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Tim Cook on iPhone Prices: 'We Want to Serve Everyone'

I actually think the XR is a fairly compelling phone, and if it had dual cameras I would consider it. I think they're going to sell the crap out of them. I think the only disappointment in the keynote was the killing of the SE. Otherwise, they have a really great lineup.

That said, I'll keep my iPhone 7+ for another year. It's served me extremely well over the last 2 years, and still works flawlessly. We'll see what flashy new products they come out with next year.
 
My original iPhone X is sitting pretty...and smiling. At these prices, I've never been happier that I already have it in my hands. It'll be my daily driver until the next re-design.
 
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neuropsychguy said:
What's wrong with a company having profits? Isn't that one of the main points of a company? Besides will the X models be destroyed or recycled? Apple will hang on to many X models as "refurbished" replacement units but can also recycle most/all of the parts for new phones.

I could see Apple selling the X at the $850 price point but it's likely that would seriously damage profit margins because that likely represents a slim markup over cost for Apple (Apple has about a 21% net profit margin, which means, all products/services being equal, Apple's breakeven point on the iPhone X is about $800; in other words, that's the point at which they would make no profits [reality is more complex though]). After a year, the breakeven point might be $700-750 but again, that's a point with 0% profit margins. Selling the X for $850 would cannibalize Xs sales though. The Xs might have higher margins than the X did at launch (one of the benefits of an "s" model) but Apple also dumped a fair amount of new tech into the Xs (the newer processors were not cheap to develop and manufacture) so margins could also be about the same. Apple keeps about a 35-40% gross profit margin and about a 16-22% net profit margin. That's just part of their business model and has been part of their business model long before Tim Cook took the lead (here's some data to back that up: https://www.bloomberg.com/view/arti...-1-trillion-honey-i-shrunk-the-profit-margins). In fact, Apple's profit margins are lower than they've been for quite a while. This is in part because Apple is spending more money (businesses spend money to hopefully make money).

I don't work for Apple. I'm not in business (I'm in academia and research) but I do have lay interests in economics and business management (among many other things). I do happen to like Apple products though. I'm not opposed to Android or Windows; I use the products that give me the most value and productivity for my money and time. I've crunched the numbers (literally) based on what I need and Apple products always come out ahead. My calculations will not hold true for other people but even with higher upfront costs, Apple products save me money, time, and effort in the long run.
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Yes. They are avoiding cannibalization. But they are losing money on production time and non-reusable materials (i.e., waste).

I’m a lawyer and a corporate exec. I get profits. But I’m also a consumer. From that perspective, it’s a shame. We’re losing perfectly usable product and left with expensive, barely better products or slightly cheaper worse products.

Can’t defend both sides at once. The positions are rarely compatible. ;)
 
wickawicka said:
This mentality is baffling. The vast majority of users aren't even using 64GB. It's 2018, internal storage is all but irrelevant.
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Every time they bump the camera specs in terms of resolution, camera-captured file sizes increase. Also, by putting huge files in the cloud, you then have to constantly pay for data to transfer them to and from your phone. Also: privacy.
 
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Mr. Dee said:
I keep saying, the best way to play the iPhone upgrade game, is to wait it out. You can get a iPhone 7 Plus now for 650. Yeah, its a 2016 phone, but I still see people like my sibling rocking an iPhone 5s, which he just upgraded from an iPhone 5. I have the iPhone X, which I upgraded from a 6s (still have it).

Going forward though, my upgrades will slow down significantly. Seriously, I won’t be looking at another iPhone until 2020. The features are not ground breaking must haves anymore. The first iPhone was enticing, because it was genuinely a breakthrough with lots of flaws, if you waited a year or more, you got a better device.

We saw them each year: 3G network support and App Store (2008), Record video (2009) - although this should have been in both the first and second generation, FaceTime and Retina display (2010).

2011 things started in a new direction, where upgrading every year wasn’t a must have. Siri wasn’t all it was supposed to be, but Apple obviously was first and saw the signs. Eventually, Google and Amazon won that race with their digital assistants. 2012 introduced a 4 inch inch iPhone, but it wasn’t dramatically inspiring enough that you needed to upgrade.

2013’s iPhone 5s was substantial under the hood with the first 64 bit processor. This made it a must have upgrade because of boost in performance and future proofing. Look at the fact that it will get the iOS 12 upgrade. The 2014 6 pretty much saturated the market with good reason, larger screens across the board. This is what Apple should have probably delivered in 2013. But, that upgrade was a must have for many, even if you bought the 2013 iPhone.

After that, 2015, 2016, you can obviously see we are now on a status symbol journey with each iPhone upgrade. It’s not that 2007 feeling anymore. The fact that you could carry this device around in your pocket do email, read nytimes, listen music, watch videos, capture photos and do it so seamlessly and still send and receive calls. There was a hint of that feeling when the Apple Watch got cellular capabilities, but it was inevitable, but bubble kinda burst, since, you could do it over Bluetooth.

People will keep buying the iPhone, because, the ecosystem is great, but you don’t have to get the latest and greatest; and looking at Apples price points now, you should run your device until Apple stop supporting them with iOS updates. If you have the money though, there is no stopping you, so enjoy it - you earned it.
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That's the way to do it. I'm using an iPhone SE that cost 75 bucks. It's one tenth the price of the iPhone XR and can run the latest OS without any lag. Beyond a certain point, these phones seem capable of opening apps instantly and switching between them with ease, they can shoot decent HD video, and have screens with indiscernible pixel grids. Upgrade if you can afford it, but the additional features are pure luxury, not necessity.
 
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Now another thing is that if Apple want people to purchase the iPhone with all the price change they have why not add the AirPods with the new purchase instead of the same old headphones.
 
curtvaughan said:
True, but comparing a two-year old iPhone model to a 1982, 32-year old 8-bit computer is a bit of a stretch. I do, though, understand your philosophical drift, especially with technology.
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Yes very much a stretch :D I'm stretching an elastic band beyond its limits at the moment! IT was the technology aspect - it moves fast.
 
swingerofbirch said:
The official price of the iPhone 7 is still higher than what I paid for it the year it came out. I've noticed Apple's products have been more and more discounted in the retail markets. In my case, I got a deal through Verizon (in November, it was near black friday) where per month it worked out to $350 for the iPhone 7 256 GB with no contract (it was actually supposed to be the 128 GB model but they were out of stock and gave me the 256 GB for the same price).

I have a suspicion Apple is able to keep their average sale price numbers to investors up despite carrier discounts because on the Verizon bill I am paying full price per month for the phone but with a discount added from Verizon—even though I have no contract. It's not a subsidy for finishing out a contract (although if I stopped service the per month discount would end, but there'd be no penalty). So accounting wise, it looks like I'm paying full price, but somehow Verizon is very heavily discounting the price (maybe through a deal with Apple).

In the old days with Apple, I would have never told people to wait for a deal, but it's changed so much. BH Photo has had the iMac Pro for thousands off (I think—wasn't it $3,000 at some point?), and the Apple Watches seem to always be on sale. Last year it seemed like they were on sale not long after the new series came out.
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I have noticed that too. Apple has moved more toward a discounting strategy it seems. It's interesting since when Steve came back that's one of the first things he ended, the constant discounting of Macs. Nobody was buying partly because they were all waiting for the next great promotion. I wonder if we will start seeing the same with iOS devices and Macs as time goes on.
 
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The problem is that this doesn't serve everyone. The iPhone 7 and possibility the 8 will be too slow to use a year from now.
 
Marzel said:
I don't think 64GB is little for a base model that accommodates the mainstream but it is definitely little for $1000 phones. The XS should have started from 128GB only because of their price.
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Agreed - for a $1000 phone, I'd definitely expect at least 128GB. 64GB is the new 16Gb / 32GB IMO.
 
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citysnaps said:
No, the model gives people who are not into making photos/videos and storing music and apps a lower cost option. If you need more memory, simply purchase the right device. A smart strategy.
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I think they've figured that people willing to pay over $1000 for their top-of-the-line iPhone are doing so primarily for its photo/video/display features, which means they would also easily opt for the higher storage options. If you aren't into the photo/video/display you might as well go for the XR or one of the earlier models. The 64GB offering allows price point advertising to feature the lower end prices for marketing purposes. It's a "lowest line" eye catcher for shoppers.
 
ol'Timmaaay is so savvy with the over inflated prices but it makes perfect sense as its the only way for Apple to make up for a dated Mac hardware line that seems to rarely ever see any updates.
 
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Blackstick said:
This. It has never been about the hardware, it's about the entire experience. Amazon Kindle tablets are $50... the experience is garbage compared to a $299 iPad.
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The problem with that analogy is the £50 Kindle is in no way comparable HW wise with the iPad. It's specs don't even come close to the OG iPad.
I full agree with what you are saying though, I have an 8 Plus and I'll find it difficult to move away from iOS after all this time, and probably won't. But when it comes to someone looking at a "budget" phone, and they are considering £749 for the Xr when there are phones on the market that will give 80% the raw performance as the Xr, and 95% of the basic functions at only 40% of the cost, sometimes you need to realise that Apple isn't for everyone, no matter what your financial situation is.
 
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AngerDanger said:
From a business perspective, the iPhone Xr seems amazing. It's $250 less than the Xs but seems to lack more than $250 worth of components (especially once you account for margins on each component). It doesn't have an OLED screen, ForceTouch, a secondary camera, the thinnest bezels, or stainless steel body, but it's still ostensibly a thing of beauty.

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Apple's decision to not include 3D Touch, which is a useful feature that has been available since the $649 iPhone 6s in 2015...

Such a disappointment. i would never even consider the iPhone Xr (r for reduced).
 
If you want to serve this customer you’ll release an upgraded SE in the next 6 months or so, thanks Tim!

Some of us still like the size of the iPhones that sold the first 500 million units. I didn’t want an iPhone 7 two years ago and I don’t want it now.

Good luck to everyone who like the massive phablets the iPhone has become, but Apple is not serving me right now, and it isn’t even about the silly prices.
 
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brofkand said:
Tone deaf to the max. But he's right, they'll sell millions of these phones. People will pay it. It's their money, good for them.
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I won't call it tone-deaf.

Rather, I think it's more due to the lessons Apple learnt from the whole 5c debacle. That's when Apple realised that for the bulk of their customers, money simply isn't an issue. The people who want the latest iPhone will get one, whatever the cost, and it shows this year in the form of an iPhone lineup where the differentiation compared to last year is fairly minimal (I mean, the iPhone Xs gets what...a faster processor and better waterproofing?).

This is the power of the iPhone. At this point, it's pretty much a license to print money, and Apple knows it.
 
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zorinlynx said:
I seriously wonder what some of you want. I don't think I've ever seen this much complaining before.

I see a variety of different products at a wide variety of price points. They're even still selling the iPhone 7 and 8, so those of us who aren't ready to make the jump to FaceID and the notch have options still. They brought out the Xr, which is a nice price drop for a FaceID phone.

Just because there's a super premium expensive phone now doesn't mean Apple's trying to rip anyone off; they're offering options for everyone.

Not to mention if you just need an iPhone period, the used market is about to be flooded with inexpensive iPhone 6, 6s, 7 and 8 and X units, which run a lot better now thanks to iOS 12's optimizations.
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Oh come on, you’ve been around here long enough. You’ve seen plenty of complaining. Usually right around new product launches :D
 
You have to wonder if getting paid in the millions has made the executive team a little out of touch with reality for pricing. For Tim a $1200 phone is like an average salary worker getting a Classic Double combo at Wendys.
 
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After last days Apple event. I NOW miss Steve :apple: Jobs even more. I had hoped that there would be a new SE version, i just HATE all the new big phones. :(
 
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