Updated Sept. 10: Apple has taken the wraps off the 2019 iPhone models. As hoped, the replacement for the iPhone XR costs $50 less. However, the iPhone 11 Pro and 11 Pro Max are priced the same as last year’s models.
There are solid reasons to be optimistic that Apple will actually drop the price of the flagship 2019 iPhone models. Recent moves by the company signal a willingness to lower the cost of its other computers, and information leaking out about the replacement for the iPhone XS series indicates that it will be cheaper to make.
Most importantly, the company needs to respond to the plethora of evidence that it charges more than most people are willing to pay for even high-end handsets.
1. Apple dropped 2019 MacBook Air’s price
The MacBook Air that launched earlier this month has the same processor as last fall’s model, and Apple just tweaked the display by adding True Tone support. But there is a huge change: this model costs $100 less than predecessor.
Plenty of people will say Apple prices only go up, but here’s proof that’s not true. And this could be an indication of Apple’s plans for its iPhone line. Information leaking out of the company’s supply chain indicates the 2019 models will be slightly improved versions of last year’s ones. Maybe they’ll also cost $100 less.
To add weight to this argument, the company recently reduced the price of Mac SSD upgrades. Many options now cost half what they did before. These two are more than hints that Apple realizes it’s been asking too much for some of its products.
2. 3D Touch is being pulled from the iPhone 11
To lower the cost of the new MacBook Pro, Apple put in a cheaper SSD. Again, this may well show Apple’s plan for its next handsets.
Unconfirmed reports indicate that 3D Touch won‘t be included in the iPhone 11. While some people like this system, it’s never found broad appeal. More importantly, it required a sensor built into the display so taking it out will lower the cost to make the 2019 iPhone.
Whether it’s a slower SSD or the end of 3D Touch, Apple appears willing to do what’s necessary to lower the price of its products.
3. A simpler, cheaper type of display
And the company might take another cost-cutting step. Apple is reportedly exploring the use of a type of screen that integrates the touch sensor into the display panel. Samsung’s Y-OCTA technology doesn’t affect the look of the AMOLED screen, just makes it thinner. And up to 30% cheaper to produce, which could really help Apple drop the total cost of the iPhone 11.
While unconfirmed reports definitely point to Apple’s interested in Y-OCTA, it might not make it to an iPhone until 2020. That said, the first rumors surfaced last year so there might have been time to put it in the 2019 model.
4. Buyers demand lower costs
A recent study on demand for 5G handsets should inform Apple’s decision. “There appears to be a price ceiling at US$1,000 for most consumers. This is an important data point for handset OEMs,” noted Jeff Fieldhack from Counterpoint Research. The iPhone XS Max is $1,099, and it’s still 4G. It’s no wonder sales of this model are weak.
The high price for the iPhone XS series has funneled buyers toward the $749 iPhone XR. This is a rare instance when Apple’s largest, most expensive handset isn’t also its best seller. But sales of this cheaper model didn’t make up for an overall drop.
iPhone sales have been slow in every region of the world since last fall. It seems clear that, starting in 2018, Apple priced itself out of the range of too many consumers.
This company’s top-tier handsets have always been expensive. But prices shot up even more in recent years. The iPhone 7 Plus debuted at $769 in 2016. The iPhone X came in at $999 in 2017. And then the following year the iPhone XS Max was $100 more than that. The price for the top-of-the-line iOS handset increased a whopping 43% in only two years.
A modest proposal
Put all this together and it appears Apple might understand that it shot itself in the foot last fall. The company really must accept that its slowdown in sales over the last 10 months is a direct result of an unsustainable increase in iPhone prices.
Hopefully, the drop in the cost of the MacBook Air and SSD upgrades are signs that the company finally realizes that there is a limit to how much people will pay for Apple products. More importantly, it seems willing to make the changes needed lower costs.
As the consumer survey showed that people draw a line at $1,000, all Apple needs to do is introduce the iPhone 11 Max at $999 to bring customers back. The iPhone X sold very well at that price. The smaller iPhone 11 could be $899.