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

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.”

More than 280 modern and contemporary artworks will be up for sale Friday at Christie’s Post-War to Present auction in New York.

The live sale, which will be held at Christie’s Rockefeller Center sale room, has a low estimate of more than US$27 million and will be led by Frank Stella’s Abra I, 1968, which is estimated to fetch between US$1.2 million and US$1.8 million, according to a news release from Christie’s.

“Abra I is a fantastic example by Stella, a large-scale canvas from the protractor series,” says head of sale Julian Ehrlich. “It engages so many crucial aspects of his practice, including scale, geometry and colour, and has appeal to established post-war collectors and others who are just coming to historical art.”

Ehrlich, who has overseen the semiannual Post-War to Present sale since its first March 2022 auction, says his goal in curating the sale was to “assemble a thoughtful and dynamic auction” with works from both popular and lesser-known artists.

“With Post-War to Present, we really have a unique opportunity to share new artistic narratives at auction. It’s a joy to highlight new artists or artists who have been overlooked historically and be a part of that conversation in a larger art world context,” he says.

Joe Overstreet’s ‘Untitled’, 1970
Christie’s

Works from a number of female artists who were pioneers of post-war abstract painting, including Helen Frankenthaler, Lynne Drexler, and Hedda Sterne, will be included. The auction will also include pieces from a group of Black artists from the 1960s to present day, including Noah Purifoy, Jack Whitten, and David Hammons, in addition to a Christie’s debut from Joe Overstreet (Untitled, 1970) and an auction debut from Rick Lowe (Untitled, 2021).

“The story of art is necessarily diverse,” Ehrlich says. “The sale itself is broad, with more than 280 works this season, and it has been fun to think through artists inside and outside of the canon that we can put forward as highlights of the auction.”

In addition to Abra I, other top lots include Tom Wesselmann’s Seascape #29, 1967, (with an estimate between US$800,000 and US$1.2 million); Keith Haring’s Andy Mouse, 1986, (also with an estimate between US$800,000 and US$1.2 million); and Jack Whitten’s Garden in Bessemer, 1986 (with an estimate between US$700,000 andUS$1 million).

“I think of the Post-War to Present sale as being especially dynamic … in the best case, even for someone deeply embedded in the market, there should be works which surprise and delight and are unexpected, as well as celebrated market-darlings and art-historical greats,” Ehrlich says.