Why Apple buyers are primed to pay premium

Cash-Money

Everyone knows that Apple does a stellar job of getting its users to upgrade to its latest version of iOS, but how does it do at convincing customers to buy its latest iPhones and iPads, rather than settling for cheaper older models?

Very well, and getting better all the time, according to new market research from the Chicago-based Consumer Intelligence Research Partners.

Looking at consumer data for the calendar quarter which ended June 30, CIRP noted that the flagship iPhone 5s accounted for an impressive 62 percent of total iPhone sales in the quarter, while the iPad Air took 52 percent of all iPad sales in the quarter. Why is this significant?

Picture: CIRP

Picture: CIRP

Well, it’s particularly good news for a company like Apple which relies on putting out new iterative products each year, which it hopes customers will buy to replace their existing models. It also shows that Apple is taking the right approach by targeting wealthier, higher-end customers, since this means that they would rather pay the extra to have the latest Apple product rather than a cheaper model like the iPhone 4s or a previous iPad.

This effect seems to be speeding up too, since in both the iPhone and iPad category, the newer flagship models dominated more than in the previous year — where the then-new iPhone 5 accounted for 52 percent of iPhone sales, and the comparable iPad flagship — the iPad with Retina — accounted for less than a third of sales.

Seeing as the iPhone 5 was a “full” release (rather than the less significant update that is traditionally the “s” model) this figures are very impressive, and bode well for the coming iPhone 6, which is one of the most eagerly-awaited iPhone updates in Apple history.

And let’s not forget what a tiny fraction of Samsung customers are buying that company’s current flop flagship phone

  • codeslubber

    Yet, iPad sales were down 23% YoY last quarter, and Android’s share of tablets has skyrocketed in the last 2 years. The biggest problem Apple has as a company: exacting a premium is easier when all competition brings is plastic junk. That’s no longer the case.

  • http://www.designstrategies.com Len Williams

    This is a silly article. You could ask a similar question to buyers who buy BMW’s and ask them why they didn’t buy a 5-year old Volkswagen or Chevy for so much less. The idea that the only thing different is the cost of the phone is patently ridiculous. The same stupid comparison is leveled at Mac users by people who question why we buy “a computer” that costs so much more than a bargain basement Windows disaster. The problem here is a lack of differentiation and a belief that a phone is a phone and a computer is a computer. What is not taken into consideration is the operating system elegance and ease of use, the quality and build of the hardware itself, the ecosystem of related apps, music, movies and other content. Mac and iOS users are usually quite aware of the entire package and opt for the better experience overall, and are therefore not all that concerned about the price point as long as it’s reasonable. Do BMW owners feel they’re being “taxed” because of their preference in buying BMW’s, or are they purposely buying them because they simply love the engineering and overall driving, reliability and operating experience of BMW’s vehicles?

    • ChanceDM

      I get what you are saying, but it seems like the article is focusing more on “New Apple products vs. old Apple products”, rather than “Apple vs. Android”.

  • PMB01

    I feel like every iPhone update is “one of the most eagerly-awaited iPhone updates in Apple history”. It’s just an update like they do every year.

About the author

Luke DormehlLuke Dormehl is a UK-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Formula: How Algorithms Solve All Our Problems, And Create More and The Apple Revolution, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme, and other publications. He'd like you a lot if you followed him on Twitter.

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