iPhone 14 Plus Sales 'Lower Than Expected' Following Launch Last Week

[The-Real-Deal82]

The price increases were largely due to the exchange rate which negatively impacts both European consumers and Apple.

The pre-VAT price of the 128GB iPhone 14 Plus is €960 in France which at the current exchange rate is around $944 USD. That's roughly the same as the pre-sales tax price ($929) in the U.S.

The pre-VAT price of the 128GB iPhone 14 is €835 in France which at the current exchange rate is around $822 USD. That's roughly the same as the pre-sales tax price ($829) in the U.S.

Apple's choices here were essentially to either lower profit margins and therefore total profits to keep euro selling prices the same OR keep profit margins the same by raising euro selling prices which would likely result in lower total profits due to decreased sales.

I think the message is clear that the current iPhone prices are more sustainable in the US than they are in Europe in the current climate. It’s up to Apple whether they are happy to continue with this strategy.

 

[reddeliciousapple]

The price increases were largely due to the exchange rate which negatively impacts both European consumers and Apple.

The pre-VAT price of the 128GB iPhone 14 Plus is €960 in France which at the current exchange rate is around $944 USD. That's roughly the same as the pre-sales tax price ($929) in the U.S.

The pre-VAT price of the 128GB iPhone 14 is €835 in France which at the current exchange rate is around $822 USD. That's roughly the same as the pre-sales tax price ($829) in the U.S.

Apple's choices here were essentially to either lower profit margins and therefore total profits to keep euro selling prices the same OR keep profit margins the same by raising euro selling prices which would likely result in lower total profits due to decreased sales.

But they are not manufactured in the US, so the inputs are not affected by the strong dollar. It's not that their profit margins in Europe are being squeezed, but that they are bigger in the US.

 

[webkit]

I think the message is clear that the current iPhone prices are more sustainable in the US than they are in Europe in the current climate. It’s up to Apple whether they are happy to continue with this strategy.

While neither of the choices I mentioned are good for Apple, it appears they have more gone with the second option hoping that more or less maintaining profit margins with lower sales will be better than reducing profit margins and keeping sales the same.

Sticking with the France euro/USD comparison, the pre-VAT launch price of the 64GB iPhone 12 in France was around $893 USD. That was a bit higher than the $829 price for same phone in the U.S. Today, the pre-VAT price of the 128GB iPhone 14 in France is around $822 USD which is actually lower than the 2020 price and the current $829 price for same phone in the U.S.

In this particular example, Apple has actually given French buyers a slight price break on the phone in 2022 compared to 2020 pricing. Unfortunately for Apple and French buyers, euro selling prices are still a lot higher due to the exchange rate.

 

[webkit]

But they are not manufactured in the US, so the inputs are not affected by the strong dollar. It's not that their profit margins in Europe are being squeezed, but that they are bigger in the US.

Apple is a U.S. company which prices the final iPhone product (which includes hardware, software, R&D, etc.) in USD and adjusts for things like local currency values and taxes. Therefore, this absolutely can mean that Apple's profit margins are being squeezed in Europe.

 

[The-Real-Deal82]

While neither of the choices I mentioned are good for Apple, it appears they have more gone with the second option hoping that more or less maintaining profit margins with lower sales will be better than reducing profit margins and keeping sales the same.

The problem with that long term is a certain percentage of consumers will look for cheaper alternatives and they may not return once they have migrated. With Apples wealth I would have thought maintaining user base with a lower profit in the short term would be more beneficial once prices level off after inflation settles down. If Apple have decided immediate profit is more important than maintaining outreach, then it’s a gamble IMO.

Sticking with the France euro/USD comparison, the pre-VAT launch price of the 64GB iPhone 12 in France was around $893 USD. That was a bit higher than the $829 price for same phone in the U.S. Today, the pre-VAT price of the 128GB iPhone 14 in France is around $822 USD which is actually lower than the 2020 price and the current $829 price for same phone in the U.S.

In this particular example, Apple has actually given French buyers a slight price break on the phone in 2022 compared to 2020 pricing. Unfortunately for Apple and French buyers, euro selling prices are still a lot higher due to the exchange rate.

Consumers aren’t going to compare exchange rates against other countries though and consider themselves lucky based off it. All they will compare is an iPhone 13 to 14 going from £749 to £849 and an iPhone 13 Pro/Pro Max to 14 Pro/14Pro Max from £949/£1049 to £1099/£1199. It’s all significantly increased due to inflation of course, but so has everything. Goods like iPhones ultimately fall into the list of none essentials that get sacrificed when the cost of living increases force people to save additional money. I’m very glad the demand is reflecting this to be honest.

 

[webkit]

The problem with that long term is a certain percentage of consumers will look for cheaper alternatives and they may not return once they have migrated. With Apples wealth I would have thought maintaining user base with a lower profit in the short term would be more beneficial once prices level off after inflation settles down. If Apple have decided immediate profit is more important than maintaining outreach, then it’s a gamble IMO.

Consumers aren’t going to compare exchange rates against other countries though and consider themselves lucky based off it. All they will compare is an iPhone 13 to 14 going from £749 to £849 and an iPhone 13 Pro/Pro Max to 14 Pro/14Pro Max from £949/£1049 to £1099/£1199. It’s all significantly increased due to inflation of course, but so has everything. Goods like iPhones ultimately fall into the list of none essentials that get sacrificed when the cost of living increases force people to save additional money. I’m very glad the demand is reflecting this to be honest.

There is certainly a risk/gamble. To keep prices the same as they were last year (using UK iPhone 13 and 14 prices as an example), Apple would have to bring the pre-VAT 128GB iPhone 14 price down to £649 which at the current exchange rate is around $734 USD. That's over 11% lower than the current U.S. price and, of course, with no adjustment for inflation.

 

[The-Real-Deal82]

There is certainly a risk/gamble. To keep prices the same as they were last year (using UK iPhone 13 and 14 prices as an example), Apple would have to bring the pre-VAT 128GB iPhone 14 price down to £649 which at the current exchange rate is around $734 USD. That's over 11% lower than the current U.S. price and, of course, with no adjustment for inflation.

Samsung managed to keep their prices the same between 2021 and 2022 in the UK. Obviously their strategy was to absorb cost to keep customers. Apple opted for reduced sales and maximum profit which obviously suits them.

 

[webkit]

Samsung managed to keep their prices the same between 2021 and 2022 in the UK. Obviously their strategy was to absorb cost to keep customers. Apple opted for reduced sales and maximum profit which obviously suits them.

That's a different situation. Samsung is a South Korean company. Their currency is practically unchanged against the British Pound so there wouldn't necessarily be a need to absorb any differences.

 

[The-Real-Deal82]

That's a different situation. Samsung is a South Korean company. Their currency is practically unchanged against the British Pound so there wouldn't necessarily be a need to absorb any differences.

I don’t think it’s any different to Apple manufacturing their products in China and using tax avoidance schemes through Ireland and Luxembourg so they can trade for higher profits in their European market.

 

[webkit]

I don’t think it’s any different to Apple manufacturing their products in China and using tax avoidance schemes through Ireland and Luxembourg so they can trade for higher profits in their European market.

Manufacturing the physical device is only part of the cost in making the phone as there’s also software, R&D, and other costs that are part of the final price.

What I want to know is why Americans are having to pay 14% more (in USD) and 38% more (in £) for a BritBox subscription this year ($7.99/month or £7.05 at current exchange rate) than last year ($6.99/month or £5.10 at last year's exchange rate) when the price in the UK remained the same at £4.99/month pre-VAT.

Greedy, customer milking Brits trying to screw Americans!

 

[The-Real-Deal82]

Manufacturing the physical device is only part of the cost in making the phone as there’s also software, R&D, and other costs that are part of the final price.

What I want to know is why Americans are having to pay 14% more (in USD) and 38% more (in £) for a BritBox subscription this year ($7.99/month or £7.05 at current exchange rate) than last year ($6.99/month or £5.10 at last year's exchange rate) when the price in the UK remained the same at £4.99/month pre-VAT.

Greedy, customer milking Brits trying to screw Americans!

We pay £159 a year in tax just to watch tv and then for those that want to watch satellite or cable it’s in average £50-£100 a month. Britbox is the same cost to us that it is to you. It’s cheaper to watch a British dominated sport like F1 in the US than it is in the UK too for example. That’s a really poor example to demonstrate your point to be honest, television costs a fortune over here. It’s the main reason I download content from less authentic sources and use streams for live sport.

 

[webkit]

We pay £159 a year in tax just to watch tv and then for those that want to watch satellite or cable it’s in average £50-£100 a month. Britbox is the same cost to us that it is to you. It’s cheaper to watch a British dominated sport like F1 in the US than it is in the UK too for example. That’s a really poor example to demonstrate your point to be honest, television costs a fortune over here. It’s the main reason I download content from less authentic sources and use streams for live sport.

I am not a BritBox subscriber and was being a bit sarcastic (hence the emoji) but it's certainly not an unreasonable question. Why did the subscription price of BritBox increase 14% in the U.S. but stayed the same in the UK when the U.S. dollar is actually stronger right now? Given the exchange rate, if the price stayed the same in the UK it should've dropped in the U.S. In British Pounds, BritBox is charging Americans 38% more this year than last year.

Some people overseas like to complain about Apple's so-called money grab, greed, milking customers, etc. Given the currency value change, the BrtiBox 14% price increase (in USD) and 38% price increase (in £) seems more like a money grab, greed, milking customers, etc. than anything Apple is doing.

 

[Celtic-moniker]

yes and no.

S always stood for 'speed' and even though the S cycle was traditionally just the last years model with a new processor... it was still worth getting if you had the non S.

The 14 however, calling it a 13S with the SAME processor wouldnt have cut it either.

Its more like the iPhone 13.5.

Benchmarks indicate an 8% speed increase. Not dramatic, sure. But still can qualify. The speed difference with the 3G and 3GS was lower - the model where the S for Speed thing was said.