Forefront Communications

Wall Street Journal: Apple’s New iPhones Will Need to Collect

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Sam Belden

Sam Belden

For Apple Inc.’s devoted fans, new product unveilings are almost a religious experience. Which is good, since the iPhone maker needs to keep testing their faith with higher prices.

Three new iPhone models are expected to be introduced into the company’s lineup at an event Wednesday. Analysts believe these will include an updated version of the pricey iPhone X launched last year, along with a larger-screen version of the same. Another device with a less-expensive LED display is also expected. Apple’s new iPhones typically go on sale in late September — just before the close of the company’s fiscal year.

The new devices will come as Apple has pulled off a rather remarkable feat. In a smartphone market that has largely matured, the world’s most valuable company has succeeded in squeezing more money out of its existing customers. Apple’s iPhone unit sales for the nine-month period ended in June were largely flat with the same period the year before at a bit less than 170 million devices, yet iPhone revenue jumped 15% in that time, to $129.5 billion. That can be credited to higher iPhone prices overall as well as the addition of the iPhone X, which starts at nearly $1,000.

But even for Apple and its devoted fans, the art of the upsell appears to have some limits. Apple doesn’t disclose sales for specific models, but analysts believe the iPhone X has accounted for about 30% of iPhone unit sales in the recent nine-month period, according to estimates from Visible Alpha. That is below the share the company’s newest models typically get in a given cycle. The iPhone 7 from the previous year is estimated to have accounted for about 70% of unit sales for the same time frame. In its most recent earnings report, rival Samsung noted that its own higher smartphone prices were “drawing market resistance.”

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