(CNN Business)Apple’s new iPhone 13 and 13 Pro lineup features all of the predictable upgrades: faster performance, longer lasting battery life, better screen and new colors.
But the biggest — and arguably only — surprise with the lineup this year isn’t something found inside a device: the pricing.Apple (AAPL) kept its iPhone prices mostly in line with last year’s models, despite rumors they’d be priced higher than ever because of current issues with the chip supply chain. Massive discounts and trade-in offers from US carriers, in some cases amounting to a free device, are available. And the company continues to offer iPhones at a wide range of price points to appeal to more customers, with or without any groundbreaking new features or design changes this year.
“Apple has become the king of the ‘good, better, best’ portfolio with a phone at every relevant price point, particularly given it typically keeps older models in its line-up for those that don’t want to pay four figures for the latest and greatest new devices,” said Ben Wood, chief analyst of market research firm CCS Insight. “Add trade-in into the mix and it makes it possible to get customers signed up for a more expensive phone than they likely planned to purchase.”
Trade-in offers
Read MoreFor people willing to trade in their existing iPhones and commit to a wireless plan for the next few years, the discounts are jaw dropping.AT&T (T), for example, is offering up to $1,000 toward a new iPhone 13 Pro and Pro Max after a trade-in, while Verizon (VZ) is touting as much as $800 off any new iPhone, essentially paying for the cost of a 128 GB iPhone 13. (WarnerMedia, the parent company of CNN, is owned by AT&T.)
Here's everything Apple unveiled at its big iPhone eventT-Mobile is offering the possibility of a free iPhone 13 for eligible trade-ins and says that with its Forever Upgrade program, users can get up to $800 off their next iPhone every two years, “forever.” If users buy from Apple directly and select T-Mobile as the carrier, they’ll get a $700 credit toward a new iPhone. The deals go on and on.Trade-ins remain a central strategy for both mobile carriers and phone makers to drive replacement sales. The catch, however, is that users will need to trade in relatively new devices. Trade-in offers also typically tie customers to a long contract that can include high-priced data plans. Carriers want to keep these users loyal rather than seeing them move to a competitor network — and a discounted or free iPhone could be the right incentive to keep them there, according to David McQueen, a director at market research firm ABI Research. For Apple, it keeps customers deep within its ecosystem of products.
Prices remain the same
Not only did Apple avoid raising base prices on the iPhone, but it effectively lowered the cost of certain iPhones when factoring in higher entry-level storage options.As analysts at Goldman Sachs pointed out in a research note Wednesday, the price of the 128 GB and 256 GB iPhone “was reduced when compared to those same storage capacities last year.”
The many colors of the iPhone 13So why not raise prices this year, knowing that Apple always seems to find customers willing to pay top dollar for its devices? “I believe Apple is aware that it has hit a sweet spot with pricing and the marginal gain of slightly increasing prices versus the negative backlash it would face is not worth it,” Wood said. More than that, he said Apple is focused on boosting revenue from the many premium services built around the iPhone, such as iCloud storage, Apple Music and Fitness+.
‘Good, better, best’
When Steve Jobs unveiled the iPhone in 2007, there was one device and one entry price point for users. When Tim Cook took over as CEO, the options became more plentiful: big ones, smaller ones, mini ones, and prices that range from $399 for the iPhone SE all the way up to $1,599 for the 1 terabyte version of the iPhone 13 Pro Max.
Photos: Apple CEO Tim Cook
Photos: Apple CEO Tim CookApple CEO Tim Cook poses for a portrait at Apple’s global headquarters in Cupertino, California on July 28, 2016.Hide Caption 1 of 28
Photos: Apple CEO Tim CookFrom left, then-Apple COO Tim Cook, Apple CEO Steve Jobs and Phil Schiller, executive vice president for product marketing, answer questions after Jobs introduced new versions of the iMac and the iLife software applications at Apple’s headquarters in Cupertino, California, on August 7, 2007. Hide Caption 2 of 28
Photos: Apple CEO Tim CookCook speaks in front of an image of an iPhone 4S at Apple headquarters on October 4, 2011. Hide Caption 3 of 28
Photos: Apple CEO Tim CookPhotographers use iPhones to take photos of Cook during a break in a Senate hearing held by the Homeland Security and Governmental Affairs Subcommittee on Investigations on May 21, 2013. Cook and other Apple officials were on hand to explain the company’s filings after the subcommittee accused Apple of tax avoidance.Hide Caption 4 of 28
Photos: Apple CEO Tim CookCook, holding an iPhone 6 Plus and wearing an Apple Watch, discusses the new products during an event in Cupertino on September 9, 2014.Hide Caption 5 of 28
Photos: Apple CEO Tim CookCook greets the crowd with U2 singer Bono as U2 guitarist The Edge looks on during an Apple special event at the Flint Center for the Performing Arts in Cupertino on September 9, 2014.Hide Caption 6 of 28
Photos: Apple CEO Tim CookCook, right, takes a photo with an Apple employee during the launch of the iPhone 6 at an Apple store in Palo Alto, California, on September 19, 2014.Hide Caption 7 of 28
Photos: Apple CEO Tim CookCook opens the door to an Apple Store to begin sales of the new iPhone 6 on September 19, 2014 in Palo Alto, California. Hundreds of people lined up to purchase the new iPhone 6 and iPhone 6 Plus that went on sale that day.Hide Caption 8 of 28
Photos: Apple CEO Tim CookCook takes a photo with his iPhone while addressing graduates during George Washington University’s commencement exercises on the National Mall on May 17, 2015. The university awarded Cook with an honorary doctorate of public service. Hide Caption 9 of 28
Photos: Apple CEO Tim CookCook stands in front of a MacBook display after an Apple special event at the Yerba Buena Center for the Arts in San Francisco on March 9, 2015. Hide Caption 10 of 28
Photos: Apple CEO Tim CookCook appears as a guest on “The Late Show with Stephen Colbert” on September 15, 2015.Hide Caption 11 of 28
Photos: Apple CEO Tim CookCook is greeted by Pope Francis at the Vatican on January 22, 2016.Hide Caption 12 of 28
Photos: Apple CEO Tim CookCook shows an iPhone 7 to performer Maddie Ziegler during an event to announce new products in San Francisco on September 7, 2016.Hide Caption 13 of 28
Photos: Apple CEO Tim CookCook speaks during the launch of Apple’s AirPods at the Bill Graham Civic Auditorium in San Francisco on September 7, 2016.Hide Caption 14 of 28
Photos: Apple CEO Tim CookCook with James Corden and Pharrell during a taped comedy bit shown on a projection screen during an Apple event in San Francisco on September 7, 2016. Hide Caption 15 of 28
Photos: Apple CEO Tim CookCook with students at Woodberry Down Community Primary School in Harringay in north London in February 2017. Cook was visiting to see how the school had incorporated Apple’s iPad and related software in its curriculum.Hide Caption 16 of 28
Photos: Apple CEO Tim CookCook speaks during an Apple special event at the Steve Jobs Theatre on the Apple Park campus on September 12, 2017. Apple held its first special event at the company’s new Apple Park campus in Cupertino and unveiled a new iPhone.Hide Caption 17 of 28
Photos: Apple CEO Tim CookTim Cook puts on a Boston Red Sox jersey before a game between the Red Sox and the Detroit Tigers at Fenway Park in Boston on June 9, 2017. Hide Caption 18 of 28
Photos: Apple CEO Tim CookPresident Donald Trump listens as Cook speaks during an American Technology Council roundtable in the State Dinning Room of the White House on June 19, 2017.Hide Caption 19 of 28
Photos: Apple CEO Tim CookCook and Apple chief design officer Jonathan Ive look at the new Apple iPhone X during an Apple special event at the Steve Jobs Theatre on September 12, 2017.Hide Caption 20 of 28
Photos: Apple CEO Tim CookTim Cook signs the box of a new iPhone X at an Apple Store in Palo Alto on November 3, 2017. The highly anticipated iPhone X went on sale around the world that day. Hide Caption 21 of 28
Photos: Apple CEO Tim CookCook welcomes customers to the opening of a new Apple Store at the historic Carnegie Library building in Washington, DC, on May 11, 2019. The location represented Apple’s most extensive restoration project to date, renovating what was once the city’s Central Public Library.Hide Caption 22 of 28
Photos: Apple CEO Tim CookCook speaks about the new iPhone Pro during an event at the Steve Jobs Theater in Cupertino on September 10, 2019. Hide Caption 23 of 28
Photos: Apple CEO Tim CookCook and Oprah Winfrey hug during an Apple special event at the Steve Jobs Theater in Cupertino on March 25, 2019.Hide Caption 24 of 28
Photos: Apple CEO Tim CookCook speaks with Singapore Paralympian Theresa Goh about the Apple watch she uses for training at the OCBC Aquatic Centre in Singapore on December 12, 2019. Hide Caption 25 of 28
Photos: Apple CEO Tim CookCook speaks via video conference at a House Judiciary subcommittee hearing on online platforms and market power in the Rayburn House Office Building on Capitol Hill on July 29, 2020. Hide Caption 26 of 28
Photos: Apple CEO Tim CookCook speaks during the Apple Worldwide Developers Conference seen on a laptop computer in Arlington, Virginia, on June 22, 2020. The conference was held remotely because of the coronavirus pandemic.Hide Caption 27 of 28
Photos: Apple CEO Tim CookCook leaves the Ronald V. Dellums Federal Building in Oakland, California, on May 21, 2021, after testifying in a federal lawsuit brought by Epic Games. Epic, the maker of the video game Fortnite, charges that Apple has transformed its App Store into an illegal monopoly.Hide Caption 28 of 28
The strategic effort to appeal to as many people as possible will become one of Cook’s biggest legacies. It’s also one that’s translated to blockbuster sales. In April, Apple reported iPhone sales were at nearly $48 billion in the first quarter of 2021, a 65% increase over the same quarter last year, as consumers upgraded to iPhone 12 devices that offered 5G for the first time. Some things haven’t changed from the Jobs days, however. There may be a much wider range of options and prices for iPhones, but Apple still doesn’t come close to the lower-price tiers available on Android smartphones.
“The company still focuses on profits and revenue rather than chasing volume and market share, which was the same mantra under Steve Jobs,” McQueen said. “Perhaps Jobs wouldn’t have launched as many device types at different sizes, as he always feared cannibalizing revenue streams — notably across iPad mini and larger screened iPhones.”Still, the number of iPhone variations and price points has only helped it appeal to more buyers — and it most likely will again this year, too.
Source: edition.cnn.com
