When Tim Cook took the stage to present the new iPhone 11 last September, what shocked people was not the three-camera module of the Pro models, it was the price of the basic version of the smartphone! After all, for the first time in many years, Apple decided to lower the price of its iPhone. (Yes, it was not the high-end version, but still…)
Why did Apple decide to take the risk of lowering prices? Something you had never done on the iPhone 10? The answer is simple… Despair!
However, it does not seem to me to be a sign of the end of Apple’s success in the market, this does not make much sense considering the size of the company, and the position of the latest iPhones in the top of sales. Still, it must be borne in mind that Apple is currently primarily a smartphone manufacturer.
That is, despite producing tablets, laptops, PCs, etc… Apple has long ceased to be a computer company! After all, since 2007, the manufacturer has sold 2.2 billion mobile phones, making about $ trillion in sales. (More money than any other company in the world!)
However, in these same 13 years, shares have grown by a maximum of 2037%, making Apple the company with the highest stock market value several times in recent months.
The iPhone is Apple’s golden goose! But the chicken seems to be having some difficulties laying eggs
Therefore, since 2007, Apple ‘all’ has made about 1.99 ‘trillion’ dollars. That is, more than half of the manufacturer’s revenues come directly from iPhone sales. Furthermore, in addition to being Apple’s best-selling product, it is also the product with the highest profit margin.
To get a sense of the money the iPhone gives, for every dollar the smartphone brings to the company, Apple earns 0.60 ~ 0.74 $. In comparison, your notebook with the highest profit margin (MacBook Air), can only retain 0.29 $.Very briefly, if it weren’t for the iPhone, Apple wouldn’t be what it is today. However, sales of the famous mobile phone are finally stagnating.
In 2015, iPhone sales reached the tipping point, so the growth of this market has ‘died’. In fact, last year, Apple sold 14 million fewer units compared to that same year. Something that is completely normal in a world like this, but that can have a serious impact on what the brand is at the moment.
Having said all that, when Apple realized that the iPhone had stopped growing, it did something extremely smart… It increased its price! In order to keep margins high, despite sales falling. After all, if you buy an iPhone 11 Pro with the iPhone 4 of 2010, you will notice a very significant difference in price… It is now more than double! But there is another reason for this price hike, iPhone production has also become more expensive.
Although the cost of production has increased, Apple had no choice but to lower the price of its smartphone!
Therefore, in 2018, when Apple launched the successor to the iPhone X, it also unveiled the iPhone Xr, a less advanced and cheaper version of the 2017 ‘X’. Launching the device at $ 749. (A 35% drop from the iPhone X price)
However, forgetting the extra camera and LCD screen, the smartphone was basically the same as the XS, with the same exact SoC and features. It was basically an excuse for Apple to launch a cheaper smartphone to rise again in the sales graph.
However, in 2019, Apple took another strange step… The company lowered the price of the iPhone XR, and launched the iPhone 11 at an even lower price, $ 699. This basically put analysts and enthusiasts on the alert, after all, Apple lowering prices is anything but normal.
Not only is Apple selling less iPhones, it is also making less money on every unit sold
The North American giant’s latest account reports show that the company’s large cash inflow is starting to shrink. Incidentally, Apple has never earned so little on every iPhone sold. Therefore, the company will have to adapt if it wants to continue to grow.
Is it the end? Of course not! But it is certainly a sign of change.
Furthermore, what do you think about all this? Share your opinion with us in the comments below.