Apple CEO Tim Cook won't raise iPhone 14 prices. He has to face a fierce rival first - and it's not Samsung

Apple CEO Tim Cook won’t raise iPhone 14 prices. He has to face a fierce rival first – and it’s not Samsung

Apple has something bigger than Samsung’s 005930,
-0.71%
foldable phone to worry about: Inflation.

None of the new iPhone 14 devices have raised prices over their iPhone 13 counterparts, Wednesday’s event showed, although many analysts expect the company to raise prices for high-end offerings.

When Apple AAPL,
+1.88%
unveiled the iPhone 13 last September, inflation was hot – but as consumers and investors scrutinize the newly unveiled iPhone 14 lineup, they will do so while sweating through even hotter inflation.

The iPhone 14 stays with a starting price of $799, the iPhone 14 Pro starts at $999, and the iPhone 14 Pro Max starts at $1,099. Prices had been the real unknown ahead of Wednesday afternoon’s event.

Still, questions remain. Despite unchanged prices for the iPhone 14 lineup, it’s worth wondering how many people will have the money and ability to spend on Apple’s latest line of smartphones, watches and headphones.

The question of affordability has been put into a tough context by a new Gallup poll released Wednesday, asking how many people are burned by the high cost of living and what they are doing to deal with it.

A majority of Americans, 56%, now say inflation is a severe or moderate financial hardship that threatens their ability to maintain their current standard of living, the poll found. That’s up from 45% last November and 49% in January.

When Apple unveiled the iPhone 13 last September, inflation data from the federal government showed a 5.4% year-over-year increase. In July, it rose 8.5% year-on-year – a colder figure than expected, helped by lower gasoline prices.

A majority of Americans, 56%, now say inflation is a severe or moderate financial difficulty that threatens their ability to maintain their current standard of living.


— Gallup Poll

While rising costs have long been hardest on low-income households earning less than $48,000 a year, Gallup said the biggest increase in self-reported hardship came from middle- and upper-income households.

These are people living in households with annual incomes ranging from $48,000 to $89,999 and above $90,000 – presumably prime demographics for the latest Apple gear. According to analysts, these are Apple’s AAPLs,
+1.88%
favored customers for its more expensive wares.

From November 2021 to August 2022, there was a 17 percentage point increase in the number of middle-income households reporting financial hardship, and for high-income households, there was a 12 percentage point increase.

Low-income households reported a four-point increase, but self-reported difficulties were much more prevalent, rising from 70% to 74%. They are unlikely to spend hundreds of dollars on the latest iPhone, experts say.

Reducing spending or buying only the essentials are the best ways to fight inflation, Gallup said. A quarter (24%) said they were spending less, while second place was tied between less vacation and less driving, at 17%.

JP Morgan analysts said they expect “wider rollout” of buy-it-now, pay-later plans and “greater focus” on how it can apply to people who change or upgrade their Apple technology.

Analysts expected the standard iPhone model to stay at the existing base price of $799, but thought the price of other versions, like the iPhone Pro and Pro Max, could see price increases. .

On an earnings call in July, Cook said he hadn’t seen “clear evidence of a macro impact” on iPhone business. But there was pressure on wearables (like watches and AirPods) and the home and accessories sector.

Still, the news was good for iPhones. The company earned $40.67 billion in iPhone revenue in the second quarter, beating expectations of $38.59 billion.

The real “unknowns” in Wednesday’s event were for prices during the high inflation at the time, a JP Morgan JPM said,
+0.48%
note published before the call. This really applies to wearables, which people consider more discretionary than iPhones, the analysts wrote.

The company’s latest Apple Watch SE starts at $249 with GPS and $299 with the addition of cellular capability. For the Series 8, prices start at $399 with GPS, and they start at $499 when adding cellular. The Apple Watch Ultra, billed as a rugged watch for extreme sports enthusiasts, will retail for $799.

See also:

Apple’s iPhone 14 event could herald a new satellite era for smartphones

#Apple #CEO #Tim #Cook #wont #raise #iPhone #prices #face #fierce #rival #Samsung

Leave a Comment

Your email address will not be published.