On September 12, as part of their “Gather Round” event, Apple announced three new phones and a new version of the Apple Watch. The new Series 4 Apple Watch starts at $399 for the 40mm size but can go all the way up to over $500 with added features. The iPhone XR, XS, and XS Max are the latest additions to the iPhone X lineup, pushing not only the limits of new features but also the limits of people’s wallets. The XS Max starts at $1,099 with 64GB of storage but goes all the way up to $1,449 with 512GB, making it the most expensive mass-produced phone ever. However, with the introduction of the XS and XS Max, Apple has also produced a “budget” option, the XR which starts at $749, the only trade-off being a couple of reduced features such as a smaller battery, single camera lens, and a slightly downgraded screen.
Ever since 2007 Apple has been slowly increasing the average price of the iPhone, but with the $999 iPhone X release last year they have made a bigger jump than usual. However, with the release of the XS Max, Apple has made another, even bigger leap. Even though according to analysts, component prices are decreasing around the world, Apple’s pricing does not reflect this. What it does reflect is their strategy to test how much consumers are willing to pay. Even though Apple has a lot of loyal followers, at some point consumers will get annoyed by the lack of real innovation.
Even within the City and Country community, people are realizing that buying new Apple products when they come out might not be worth the cost. A survey sent out showed that 50% of the respondents wouldn’t purchase a new iPhone, and of the other 50%, the majority said they would only buy the XR, the cheapest option. The most common reasons for not purchasing a new phone were that the current phone they have works well, or the new products were too expensive. Almost 80% of the survey respondents also said that they thought iPhones were too pricey and weren’t always worth it. Allen Entrekin said, “I believe that Apple charges an extremely large Apple tax for all of their products.”
Apple is also very good at successfully getting attention and generating awareness, part of the reason why consumers end up purchasing their phones, despite the massive price tag. With a combination of “accidental" leaks, good marketing, and overall brand awareness, Apple makes sure that everyone knows about their next generation of products. 100% of the survey respondents were already aware of the iPhone release, compared to companies like OneNote and LG, where the majority of people were not aware of a new event. Apple’s combination of good marketing and brand loyalty are what allow it to raise prices, and because if it other companies are increasing their prices just because it is what’s expected.
However, the price increase isn’t for nothing, and the new products do have useful features (albeit only for some people). Creative professionals, such as photographers, definitely would benefit from the better camera, increased storage and larger screen on the XS Max. The XS and XS Max also have a much faster processor, meaning that games and apps run smoother, and things like Siri and Face ID benefit from the all-new A12 Bionic chip, which includes a dedicated artificial intelligence processor. This means that not only is Face ID faster and more accurate, but Siri might actually start to understand what you’re saying.
Another product that significantly benefits from the increased price is the new Apple Watch. While the Series 4 Watch wasn’t the focus of the event, for some people it’s the most important product that Apple has released in years. This is because the new smartwatch is the watch to have an FDA-cleared EKG heart monitor. The heart monitor allows the watch to detect irregular heartbeats, or even a heart attack and alert your emergency contact. The EKG feature also allows the watch to send detailed PDF reports to your doctor. The Series 4 also has a new gyroscope, which enables it to detect falls. If the watch detects a fall, it can then track how long the person has been down, and if it exceeds a particular time, it also alerts your emergency contact. These features are groundbreaking and could save the lives of older adults, and especially people at risk for heart attacks.
Though this round of Apple products come at a cost, they do have a couple of important features, especially in the Apple Watch. However, it is clear that if Apple wants to be able to keep this prices, while also maintaining their client base, they will need to do something big because eventually people will get irritated with the increase of pricing yet the lack of real innovation.