Apple's Biggest New Product Launch Surprise: No Price Increases

Apple tacitly acknowledges - finally? - that there is a limit to how much people can or will pay for smartphone. JL

Dan Gallagher reports in the Wall Street Journal:

A slimmer iPhone lineup with more configurations available for $600 and under is a distinct difference from the past couple of years, which saw Apple and other smartphone makers testing buyers’ limits with rising prices. The company needs to keep its current base of customers happy—and upgrading devices as much as possible. It also will bundle a free year of its soon-to-launch TV+ service with sales of new devices, which may add to their appeal. At least it isn’t pricing even more of its customers out of the game yet.
Apple probably won’t sell many more iPhones in the coming year than last, but at least it isn’t giving customers an extra reason to stay away.
One of the few actual surprises to emerge from the company’s lengthy product event Tuesday was the absence of another increase in iPhone prices. The company’s newest high-end iPhone 11 Pro devices will still set customers back by $1,000 or more. But those prices match last year’s new high-end configurations.
Apple also added a more basic iPhone 11 model to this year’s lineup starting at less than $700 and dropped the price of some older phones—including a 20% cut for last year’s iPhone XR. The upshot is a slightly slimmer iPhone lineup with more configurations available for $600 and under.That is a distinct difference from the past couple of years, which saw Apple and other smartphone makers testing buyers’ limits with rising prices. It also is a notable move in the context of an escalating trade dispute with China, which still carries the potential of tariffs for Apple and other U.S. companies that make goods in China. A delay on those tariffs from the Trump administration may allow the new phones unveiled Tuesday to launch unimpeded later this month, but the dispute still sets a cloud of uncertainty over Apple’s coming fiscal year, which begins later this month.
Hence, Apple’s decision to finally hold the line on iPhone prices is a smart one. The company needs to keep its current base of customers happy—and upgrading devices as much as possible. Apple said Tuesday it also will bundle a free year of its soon-to-launch TV+ service with sales of new devices, which may add to their appeal.
Still, the coming year will be a tough one. IDC projected Monday that overall smartphone sales will fall by 2% this year—making for the third straight year of declines. Build-out of 5G networks would turn global demand around next year, but even that is uncertain. Apple is unlikely to have a 5G-compatible iPhone on the market until next fall anyway. But at least it isn’t pricing even more of its customers out of the game yet.