With Apple expected to announce the new iPhone 14 lineup at its upcoming event next Wednesday, a big question mark remains over how much, in this economy, the tech giant will charge. much for its latest and greatest smartphones.
Apple has some well-known 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 price conundrum,” 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 also faces rising costs related to iPhone components and transportation.
“My expectation is that Apple will probably have to raise prices,” Wood told CNN Business. But given the stress consumers are facing, he thinks Apple will also do “everything they can to make that as minimal as possible”.
In addition to broader signals of a worsening economy, Apple is also facing other headwinds as it prepares for product launches next week. Supply chain hiccups stemming from China’s zero-Covid policy are partly related to the company’s 11% year-over-year drop in quarterly profit reported last month. However, Apple CEO Tim Cook said during the earnings call that there is “no clear evidence of a macroeconomic impact” on iPhone sales. Cook added that the company even set a third-quarter record “in both revenue and iPhone switchers,” adding that “customers continue to find that the iPhone remains the gold standard for smartphones. ”
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 expected Apple to increase the average selling price of the iPhone 14 series by about 15% over 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 would raise the price of its latest high-end models by around $100. “We believe a $100 price increase on the iPhone 14 Pro/Pro Max is likely to occur in-store due to increased component prices as well as added functionality on this new release,” the note states. . The cameras on the upcoming iPhone Pro models are rumored to be upgraded to possibly justify the price increase, among other improvements.
Wedbush analysts also predict strong underlying demand for the next iPhone, estimating that some 240 million of the 1 billion iPhone users worldwide haven’t upgraded their phones in more than three and a half years. .
Wood also notes that Apple’s iPhone is to some extent insulated from macroeconomic pressures. Consumers are also increasingly considering smartphones as “near essential” compared to some other technological devices. “Whether you really need an iPhone, that’s the question, but people who already have iPhones are amazingly 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, which is notoriously tight-lipped during 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 out.”
The event will be broadcast on Apple’s website from the company’s headquarters in Cupertino, California, starting at 1 p.m. ET.