Why Apple will increase the price of iPhone 14
Apple’s head is in the stars. Or, at least, he wants to give the impression that his gaze is directed “away” (“away”), the slogan of its big conference going to school this Wednesday, September 7, from its headquarters in Cupertino, California. However, in the context of significant price increases around the world (inflation +5.8% in France and +9.1% in the US), the American firm’s concerns are more on the ground, in the context of strong geopolitical tensions related to the war in the US. Ukraine and China’s military provocations against Taiwan face challenges, particularly in electronic chips, and in addition the euro is at record lows against the dollar.
“The real question is how Apple will introduce new products with limited innovation in an uncertain context”Forrester’s senior analyst Tomas Husson emphasizes.
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Because do not expect a revolution in the radius of innovations. Tim Cook, the CEO of the Apple brand, will use this event to introduce smartphones that are presented as more beautiful and more sophisticated, as every year. But more than fifteen years after the creation of the iPhone, it is impossible to reinvent the wheel. It’s easy to guess that the newest model in the range, the iPhone 14, will have a better camera, a more powerful battery, better 5G connectivity and even increased computing capabilities. Don’t really panic. A new version of the Apple Watch — perhaps with a temperature sensor and improved health tracking features — won’t be enough to generate excitement. Especially important information of this conference will come at the end of it: price.
“Postpone component price increase”
All analysts predict an increase in the price of the new model compared to the price of the iPhone 13 – it is sold between 809 and 1839 euros, depending on the version and options. Basic explanation: electronic components. Demand for semiconductors exploded after the pandemic, and more so with Sino-Taiwan tensions, as sector revenues surged. According to the Gartner Institute, +26.3% in 2021 and +7.4% in 2022. Leaks from suppliers thus allow us to guess that only the most expensive versions of the iPhone 14 (the “Pro” and “Pro Max”) will be equipped with new chips, while the rest will reuse the same iPhone. 13.
Beyond that, the dearth is the price increase. The Taiwanese giant TSMC raised its prices by an average of +20%, the daily “Nikkei” reveals. Apple, a TSMC customer, and those directly affecting all electronics manufacturers. For example, Sony decided to increase the price of the PlayStation 5 console by 50 euros (+10%), and the French speaker manufacturer Devialet decided to increase the price of the Phantom (103 dB version) by 310 euros (+16%).
“All tech groups are starting to pass component price increases on to consumer prices, and Apple was the first to do so in June with a +32% increase in new iMacs”notes Jean-Christophe Liaubet, partner at EY Fabernovel consulting firm.
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Launched in July, the MacBook Air M2 is actually priced at €1,499, compared to €1,129 for its predecessor. Historically, Apple has always positioned itself as a high-end technology brand. However, the trend in luxury isn’t to cut prices – some popular bags have seen their labels fetch +30%. It also has to offset a decline in volume as the smartphone sector begins to shrink: CounterPoint estimates the decline to be between -9 and -10% in the second quarter, and -5% for Apple in particular. So, in order for the brand to continue to show growth in turnover and profits that please the stock market, it has no choice but to increase its prices. “It’s the same logic with luxury brands, Jean-Christophe Liaubet continues. And it’s a strategy that makes it easier to get through market downturns. »
“$100 more”
So much so that the iPhone 14, especially in the “Pro” and “Pro Max” versions“definitely $100 more”, analyst Dan Ives said. Before him, analyst Ming-Chi Kuo was planning +15%. But in addition, France and all of Europe in general will pay the lowest price of a euro against the dollar. The euro fell below $0.99 for the first time in two decades on Monday as the currency was hit by fears for the European economy following the shutdown of the Nord Stream 1 gas pipeline by Russia’s Gazprom. Jean-Christophe Liaubet of EY Fabernovel warns:
“Mechanically, the weakening of the euro against the dollar will continue to affect the prices of technological products sold here. »
So, European analysts do not even dare to estimate the price of the future iPhone. Nevertheless, if we rely on the growth of the MacBook Air, then we can estimate that the iPhone 14 Pro will sell for 1539 euros – more than the minimum wage. “The most interesting thing will be to see how much Apple sets the new price for the old model, which will give it most of its sales.”Forrester’s Thomas Husson notes.
Indeed, each new generation of iPhone is accompanied by a transition to a lower price of the previous generation. What many consumers note – the brand, but does not disclose the details of the models sold. Today, iPhone 12 is sold for 689 euros. Will this price remain for the iPhone 13? Likewise, will the older version of the iPhone SE, which sells for 529 euros, continue? Answers this Wednesday.
