Apple banking on affluent customers

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Keith T Mambo
Keith T Mambohttps://www.zimetro.co.zw/
Keith T. Mambo is currently a reporter for ZiMetro News . He focuses on identity politics for The Southern Eye. He was previously a fellow at the UCT University of Cape Town for Political Science.

Apple banking on affluent customers

The next iPhone will be available in stores on Friday, and Apple is banking on wealthy customers to make the gadget a success amid a year of soaring inflation and unstable technology expenditure.

The finest features of the iPhone 14 lineup are reserved for high-end Pro versions that cost at least US$1000. According to presale statistics, the plan is already working with customers, who have made the costly new iPhone the most preferred model.

Though total expenditure on mobile devices and computers is falling this year, there is still a need for high-end iPhones, which is Apple’s strong suit. This has helped the corporation maintain output at a time when most of the industry is cutting back on planning.

“The data continues to point to robust demand for the iPhone 14 Pro and Pro Max, which could have a materially positive impact for both mix and margins,” said Amit Daryanani, an analyst at Evercore ISI.

The iPhone 14 line was unveiled earlier this month alongside new Apple Watches and AirPods. The company didn’t raise prices, a surprise to analysts who thought inflationary pressure would force the move. But Apple is still attempting to upsell consumers more than ever before.

The standard iPhone, which starts at US$799, doesn’t even run Apple’s latest processor, the A16. Instead, it uses the same A15 chip as last year, with the A16 going into the Pro models. The Pro phones also get significant camera improvements and a new interface called the Dynamic Island.

That’s left users with less reason to upgrade to a basic iPhone 14, but plenty of incentive to pay a little more for the Pro. A flurry of carrier promotions and trade-in offers also may coax consumers into buying a glitzier model.

Apple reshuffled its display configurations this year as well. Gone is the mini version of the iPhone. Instead, the company is betting that consumers want more screen real estate. The non-Pro iPhone 14 will come in a 6.1-inch model and a 6.7-inch Plus version that won’t be available until October 7.

The preorder data suggests the iPhone 14 Pro Max is more in demand than the same model was last year, part of the shift upscale, according to a report by KGI Securities.

The question now is whether that momentum is strong enough for Apple to overcome a broader slump. Worldwide the smartphone market is expected to decline 3,5 percent to 1,31 billion units this year, according to market research firm IDC.

In China, both a manufacturing hub for Apple and a key market, smartphone sales have tumbled this year. But Apple shipments are up 5 percent compared with an overall decline of 23%, according to Evercore ISI’s Daryanani.

“Apple continues to gain significant share in China and we expect the share gains to continue,” he said.

A successful iPhone 14 launch could help ease investor jitters after a roller coaster of a month. The stock has whipsawed between gains and losses in recent trading sessions, with the shares suffering their worst single-day rout since 2020 on Tuesday. A higher-than-expected inflation report and concerns about interest rate hikes have hit tech stocks especially hard.

Apple shares are down 14 percent for the year, though that’s a bit better than the S&P 500, which has fallen 18 percent. The tech-heavy Nasdaq Composite Index has tumbled 26 percent. – Bloomberg

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