Apple mulls more premium iPhones, discounts in China

The news: Reeling from its first revenue decline since 2019 as iPhone and Mac sales slump, Apple is reportedly thinking of more premium handsets, while allowing carriers to discount in China, per The Register.

• Apple reported earnings of $117.1 billion, versus the $121.1 billion expected. This is its biggest decline in revenues since 2016, per Yahoo.
• Apple’s reaction to slowing iPhone sales could be to raise the ceiling on price and performance. 
• “The iPhone has become so integral to people's lives. It contains their contacts and their health information and their banking information and their smart home. I think people are willing to really stretch to get the best they can afford in that category," CEO Tim Cook said on the company’s earning’s call. 

How this would work: Apple could accelerate iPhone releases or bring out features planned for future models in a more expensive premium device.

• The rumored iPhone Ultra line will feature better cameras and more premium features, a strategy rival Samsung has also used.
• Apple did this in 2017, when it released the iPhone X. The phone was more advanced and cost $500 more than the iPhone 8 released in the similar year.
• Apple has also used the Ultra branding for its most expensive Apple Watches and Apple M1 processors.

Why it’s worth watching: Of all the Big Tech companies, Apple faces the most pressure from shareholders to keep posting record profits.

• It lost $1 trillion in market cap a year after becoming the first public company to be valued at $3 trillion, per CNN.
• In response to iPhone shortfalls, Apple has accelerated its exodus from China and is looking at India and Vietnam as alternatives. But effectively replicating its Chinese production facilities in other countries could take years.

Meanwhile, in China: Retailers like JD.com Inc. and state carrier China Mobile took 800 yuan ($118) off the iPhone 14 Pro, ostensibly to push sales. Apple’s own local website, meanwhile, did not lower its price.

Our take: An even more premium iPhone that offers professional photo and video features has limited appeal, especially now that most 5G-capable devices are similar in terms of performance and features. 

This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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