Apple’s Priciest iPhones Take Centre Stage as Industry Smartphone Sales Decline | Kanebridge News
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Apple’s Priciest iPhones Take Centre Stage as Industry Smartphone Sales Decline

Tue, Sep 6, 2022 9:12amGrey Clock 4 min
Tech giant is expected to reveal the iPhone 14 lineup during an event Wednesday.

Apple Inc.’s most expensive smartphones will take focus Wednesday as the company unveils the iPhone 14 lineup amid a global slowdown for all but the priciest of gadgets.

The company’s Pro models—the 6.1- and 6.7-inch display versions—have helped fuel record sales and profits for the past two years as the tech giant unveiled its first 5G-capable iPhones in late 2020.

Those versions, which have been priced starting at $200 more than the base-level offering, are poised to get some of the most notable upgrades in a cycle that is expected to be more evolutionary than revolutionary for the iPhone.

Apple’s first in-person product event since Covid-19 upended modern life will include reporters at the company’s headquarters in Cupertino, Calif., and be broadcast simultaneously via its website beginning at 1 p.m. in New York.

The question among many investors is how long can demand—which has been at record heights—last for the iPhone during uncertainty around the economy and rising prices.

Apple has remained confident that there is still interest in converting to the latest technology. “Around the world, 5G penetration is still low,” Tim Cook, Apple chief executive, told analysts in July. “And so I think there’s reason to be optimistic.”

So far, Apple has bucked an industrywide decline in smartphone shipments, which slipped almost 9% in the past quarter compared with a year earlier, according to researcher International Data Corp. During the first half, the bright spot in the market was smartphones priced above $900, according to Counterpoint Research.

Since the arrival of the 5G phones in late 2020, U.S. buyers have been shelling out more for their iPhones. Average selling prices of the iPhone rose to $954 in the June quarter compared with $783 in the September quarter in 2019, when the iPhone 11 was introduced, according to estimates by Consumer Intelligence Research Partners’ survey of consumers.

That is because more buyers have been opting for the more expensive Pro models and spending more to add more storage on the device, which allows for more photos and data-heavy videos to be kept on the phone.

The iPhone 13 Pro comes with 128 gigabytes, while an extra $100 bumps that to 250 gigabytes. For an extra $500, buyers can get 1 terabyte. More than 50% of iPhone buyers were upgrading their storage in the 12 months ending in June, according to Consumer Intelligence Research Partners, compared with less than 40% in 2019.

“That phone mix has moved more premium in recent years,” said Josh Lowitz, co-founder of Consumer Intelligence Research Partners. “For me, that was not anticipated.”

Continuing to sell pricier phones could help Apple boost revenue even if the rate of unit sales slows or becomes stagnant in the coming fiscal year. The 5G phones fuelled estimated unit growth of 27% in fiscal 2021, according to FactSet data. Apple doesn’t release unit sales.

This fiscal year, which ends in September, is expected to see iPhone unit sales slow to 2.5% and grow just 0.8% next year, according to analysts. But those analysts, on average, expected iPhone revenue to rise 6.7% to a record $204.9 billion this fiscal year, followed by an expected 2.7% rise in the 2023 fiscal year.

On Wednesday, the biggest changes are planned for the most-expensive Pro versions. Those models are expected to have more-powerful cameras and better video performance and to receive Apple’s new A16 chip, according to people familiar with the plans.

The base models will get an enhanced version of the current A15 processor. The base lineup is also expected to get the larger 6.7-inch display along with the cheaper 6.1-inch version, while the iPhone 14 lineup won’t have the Mini version with the 5.4-inch display this year, people familiar with the plans said.

The Pro phones, which have started at $999 and $1,099, might also see a price increase of $100, while the base models stay the same—making the difference between a base model and a flagship model $300, analysts have predicted.

Pricing is always a complicated endeavour, made even more difficult this year by rising costs for parts and falling buying power among consumers. But people continue to spend on higher-end phones.

Those pricier phones have been made more palatable to buyers, thanks to a war between U.S. cellular carriers fighting to keep market share as they push to transfer as many customers over to new faster 5G connectivity.

Those carriers have been investing heavily in the 5G technology, and they saw the first iPhones capable of using the technology as a potential catalyst for poaching customers, setting off record incentive spending to offer deals to customers to upgrade their phones.

In the final three months of last year, after the iPhone 13 lineup fully launched, U.S. carriers collectively spent a record amount on incentives totalling $5.7 billion and the average customer saw about $300 of benefit, according to consulting firm BayStreet Research LLC.

The carriers are effectively subsidising Apple’s high iPhone prices to get people to buy the Pro models, BayStreet Founder Cliff Maldonado said. He said he expects record incentives again when the latest iPhones arrive.

With iPhone buyers on a little more than three-year cycle of upgrading, iPhone 11 owners will be emerging into a dramatically different market than when carriers spent an estimated $2 billion on incentives during the final three months of 2019.

“The iPhone 11 was a big cycle,” Mr. Maldonado said. “This is the last big chunk of people who don’t have 5G.”


Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

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What’s still keeping American workers out of the office?

At a time when restaurants, planes and concert arenas are packed to the rafters, office buildings remain half full. Thinly populated cubicles and hallways are straining downtown economies and, bosses say, fragmenting corporate cultures as workers lose a sense of engagement.

Yet workers say high costs, caregiving duties, long commutes and days still scheduled full of Zooms are keeping them at home at least part of the time, along with a lingering sense that they’re able to do their jobs competently from anywhere. More than a dozen workers interviewed by The Wall Street Journal say they can’t envision returning to a five-day office routine, even if they’re missing career development or winding up on the company layoff list.

Managers say they will renew the push to get employees back into offices later this year. The share of companies planning to keep office attendance voluntary, rather than mandatory, is dropping, according to a survey released in May of more than 200 corporate real-estate executives conducted by property-services firm CBRE, one of the largest managers of U.S. office space.

A battle of wills could be ahead. The gap between what employees and bosses want remains wide, with bosses expecting in-person collaboration and workers loath to forgo flexibility, according to monthly surveys of worker sentiment maintained by Nicholas Bloom, a Stanford University economist who studies remote work.

Escalating expenses

One reason workers say they’re reluctant to return is money. Some who have lost remote-work privileges said they are spending hundreds, or in some cases thousands, of dollars each month on meals, commutes and child care.

One supercommuter who treks to her Manhattan job from her home in Philadelphia negotiated a two-day-a-week limit to her New York office time this year. Otherwise, she said she could easily spend $10,000 a year on Amtrak tickets if she commuted five days a week.

Christos Berger, a 25-year-old mortgage-loan assistant who lives outside Washington, D.C., estimates she spends $2,100 on child care and $450 on gas monthly now that she is working up to three days a week in the office.

Berger and her husband juggled parenting duties when they were fully remote. The cost of office life has her contemplating a big ask: clearance to work from home full time.

“Companies are pushing you to be available at night, be available on weekends,” she said, adding that she feels employers aren’t taking into account parents’ need for family time.

Rachel Cottam, a 31-year-old head of content for a tech company, works full time from her home near Salt Lake City, making the occasional out-of-town trip to headquarters. She used to be a high-school teacher, spending weekdays in the classroom. Back then, she and her husband spent $100 a week on child care and $70 a week on gas. Now they save that money. She even let her car insurance company know she no longer commutes and they knocked $5 a month off the bill.

Friends who have been recalled to offices tell Cottam about the added cost of coffee, lunch and beauty supplies. They also talk about the emotional cost they feel from losing work flexibility.

“For them, it feels like this great ‘future of work’ they’ve been gifted is suddenly ripped away,” she said.

Parent trade-offs

If pandemic-era flexible schedules go away, a huge number of parents will drop out of the workforce, workers say.

When Meghan Skornia, a 36-year-old urban planner and married mother of an 18-month-old son, was looking for a new job last year, she weeded out job openings with strict in-office policies. Were she given such mandates, she said, she would consider becoming an independent consultant.

The firm in Portland, Ore., where Skornia now works requests one day a week in the office, but doesn’t dictate which day. The arrangement lets her spend time with her son and juggle her job duties, she said. “If I were in the office five days a week, I wouldn’t really ever see my son, except for weekends.”

Emotional labor

For some, coming into the office means donning a mask to fit in.

Kenneth Thomas, 42, said he left his investment-firm job in the summer of 2021 when the company insisted that workers return to the office full time. Thomas, who describes himself as a 6-foot-2 Black man, said managing how he was perceived—not slipping into slang or inadvertently appearing threatening through body language—made the office workday exhausting. He said that other professionals of colour have told him they feel similarly isolated at work.

“When I was working from home, it freed up so much of my mental bandwidth,” he said. His current job, treasurer of a green-energy company, allows him to work remotely two or three days a week.

Lost productivity

The longer the commute, the less likely workers are to return to offices.

Ryan Koch, a Berkeley, Calif., resident, went to his San Francisco office two days a week as required late last year, but then he let his attendance slide, because commuting to an office felt pointless. “I’m doing the same video calls that I can be doing at home,” he said.

Koch, who works in sales, said his nonattendance wasn’t noted so long as his numbers were good. When Koch and other colleagues were unable to meet sales quotas in recent weeks, they were laid off. Ignoring the in-office requirement probably didn’t help, he said, adding he hopes to land a new hybrid role where he goes in one or two days.

Jess Goodwin, a 36-year-old media-marketing professional, turned down an offer to go from freelance to full time earlier this year because the role required office time and no change in pay.

Goodwin said a manager “made it really clear that this is what they’re mandating right now and it could change in the future to ‘you have to be back in five days a week.’”

Goodwin, who lives in Brooklyn, N.Y., calculated that subway commutes to Midtown Manhattan would consume more than 150 hours annually, in addition to time spent getting ready for work.

Goodwin’s holding out for a better offer. She said she would consider a hybrid position if it came with a generous package and good commute, adding: “And I would also probably need something in my contract being like, ‘We’re not going to increase the number of days you have to come in.’”


Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

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