Hiding in plain sight: Apple’s iPhone strategy

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The Macalope brings you this breaking news about Apple: Apple products cost too much. More updates on this late-breaking news as they come in.

Writing for the very nice people and editors and middle managers and a surprising number of luchadores over at Business Insider, Troy Wolverton says “Apple's $1,000 iPhones are turning it into a luxury brand — and it could lose a whole generation of customers.” (Tip o’ the antlers to Nick, Alex and Mickey.)

You’d think by reading that headline that all the iPhones Apple sells now are $1,000. That is not true. Some of them are more! But a lot of them are less. It’s especially confusing because the page title is “Apple’s iPhone XS and XR could leave out mainstream consumers” and the XR starts at $749.

Apple, it seems, has now fully bought into the notion that it's an upscale brand.

Dude, where were you for the last 15 years? They shipped a watch that was like $10,000.

Its move to revamp its device lineup by doubling down on thousand-dollar phones, and simultaneously dropping its least expensive model, has made clear that it's no longer overly concerned with appealing to customers of more limited means.

Yes, Apple has dropped the iPhone SE which started at $350, but that was also the cheapest iPhone ever according to this chart by Horace Dediu. The previous lowest price was $399. For most of the iPhone’s history, however, the cheapest device has been priced at $450—which is what the 32 GB iPhone 7 is currently priced at—or more. Wolverton seems to think Apple is breaking with history on the low end when in fact it’s going back to its historical norm.

It is true that Apple has raised the prices of its “all-new” models in the past two years, but you can still get a “new” iPhone for about what you almost always could.

Now, The Macalope is a huge fan of the SE. He personally hates these ungainly freaks of nature that have become the standard size for smartphones these days. He would have loved it if Apple had shipped an SE 2 with iPhone 8 internals. Sadly, he no longer thinks that’s in the cards, although he still has a smidgen of hope that some time in the future the company will ship an X-style phone in a smaller size than the iPhone XS.

The iPad's $500 price was considered a bargain when it first launched.

And now it’s even cheaper, starting at only $329. Weird. Wasn’t The Macalope just reading something about Apple implementing premium-brand pricing that was going to cause it to lose a whole generation of customers? Oh, right, it’s this thing he’s reading right now.

Longer term, though, this focus on the high end could weigh heavily on the company. With iPhones costing more, Apple fans are likely to hold on to their phones longer…

Apple would certainly be shocked to learn this except for one thing: that’s literally their plan. Here’s Dediu again, talking about Apple’s vice president of Environment, Policy and Social Initiatives Lisa Jackson’s segment of the keynote:

To emphasize the second point she said Apple now strives to design and build durable products that last as long as possible. That means long-lasting hardware coupled with long-lasting software. She pointed out that iOS 12 runs even on iPhone 5S, now five years old. Because iPhones last longer, you can keep using them or pass them on to someone who will continue to use them after you upgrade.

If The Macalope had a nickel for every time a pundit worriedly describe an Apple strategy as some disaster the company was blundering into he might be able to afford an iPhone XR.

  
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