BackApple Blinks on iPhone Pricing
The company avoids expected price hikes on the iPhone 15 family, which might curb revenue growth in the coming year.
PremiumApple won’t be jacking up the price on its faithful iPhone buyers. That could cost it.
The world’s largest company by market value updated the key product line of its largest business on Tuesday. The new iPhone 15 family turned out to be mostly as expected, with enhanced camera features and USB-C charging ports on all models and titanium casing with a new central processing chip on the Pro devices.
One surprise, though, was Apple avoiding an across-the-board price hike. Prices on the different memory configurations of the iPhone 15 family are identical to last year’s iPhone 14 lineup, with the only exception being the removal of a 128GB version of the Pro Max—the lowest priced phone in that lineup. That trick raised the average selling price of the Pro family by less than 2%. Numerous leaks ahead of the event suggest Apple was planning a more significant bump, leading several analysts to project an increase of $100-$200 across at least the new iPhone Pro family. That would have resulted in the average selling price of that crucial lineup rising by at least 8%.
Apple shares closed down nearly 2% Tuesday following the event. That alone isn’t unusual; the stock has fallen after seven of the last 10 iPhone introductions. But the shares had already slid nearly 6% over the past week on growing worries about Apple’s business in China, where the iPhone might be facing a ban among government workers as well as a resurgent local competitor in Huawei, which has launched a new phone that is reportedly delivering performance specs close to Apple’s premium devices.
Including Tuesday’s decline, the past week has now cost Apple nearly $210 billion in market capitalization—more than the value of nearly 94% of the companies on the S&P 500.
Smartphone prices are already in nosebleed territory—especially for premium devices such as the iPhone Pro and foldable screen devices from companies such as Samsung and Google. So it is possible that Apple determined that this year’s rather incremental updates to the iPhone couldn’t sustain a price hike. One of those updates—the USB-C charging port—could actually result in extra costs for some buyers since the port replaces the Lightning standard that the company has used on its iPhones for more than a decade. That update came at the behest of new rules by the European Union. Apple is conveniently now selling an adapter to connect old lightning cables to the new iPhones—for $29 a pop.
Apple also might feel more of a need to keep its position strong in its core domestic market given the challenges in China. The segment for mainland China, Hong Kong and Taiwan accounts for 19% of the company’s revenue, and the iPhone has long ruled the premium portion of that country’s smartphone market, even counting as a status symbol among the elite.
But the weakening Chinese economy and growing animosity with the U.S. is making life difficult for American brands and major tech players there.
The new Huawei phone is also a wild card; Reuters reported Tuesday that the company has boosted its shipment target for its new Mate 60 series smartphone by 20% for this year. In a report Wednesday, Bernstein analyst Toni Sacconaghi noted that Apple retained its iPhone prices in China, “possibly reflecting concerns about a weaker consumer and rising political backlash."
Keeping iPhone prices stable will likely appeal to consumers already struggling with high inflation. It could also end up crimping Apple’s growth, though, as analysts had expected higher prices to offset low single-digit percentage growth in iPhone unit shipments for the fiscal year ending next September.
Those new titanium iPhones had better shine.
Write to Dan Gallagher at dan.gallagher@wsj.com
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