Is Apple Losing Its Edge?
Today is new iPhone day, but as customers gear up to get their hands on the latest Apple gadgets, sales on launch day seem slower than usual.
As a seasoned Apple fan and marketing expert, I have some thoughts about this product launch. Let’s dive into my analysis.
Slow Start for the New iPhone
Initial reports say Apple is experiencing lower demand for flagship models this year (iPhone 16 Pro and Pro Max) while base model sales seem to be in line with the expectations.
(Source: Ming Chi-Kuo https://medium.com/@mingchikuo/iphone-16-first-weekend-pre-order-analysis-estimated-total-sales-of-about-37-million-units-pro-0a04869b147c)
The hype around the launch also seems significantly lower: customers are able to walk to Apple stores and grab their preferred model, which would typically be sold out for several days/weeks in previous years.
Apple employees are also able to buy the newer models on discount right from day one – a perk usually delayed several weeks/months after launch.
(Source: 9to5mac https://9to5mac.com/2024/09/15/lower-iphone-16-pro-demand)
Why is that?
Some are attributing the lackluster demand of the Pro model due to the delayed rollout of the much anticipated AI features, which are expected to roll out later in the fall for the US, and early next year for other geographies.
(Source: Bloomberg https://www.bloomberg.com/news/articles/2024-07-28/apple-intelligence-to-miss-initial-release-of-upcoming-ios-18-ipados-overhauls)
The iPhone 16 Pro is relatively similar to last year’s model, and without AI features there’s little incentive for consumers to upgrade.
I think the Pro model could be a slow-burner this year, with sales picking up in the longer tail as AI features roll out and customers realize they’re missing out on features or new features go viral on social.
Apple US pricing is solid
Some have pointed out that consumers simply lack disposable money to drop $1000 on a new iPhone these days.
While it’s true that purchasing power has decreased due to the past years’ market conditions, I think that’s only part of the story. Besides, this trend is likely to revert in the medium term due to the recent rate cuts, contributing to higher long-tail sales than usual.
One thing I found interesting of this launch is how Apple is using smart pricing tactics to encourage sales. In the US, Apple has kept the price of the base flagship iPhone consistent over the past 7 years.
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A new iPhone X was $999 in 2017. The latest flagship iPhone is still $999.
Due to inflation, this means new iPhones shave actually gotten cheaper over time.
Imo, this tactic to keep pricing at the $999 is solid, giving consumers a psychological anchor point, even though it is potentially eating their margins over time.
EU consumers gap is increasing
At the same time, new iPhones have gotten significantly more expensive outside the US.
In Europe/Italy where I’m from, the latest iPhone model will run you €1,239 or $1,383 – that’s a 35% markup from the US price of the same model (minus tax) and a 5% increase in price since 2017. All the while US pricing has stayed the same.
As a European consumer, this pricing disparity feels frustrating, and it's easy to understand why many of my friends back home are opting for other brands.
Add the ongoing ‘feud’ Apple has picked up with the EU, where it has announced local customers won’t be getting new features as their counterparts in the US. This discrepancy is likely further contributing to sluggish sales across the continent.
The Apple hype is alive in Asia
On the other hand, sales seem to do great in Asia. It is no coincidence that most of the images Apple chose to feature on their pressroom website showing crowds around the launch day are of stores located in the APAC region, with the notable exception of London’s Regent Street and New York’s Fifth Avenue flagship stores.
This might indicate Apple is consolidating its positioning with the East-asian audience, especially in China, South Korea, and India, and a shift of the consumer hype cycle around new Apple products from the western to the eastern side of the globe.
This shift is logical, given that Apple entered these markets later compared to its earlier, more established presence in the U.S., where its market penetration is already significantly higher.
What do you think of the latest iPhone launch? Is Apple losing its edge, or do you believe sales will be a slow burn with long-term growth?