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Apple freezes prices for iPhone 14 – Good for consumers but bad for shareholders?

08 Sep 2022

Before you head to your nearest Singtel shop to buy the latest iPhone 14 Pro, we analyse if Apple's price freeze on the iPhone should be of concern to investors.

Apple iPhone 14 Singtel

TL;DR

  • The greatest surprise from Apple's latest product launch is a price freeze on the iPhone. If you're buying the iPhone 14 or iPhone 14 Pro in the US or Singapore, you wouldn't have to pay more compared to the iPhone 13 or iPhone 13 Pro.
  • We would not be too concerned that the lack of price increases would limit Apple's ability to grow its revenue. 
  • Apple can still grow its revenue by getting users to upgrade their iPhone to the iPhone Pro and buy more devices such as its AirPods. With a growing user base, more customers will also be using Apple’s services such as the App Store.
  • We also share how to be one of the first to own the iPhone 14 in Singapore if you are a Singtel user!

What happened?

If you’re an Apple fan like us, you would probably be very interested to find out what new features have been introduced in the latest iPhone 14. 

And whether it’s time to upgrade your Apple Watch and Apple AirPods. 

The greatest surprise that came out of Apple’s latest product launch was that it will be freezing prices for the iPhone (in the US at least). 

We take a look at how the highly anticipated Apple event means for investors. 

Source: Apple

What we learnt from the latest Apple launch event

#1 - Increasing differentiation of the iPhone Pro from the iPhone

With this event launch, it is clear that there is now a greater differentiation iPhone Pro and non-Pro version of iPhone. 

The iPhone 14 Pro and Pro Max will have a new 48-megapixel sensor, which will allows you to take sharper photos! 

This comes after Apple phones have stuck to a 12-megapixel main camera sensor for many years. 

iPhone 14 Pro also upgraded its Deep Fusion imaging pipeline to what it calls Photonic Engine. 

In layman's terms, this just means it shoots at multiple exposures to get the best-exposed pictures from each frame and combine them together!

Source: Apple

 

Also, the selfie cameras on both the non-Pro and Pro models now have auto-focus with a wider aperture. 

This will mean that it reduces the depth of the field and focuses attention on the subject which is ideal for a selfie!

Source: Apple

#2 - Apple AirPods and Apple Watch just got better too

Apple also broadened the Watch line-up by introducing Ultra models which are seen as the “SUV of watches”. 

Sold as an accessory for extreme athletes, the Apple Watch Ultra is clearly different from the other Apple Watches currently in the market. 

At the same time, the 2nd generation AirPods Pro looks set to improve from the flaws of the 1st generation AirPods. 

The AirPods Pro 2 promise noise cancellation that is twice as effective and battery life that last 1.5 hours longer. 

If you are an audiophile and are looking out for better sound quality, the AirPods Pro 2 offers personalised spatial audio to offer you more tailored listening. 

Even the case for the AirPods Pro 2 comes with improvements. It offers 30 hours of playtime, and can be found via Find May. 

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Source: Apple

Price freeze for the iPhone in the US (and Singapore)

The new iPhone 14 Pro and iPhone 14 Pro Max will not come with any price increases in the US, even as inflation is at record high levels! 

With the relative strength of the Singapore dollar, the iPhone 14 Pro will be priced at the same level as the iPhone 13 Pro at S$1,649 for a 128 GB unit.

Likewise, you’ll have to pay S$1,299 for the iPhone 14, which is the same price as the iPhone 13. 

What this means is that adjusted for inflation, Apple’s products just got cheaper!

You wouldn’t be as lucky if you were in the UK, where the British Pound has hit the lowest level against the US Dollar since 1985. 

Consumers would have to pay £150 (S$242) more for an iPhone 14 Pro compared to the price of the iPhone 13 Pro when it was launched last year. 

 

128GB

256GB

512GB

1TB

iPhone 13

S$1,299

S$1,469

S$1,799

 

iPhone 14

S$1,299

S$1,469

S$1,799

 

iPhone 13 Pro

S$1,649

S$1,819

S$2,149

S$2,479

iPhone 14 Pro

S$1,649

S$1,819

S$2,149

S$2,479

iPhone 13 Pro Max

S$1,799

S$1,969

S$2,299

S$2,629

iPhone 14 Pro Max

S$1,799

S$1,969

S$2,299

S$2,629

Source: Apple

Pro tip: 

To be the first few to own the iPhone 14 in Singapore, you can pre-order via the Apple website starting at 8 pm on 9 September 22. 

You can also pre-register with Singtel over here starting from 8pm on 9th September if you are a Singtel Prestige & Red member. All other customers can pre-register from 10pm on the same day. 

What will Beansprout do?

From an investor perspective, you may be concerned that the lack of price increases may limit the ability of Apple to grow its revenue. 

There are two key reasons why we wouldn’t be too worried for now, as Apple can still grow its revenue by getting users to upgrade their phones and buy more devices, as well as to use more of Apple’s services. 

#1 – Apple can still increase average revenue per user (ARPU) even as prices stay the same

Some analysts have argued that Apple’s growth is driven by getting its customers to pay higher prices and purchase more services and devices. 

So from owning an iPhone, you might upgrade to a higher-priced iPhone Pro (who can resist the better camera?)

You will probably also spend more money in the App Store, or buy an Apple Watch or Airpods (the better noise cancelling might help on the train ride home). 

So rather than spending S$1,299 on a basic iPhone, you might spend close to S$2,000 instead! 

#2 – Apple positioning itself more as a services company rather than a product company 

While more than half of Apple’s revenue comes from the sale of iPhone, it is increasingly seen as a services company. 

This may be another reason why we shouldn’t be too concerned about the lack of price increases. 

If more consumers were to buy the iPhone because it is seen as being cheaper, its user base will continue to grow. 

And as more people use Apple devices, it would be able to generate revenue from the services it provide, such as by making purchases on the App Store. 

#3 – Look for companies with strong economic moat 

In an inflationary environment, it is important to look for companies that have an ability to keep its customers spending. 

Apple has demonstrated that it is able to do that, which won Warren Buffett’s Berkshire Hathway over as a shareholder. 

Amazon also recently said that it saw demand increase in the past quarter. Find out what led Amazon to have an optimistic view of its performance in the year ahead in our article 3 stocks Temasek bought – Amazon, Robinhood and Nu”