Total Profit = Volume * Profit Per Unit
So even though Volume is smaller because units are more expensive, the increased markup increases the total profit and that's the reason why they are getting ~90% of the profits in the industry. This idea makes more sense to me considering guidance for the next quarter won't include volumes.
Is there any reasoning behind only targeting volume that I am unaware of? Genuine question.
If you look at history of game consoles, the ones with the higher quality hardware and software usually lost because of the high prices.
Exclusivity works up to a point.
I have a 6S and I'd love a new phone, but at the end of the day the trade off for getting to work on my startup is that I need to prioritize spending money on things that will actually contribute to my happiness or well being in some way. And since I know a new phone isn't going to improve my life in any way, that just makes it really easy to dump the money into crypto or whatever instead.
That they didn't actually discontinue the 5s at the time is incidental.
The point is, that they do release things out of cycle so just because they didn't do it at the usual time doesn't mean they won't.
What, do teenagers suddenly stop wanting things just because they can't afford them? When did that start?
I think it's easy to confuse "sales volumes are dropping among teens because of price" with "teens don't want iPhones anymore." Those are not the same things at all.
As the upgrade cycle slows, they are cramming more technology into the phone to justify upgrades, increasing the base price and thus increasing the profit per replacement phone.
They'll continue to sell models with a reduced cost (such as the iPhone 7, still for sale), but they will likely continue to not have "cheap" phones.
For people who are on longer upgrade cycles, I tell them that phones are historically supported by Apple in OS updates for 5 years after initial release. So while that iPhone 7 may be nearly half the cost of the XR on sale, it also likely has half the remaining supported life. This usually gets them thinking about the pricing as an ongoing cost (of the device, replacements, and likely repairs over time) which IMHO is a healthier way of reasoning about such expenses than just shininess or upfront cost.
You mean like the iPhone 7, which retails for $449?
IMHO this is getting the causation backwards.
I think Apple saw the stagnation in unit sales happening anyway as people no longer see newer features and tech improvements as 'must-haves' and are keeping their phones for longer for that reason. As opposed to people keeping their phones longer because new ones cost too much.
This is surely part of the reasoning behind their open pivot to an emphasis on devices lasting longer and optimising iOS for older devices, ie they know people are keeping their devices longer, therefore they're marketing: if you want a phone to last longer then Apple is the vendor for you.
Of course to maintain profit levels they have to take the gamble that people then are prepared to pay more initially for a phone. Hence the differentiation between the Xr (new 'regular' model) and the Xs premium models. And the increase in ASP during 2018 due to the introduction of the X at the high end would have shown the gamble to be the right one.
Once certain demographics consider their phones to be "good enough", they are going to use them until they break or apps stop working.
Apple wants such people to feel to feel comfortable spending more money once they do upgrade their phone.
A percentage of this higher cost is put into newer, more expensive hardware; this allows Apple to focus on differentiating technology on the higher end models (edge to edge retina screens! stupid-good cameras! no home button! facial recognition! you can video conference with your coworkers looking like animated poop!)
Despite not owning one, I believe Apple can easily fix most of their issues by simply reducing the price and growing volumes again. They are about to lose the teenage market. That's mostly a cost problem. For the past few years they've cashed in on their popularity by squeezing the high end of the market. Now that that is running dry, they need to pay attention to their bottom line again or they risk permanently alienating a new generation of users.
My guess is that a 500$ base model that doesn't suck, would be quite popular. Of course their problem is that they have little to differentiate the 1200 $ model from that and that most of their competition is selling quite nice phones at or below that price.