However, as broader economic forecasts are downgraded left and right, it may be difficult to convince people to upgrade their iPhones.
“Apple faces a real conundrum over pricing,” said Ben Wood, chief analyst at market research firm CCS Insight. In addition to inflation and cost-of-living pressures ravaging consumers, he noted that Apple is also facing rising costs related to iPhone components and shipping.
“My expectation is that Apple will probably have to push prices up,” Wood told CNN Business. But given the stress consumers are facing, he thinks Apple will also do “everything we can to minimize that as much as possible.”
In addition to broader signals of a worsening economy, Apple is also facing other headwinds as it prepares to launch products next week. Supply chain hiccups stemming from China’s Covid-free policy are partly related to the company’s 11% year-on-year drop in quarterly profit reported last month. However, Apple CEO Tim Cook said on the earnings call that there is “no clear evidence of a macroeconomic impact” on iPhone sales. Cook added that the company even set a record in the third quarter “in both revenue and the number of people switching to the iPhone,” adding that “customers continue to see that the iPhone remains the gold standard for phones.” smart”.
Steady iPhone sales are in part related to other predictions from some in the industry that Apple will raise the price of its latest iPhones — though it’s difficult to predict by how much.
Ming-Chi Kuo, an influential Apple analyst in Asia, tweeted earlier this month, he expects Apple to increase the average selling price of the iPhone 14 series by about 15% compared to the iPhone 13 series. (Currently, the regular iPhone 13, not the mini, starts at $799, iPhone 13 Pro starts at $999 and iPhone 13 Pro Max starts at $1,099.)
In a research note on Monday, Wedbush Securities analysts Dan Ives and John Katsingris predicted that Apple will raise the price of its latest high-end models by around $100. “We believe the $100 price increase on iPhone 14 Pro/Pro Max is likely due to increased component prices as well as additional functionality on this new release,” the note states. The cameras on the upcoming iPhone Pro models are said to be getting an upgrade that could justify the price increase, among other improvements.
Wedbush analysts also predict strong underlying demand for the next iPhone, estimating that around 240 million of the 1 billion iPhone users worldwide haven’t upgraded their phones in more than three years. half.
Wood also notes that Apple’s iPhone is in some ways insulated from macroeconomic pressures. Consumers are also increasingly considering smartphones as “almost essential” compared to some other technological devices. “Do you really need an iPhone, that’s still a question, but people who already have iPhones are incredibly loyal,” Wood said.
“I think Apple has some advantages over its competitors,” he added. “There are people who are always waiting for a new iPhone.”
Apple, known for being tight-lipped in the run-up to its product launches, did not respond to CNN Business’s request for comment Monday on the latest iPhone prices. The company sent out invites last week for the September 7 event, confusingly named: “Far away.”
The event will be broadcast on Apple’s website from the company’s headquarters in Cupertino, California, starting at 1 p.m. ET.