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Apple iPhone will be okay

Apple is reported to be experimenting with new pricing models for the iPhone in order to attract more customers. The company is exploring trade-in offers to existing customers that will help reduce the price of the iPhone XR to $449. Internally the project is dubbed 'Fire Drill'.

The issue around slowing iPhone demand has seen the share price of Apple drop more than its FANG/FAAMA peers recently. The fact that Apple decided to stop reporting its iPhone unit sales didn't help either.

The iPhone demand argument is not a black and white one, however. We know that when compared to other mobile device manufacturers, the iPhone has a market share of approximately 24.3% but controls over 88% of all profit in the industry.

Apple critics say that people have lost their urge to buy a new version of the iPhone every 24 months because of a lack of innovation. In a way, this is a compliment because it means Apple is doing well enough to have customers satisfied with the current phone, and it is durable enough to last longer than average devices.

The other argument is that smartphones, in general, have hit peak innovation. I'd take issue with the second argument because just as an example, my phone doesn't let me do holographic presentations as of yet!

The iPhone continues to be an aspirational luxury brand and will continue to be a meaningful contributor to Apple's earnings. The company has enough time to innovate and kick-start the next iPhone super cycle.


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