Apple Focuses on X Appeal with the iPhone XR, XS, and XS Max


(Simon) #81

I wouldn’t be surprised to see the XR do very well and the XS disappearing next iteration after comparably poor sales. I would imagine most people looking for better than the XR will go straight for the XS Max.


(Adam Engst) #82

I agree that the iPhone XS is in sort of a no-man’s land in the middle—the iPhone XR is so much cheaper and the iPhone XS Max will take everyone who wants the larger screen.

As far as the next iteration (iPhone 11) goes, I think Apple will want a fairly significant update that will move the flagship model into new territory. And it feels to me as though they’ll always want the flagship model to come in two sizes. So to my mind, the real question is what happens to the iPhone XR. Will Apple keep it moving forward, or just maintain it in the lineup at a new, lower cost? It seems likely that how well it sells this year will determine that, although I do wonder if the necessary planning has already been locked down because it takes too long to change directions.


(David Silbey) #83

I wouldn’t be surprised to see the XR do very well and the XS disappearing next iteration after comparably poor sales

Note of course that the XR costs what the top end model iPhone did only a few years ago. Apple’s really trying to push the average selling price up.


(Adam Engst) #84

I liked Jason Snell’s “boiling the frog” analogy with the prices going up.


(David Silbey) #85

Careful! James Fallows will be on your case.

Boiling Frog?


(Marc Z) #86

I hear complaints about the rising prices with comparison to prices from several years ago, but no one mentions inflation. That’s got to be a contributing factor. That and today’s phones include a lot more cutting edge tech. Prices on the low-end aren’t that much higher.


(David Silbey) #87

I hear complaints about the rising prices with comparison to prices from several years ago, but no one mentions inflation. That’s got to be a contributing factor.

The base model iPhone 4 debuted at $499 in 2010, which would be $561 in today’s dollars. A base model XS is going to cost $999.


(Simon) #88

I think it’s rather clear that Apple is increasing prices to make sure they can increase revenue despite stagnating number of units shipped. A lot of markets are saturated, devices have matured, and some buyers will update less frequently.

I wonder what their longer term plan is. Assuming shipment numbers do not go up, are they willing to accept stagnating revenue or will ASPs have to go up even more? How high can that be? Can you get people to spend $2k on a phone? How do you do that?


(Simon) #89

Expanding on that thought, personally I like some of the stuff they’re doing at the high end, but it’s by far not important enough for me to justify spending $500 or so more. Apart from its size, an iPhone 7 or 8 would likely do just fine for me. Not that the Xs Max doesn’t do a whole lot more, that’s just of no real value to me. In that sense, I must be a really bad customer. I exploit the longevity of their devices and since I use the iPhone mostly as a tool for work (email, messaging, web), I’m not going to buy into any of their services or content (the exception being an occasional iTunes song/movie/book purchase).

I suppose teenagers or young adults who replace their iPhones every year and also consume a lot of subscription services (and Apple content) are to them much more interesting. I guess I wonder how far you can push prices in that segment. It would be interesting to see if Apple can pull it off, and of course how.


(Doug Miller) #90

I think they hinted at this during Lisa Jackson’s presentation at the keynote. Long term they expect people to keep phones longer, and be willing to pay more if they know they’ll be keeping them longer. Buying an Xs for $1000 and keeping it for three years isn’t much different from spending $650 for a 6s three years ago and having kept it for two years.


(Paul Schinder) #91

You can get people to spend $2k on a phone if it has enough features and you make it easy for them. I just spent $1k+ twice, ordering a XS for both me and my daughter last Friday at 3:01 am. I would have had to order for her anyway, but the one for me is a luxury (I’m using an 8, acquired last year, now). The reason it wasn’t painful is the iPhone upgrade program, where the cost is divided over 24 months, and you can effortlessly get a new phone every year if you want. I’m usually a “use it until it stops working” person, but not for the iPhone now. (If Apple had a similar program for the Apple Watch, I might have replaced my 3 with a 4.)

I’m looking forward to Face ID and the new camera. I’m not particularly looking forward to learning a new UI, but my daughter seemed to pick it up easily last year. It’s supposed to arrive tomorrow.


#92

I think it’s rather clear that Apple is increasing prices to make sure they can increase revenue despite stagnating number of units shipped. A lot of markets are >saturated, devices have matured, and some buyers will update less frequently.

They actually shipped and sold fewer iPhone models 2017 than in 2016 and profits skyrocketed through the roof.

I wonder what their longer term plan is. Assuming shipment numbers do not go up, are they willing to accept stagnating revenue or will ASPs have to go up even >more?

iPhone revenue is very far from stagnating, at least to date. But also consider that most people who but iPhones also buy in to one or more of Apple’s multiple revenue streams: App Store, in-app purchases, Music, iTunes, iCloud, etc. Here’s what Apple earned from in-app purchases in just the week after Christmas 2017:

“App Store customers around the world made apps and games a bigger part of their holiday season in 2017 than ever before, culminating in $300 million in purchases made on New Year’s Day 2018. During the week starting on Christmas Eve, a record number of customers made purchases or downloaded apps from the App Store, spending over $890 million in that seven-day period.”

And that’s just App Store. Apple is currently burning through the $3 billion dollars they allocated for their yet to be announced streaming video service, and are spending probably even more on AR/VR and are testing robo vehicles on the road. People who like iPhones tend to get drawn into other parts of the Apple ecosystem of hardware and services.

How high can that be? Can you get people to spend $2k on a phone? How do you do that?

I can’t predict future economic patterns, but if Apple suspected it could be possible to turn enough of a profit on it, they would. And I do not doubt that one day they will.


#93

---- Simon tidbits-talk@talk.tidbits.com wrote:

Expanding on that thought, personally I like some of the stuff they’re doing at the high end, but it’s by far not important enough for me to justify spending $500 or so >more. Apart from its size, an iPhone 7 or 8 would likely do just fine for me. Not that the Xs Max doesn’t do a whole lot more, that’s just of no real value to me. In that >sense, I must be a really bad customer. I exploit the longevity of their devices and since I use the iPhone mostly as a tool for work (email, messaging, web), I’m not >going to buy into any of their services or content (the exception being an occasional iTunes song/movie/book purchase).

If you are Talking on this list you cannot be a bad Apple customer; you are part of the Apple ecosystem by actively demonstrates loyalty and sticking to a particular product. You haven’t mentioned anything about buying a Windows PC or a Surface tablet. As far as I remember, you haven’t mentioned abandoning iPhone for another manufacturer. And if you use Maps or Apple News, they do sell limited ads on them. You’re one of the reasons Google is paying Apple $3 billion a year to be the default iOS Safari search engine, and this doesn’t include what Google recently started paying to be the default in Siri.

Apple wouldn’t have made such a big deal about encouraging people to hang on to their iPhones if they didn’t think this was a big and unique selling proposition?I doubt that Samsung, LG or other smartphone manufacturers who don’t have significant, if any, services streams will be doing likewise.


(Nick Pappas) #94

Warning about eSIM. If you are planning to travel overseas with an XS, as far as I can tell, major overseas telecom vendors, such as Orange, are not yet supporting eSIM. I am delaying purchase of XS for this reason. If anyone has better info, please share.


(Marc Z) #95

From what I heard, major cellular companies in the US are supporting it — so couldn’t you use the eSim with them and the physical SIM with Orange or whoever in Europe?


(Adam Engst) #96

Hah! I always assumed it was just a metaphor, not something based in fact—nice to know frogs aren’t that stupid. The question is, what’s a better shorthand way of expressing this scenario, where something is getting bad slowly such that the people suffering it don’t take any action (perhaps until it’s too late).


(frederico) #97

In the automotive business, we called it lot rot, but that’s probably too obscure. Around my house, things left undone are referred to as ‘in the back of the freezer’, or ‘it got freezer burn.’

Probably not good enough for her universal metaphor.


(frederico) #98

Oh, and I forgot, my grandmother used to say, “napping in the sun light”.


(Fearghas McKay) #99

eSIM has not been enabled yet, it will need a software update.

Other major vendors of telecoms like Vodafone & EE will be supporting eSIM when it is available, they already support eSIM on other platforms. OrangeUK is now part of EE, I haven’t kept track of the other Orange countries. When Three suppports eSIM that will be very interesting.

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(Simon) #100

I thought of death by a thousand cuts, but that doesn’t place quite the same emphasis. Then a quick Wikipedia search led me to this metaphor that I don’t think I’ve ever come across before.