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

By TIM HIGGINS
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.”



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Hoping to recreate a freewheeling world tour from their youth, two retirees set themselves a ‘no itinerary’ challenge: Can they improvise their way across seven countries?

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In our 20s, my new husband and I took a year off from our fledgling careers to travel in Southeast Asia. Equipped with paper maps, we began in China and improvised each day’s “itinerary” on the go. A gap year for grown-ups, I called it, although I scarcely qualified as one.

Nearly 40 years later, we are new retirees with the same wanderlust. We wondered: Could we recapture the thrill of winging it, enduring rough roads and cheap hotels?

We could and did, but for 2½ months instead of 12. We mapped out a route that would take us up Africa’s east coast and then—who knows where? Here’s how we rolled and five important lessons we learned on a 6,000-mile trip.

Kenya: Live large by day

Our first stop was the tiny, car-free island of Lamu, well-known for its high-profile visitors, from Kate Moss to the Obamas. This low-key getaway offered white-sand beaches, dhows — boats you can rent for day cruises and snorkelling — and lots of donkeys, the main mode of transport.

We considered the beachside Peponi Hotel in Shela, a hot spot since the 1960s (Mick Jagger bunked there). But room rates start at $250, far above our per-night budget of $70 or less. When contemplating almost 100 nights of travel, price matters.

So we chose a villa in the dunes called Amani Lamu, $61 per night for an en suite room with a private terrace and shared plunge pool.

We still had a cool Peponi moment come sunset: On the hotel’s whitewashed veranda, we sipped Pepotinis and plotted our next day’s interlude at the Majlis, Lamu’s fanciest resort (from $580).
With a $20 day pass, we could lounge around its pools and beach bars like proper resort habitués.

Lesson learned: Live like billionaires by day and frugal backpackers by night.
Must-go: Across the bay on Manda Island, bunk a night in a thatched-roof bungalow on stilts at Nyla’s Guest House and Kitchen (from $48 with breakfast).
After a dinner of doro wat, a spicy Ethiopian chicken stew and rice, the sound of waves will lull you asleep.

Egypt: Ask. Politely.

From Lamu, we flew to Aswan in Egypt. Our “plan”: Cruise down the Nile to Luxor, then take a train to Cairo, and venture to Giza’s pyramids.

Turns out it’s the kind of thing one really should book in advance. But at our Aswan hostel, the proprietor, who treated us like guests deserving white-glove service, secured a felucca, a vessel manned by a navigator and captain-cum-cook. Since we’d booked fewer than 24 hours in advance and there were no other takers, we were its sole passengers for the three-day trip.

One day, we stopped to tour ancient temples and visit a bustling camel fair, but otherwise, we remained on board watching the sunbaked desert slide by. We slept on futons on the deck under the stars. The cost: about $100 per night per person, including three meals.

Lesson learned: Ask for help. We found Egyptians kind and unfazed by our haplessness, especially when we greeted them respectfully with assalamu alaikum (“Peace to you”).
Must-go: For buys from carpets to kebabs, don’t miss Cairo’s massive Khan el-Khalili bazaar, in business since 1382. We loved the babouche, cute leather slippers, but resisted as our packs were full.

Turkey: Heed weather reports

Next stop Tunisia, via a cheap flight on EgyptAir. We loved Tunisia, but left after six days because the weather got chilly.

Fair enough, it was January. We hopped continents by plane and landed in Istanbul, where it snowed. Fortunately, two of Istanbul’s main pleasures involve hot water. We indulged in daily hammams, or Turkish baths, ranging from $30 to $60 for services that included, variously, a massage, a scrub-down and a soak.

Beneath soaring ceilings at the temple-like Kılıç Ali Paşa Halamı, brisk workers sternly wielded linen sacks to dowse my body in a cloud of hot foam.
In between visits to Ottoman-era mosques and the city’s spice markets, we staved off the chill by drinking fruity pomegranate tea and sampling Turkish delight and baklava at tea salons.

A favourite salon: Sekerci Cafer Erol in Kadıköy, a ferry-ride away on the “Asian” side of Istanbul, where the city adjoins Asia.

Lesson learned: Pay attention to the weather gods. We foolishly took the concept of travelling off-season too far.
Must-go: Don’t miss the Istanbul Modern, the Renzo Piano-designed art museum in the historic Beyoğlu district.

Cambodia: Chill out

After a long flight from Istanbul, we spent two weeks in Laos and then hopped another plane to Cambodia, specifically Koh Rong Sanloem, another car-free island.

Like vagabonds, we lolled by the warm, super-blue water of Sunset Beach, steps from our bungalow at Sleeping Trees (from $54 per night).
A caveat: You have to sweat to get to this island paradise. We took a bus, a ferry and then hiked for 40 minutes up and down a steep hill and through a jungle. You’ll find only a handful of “resorts”—simple bungalow complexes like ours. There’s nothing much to do. I’ll be back.

Lesson learned: Until our week in Cambodia, we’d been travelling too much and too fast, prioritising exploration over relaxation. This island taught us the pleasures of stasis.
Must-go: Spend one day in Cambodia’s capital city, Phnom Penh, to delve into its sobering history. Tour the Choeung Ek Genocidal Centre, site of a Killing Field, where nearly 9,000 Cambodians died.

Thailand: Be a frugal hedonist

We spent our last two weeks on the island of Ko Samui, where season three of “The White Lotus” was shot.

We went there for its astounding beauty, not the luxury resort experience that comes with too many boisterous lads on vacation, snake farms and traffic jams in town.

Truth be told, we flouted our budget rules to book an Airbnb with a pool (from $300) in the hills of Lipa Noi on the island’s quiet side. We joined the nearby Gravity Movement Gym to work out, but cooked our own meals to keep our final tabulation of expenses within reach.

Lesson learned: Pinching pennies feels restrictive, no matter how lush the surroundings. And it leads to bickering, as partners tally up who squandered how much on what.
With the end in sight, we splurged on the villa and even bought souvenirs, knowing we’d lug them for days, not weeks.
Must-go: Take the 30-minute ferry to sister island Ko Pha Ngan for its peace, love and yoga vibe and, once a month, full-moon parties.
Via Airbnb, we bunked at a Thai house called Baan Nuit, run by the Dear Phangan restaurant proprietors.

We sampled steamed dumplings, white fish in a Thai basil sauce and spicy noodles for a mere $15 apiece.
Hey, indulge in that “White Lotus” moment if you dare!

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