Don't Want To Pay $10 A Month For Apple Music? Apple Will Cut You A Deal

(I know this is annoying but I've never been A2A'd by someone as famous as Griffin Wagner. Thank you! Also, sorry in advance for the long answer.)

After the release of the iPhone 6 series in 2014, iPhone sales growth began to slow. In Q4 of 2014 alone, just after the iPhone 6 and 6 Plus were released, 39.27 million iPhones were sold. Compare that to today, with the newly released iPhone XS and XS Plus, analysts have been saying that sales have been disappointingly low, and that most people are staying with their current devices.

Don't let these sales figures deceive you into thinking that Apple is dying, though. Apple still sells an incredible amount of devices compared to other OEMs. However, by Apple standards, sales have been slow.

What is Apple's solution, then? How do they keep those profits high?

It's simple. Up the prices.

Last year's iPhone X launched at $999. However, the cost to manufacture each unit, excluding labor, landed right around $400. Even with labor included, which is extraordinarily cheap in China, the cost to make the iPhone X was far less than the asking price. In order to keep profits high, Apple increased the price of its products so profits margins were higher.

Apple didn't know what would happen if they released this phone. It was a gamble, but it paid off. The iPhone X was sensational, and it sold better than analysts had predicted. It was a hit. Apple got its money, and people got a nice product. Win-win.

This year, Apple kept going. People had already shown that they were more than willing to pay $1000 for a phone, so Apple pushed the envelope a bit with the new iPhone XS Max. $1149 was the new starting price, but in some parts of the world, it could cost the equivalent of $2000 USD.

However, it wasn’t quite the blowout success that Apple had hoped for. Sure, people were excited for a bigger iPhone X, but it just didn’t bring that much to the table. Traditionally, the bigger iPhone had extra features, such as a bigger battery, a better camera, and more RAM, but this year’s XS Max only brought one of those: the bigger battery. It didn’t even really make a difference, either, as shown by some battery tests online. The XS Max only performed marginally better than the already excellent XS. Regarding screen size, the iPhone XS was already large enough for the vast majority of people.

Then came the iPhone XR. Starting at $749, yet with no real compromises in any area, it looks like a great deal next to the XS series. Apple had been hoping not to cannibalize sales of the more expensive XS by downgrading the specs of the iPhone XR, but that backfired. Most people think that the trade-offs justify the large price difference, and some don’t see any sacrifices made worth talking about at all. The iPhone XR is expected to be the big seller out of all the new iPhones released this year.

In short, Apple released a $1000 phone to combat declining sales and to increase profits, and it worked last year. This year, though, with the iPhone XR, it’s looking like that plan took a turn. Not necessarily the wrong turn, as Apple is likely to sell an astronomical amount of the iPhone XR, thus producing huge sales. This pretty much negates the problem that they were trying to combat by raising prices, but that means that it doesn’t really matter too much if the iPhone XS series doesn’t sell well.

TL;DR: Apple released a $1000 phone to combat slower sales and keep profit up, but this year, the iPhone XR is likely to solve the problem of declining sales. Thus, the $1000+ phones such as the XS and XS Max will not sell as well, but that doesn’t matter as much anymore.

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