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Is Apple Pricing XSive?

Apple has released their new iPhone XS range, but is the pricing XSive?

The new Apple XS is priced from $1,629 AUD and has a 5.8-inch Super Retina HD display and the XS Max starts at $1,799 AUD and comes with a 6.5-inch Super Retina HD display.

On Apple Australia’s website, they also have a XR which will be priced from $1,299 AUD and has a 6.1-inch Liquid Retina HD display, and lower specs such as lower screen resolution, no 3D touch, no telephoto camera, and water-resistant to a depth of 1 metre for up to 30 minutes, as opposed to 2 metres for the XS range (Source https://www.apple.com/au/iphone/compare/).

Table 1 below shows a list of basic details on the new iPhones available on Apple’s Australian website.

Table 1: iPhone models, screen sizes, and prices from Apple Apple’s Australian website

Source https://www.apple.com/au/iphone/compare/ 10/10/18 (Note the iPhone series 6 and SE specifications are listed, but I was unable to find any pricing on the site)

Sure, you can find the phones at lower prices, but they are still close to the prices on the Apple website. With money getting tighter and tighter, due to the rise of our costs of living including mandatory-like service charges (MLSC’s) and close to zero wage increases, consumers are being more picky than usual when it comes to big purchases.

When the very first iPhone was introduced, it was revolutionary and people camped out overnight just to be the first to become a proud owner of an iPhone. The latest launch of the XS range could be considered lacklustre, with only a small number of people lined up at Apple’s Sydney shopfront. Fair enough it could be that many people have pre-ordered on the net, but my belief which is yet to be confirmed, they are selling a lot less and it will be interesting when confirmed details come out.


The Product Life Cycle and iPhones

As smartphones go through the product life cycle from product development, introduction, growth, maturity, and decline, the knowledge of consumers improves which enables them to compare the different brands and models in the market and then judge this against the price of other mobile phones, and then determine the value. Added to this is we may be moving towards the old VHS vs Beta video tape scenario, where the market became polarised, and eventually there was one standard and ultimately one winner.

Apple has relied heavily on its style, quality, iTunes, app store, and new exciting features which consumers have been happy to pay for. Apple iPhones have been around since June 2007 and have sold over one billion units taking on the so called “dumbphone” big players at the time including Motorola, Nokia, Ericson, and Blackberry. Many buyers who purchased the early iPhones became very loyal and helped spread the word, and when their old iPhone required upgrading, they just took on a new model iPhone without considering the competition.

One key reason was that the switch costs of having to move away from Apple features such as iMessage, iTunes, Apple app store, and iCloud, as well as family, friends and associates using Apple’s made moving away from Apple seemingly impossible or just not worth the effort to change. Many consumers were also not aware of the growing Android market, despite the Android operating system-based phones being sold since September 2008. Windows and other brands such as Blackberry also introduced other operating systems that worked independently, or integrated Android into the software or applications. The features of the key potential players using the Android operating system were originally behind Apple, but as the years go by, Android’s software, app access, and associated phone features have improved and can now stand alongside Apple.

As the new Apple XS range is introduced, consumers will face many decisions including, “What is the price of brand loyalty?”, “What are the costs in terms of ceasing to use Apple dominated or associated features consumers have enjoyed versus switching to the Android platform?”, and “Are there other alternatives with the same features they actually need at a cheaper price?”.

The growing knowledge as well as the increasing competition of mobile phones with similar or even better features has meant past Apple iPhone users are looking around and considering moving across to the Android platform. My feeling is that Apple has not understood where they sit in the mobile phone product life cycle and hence have not paid attention to the growing price sensitivity and the reducing switching costs.  They should have considered introducing a wide enough range to fit this updated market, such as a range of phones with lower basic features (although it would have to be careful to not affect it’s quality/style etc positioning), and/or a middle range, as well as a high-end range. You could argue that they still have the iPhone 7 range promoted on their website, but even if they run the latest IOS, you can also argue that these are considered old in a rapidly changing market.

As a result, I believe that a larger than anticipated portion of the market will switch from the Apple to the Android platform for the simple reason that consumers understand their requirements and the available features better, and have the confidence to compare them.

Paying for features consumers originally thought were amazing, but either never used or now realise they are available on the Android platform does not make sense to a better educated market, and hence they will have to weigh up whether the new Apple range is XSive or not.

As a disclaimer, I am an avid Apple user.  I love their quality and technology, but on the same token, like many consumers, my knowledge has grown and as the new models come out, I need more and more convincing that I am getting value for money.