6 ms·

I haven't felt like Apple has been making products for me recently until the Macbook Air release and now this. Sane price points, and the exact features I need.

by werber 6y ago

I haven't felt like Apple has been making products for me recently until the Macbook Air release and now this. Sane price points, and the exact features I need. Not sure what changed over there, but I'm really impressed.

thekyle 6y ago
I'm sure there are many factors. But Jony Ive did recently leave.
- werber 6y ago
  I just read his wiki, what influence did he have over pricing? Like, design wise this all seems on brand but it feels like maybe it be a different part of the business for pricing. But, i have no hardware experience or knowledge
totalZero 6y ago
It's almost as if a major world event convinced Apple management to optimize their product line for consumers who have less money to spend on devices. Not sure what could have caused that, though.
- graeme 6y ago
  This has been in the works for a year or two at least. Hardware cycles don’t happen in weeks.
  - totalZero 6y ago
    It is not a coincidence that MSRP is announced at a "sane price point" (uncommon for Apple, which sells a monitor stand for $1000) right when the mobile phone market shrinks. Apple's mobile handset prices have been cut by 10% or more in China. In the US, new iPad Pro and Macbook Air prices have been discounted about 20% by authorized retailers and new old stock of the fully loaded MBP15 was discounted 35% by Best Buy a couple of days ago. Apple typically reports a profit margin of about 1/3 for its devices on average, and 2/3 for its services. My understanding based on gross margin numbers from competitors is that handsets fall on the higher side of that average, and PCs on the lower side. In times when consumer demand for devices is expected to be price-elastic (eg when 15 million Americans get laid off in the span of three weeks and vast numbers of people are staying home so they don't need to replace mobile devices as frequently), margin can come down to increase unit sales and optimize net profit. Handsets are not sold in a free market; prices are set by Apple and its partners. If they don't bring the price down, there are some consumers who will say "this is nice; I want it, but I can't afford it right now." That cohort of near-miss buyers would constitute a deadweight loss -- an inefficiency between supply and demand, caused by the pricing scheme set by Apple itself. You can entice those shoppers to buy anyway (ie, eliminate the market inefficiency) by reducing the price. Pricing products expensively to widen gross margins works to increase profit in a time when demand is strong, but when demand is depressed and consumer discretionary spending becomes scarce, prices must come down to optimize for the new demand picture. On a separate note, this particular device re-uses many components from past Apple devices (as did the previous SE), so you ought to differentiate the timespan of its development cycle from a new flagship handset for which a new processor is developed and most third-party components are being implemented for the first time.
    - graeme 6y ago
      This is all reasonable, except for the fact that $399 has been rumoured as the price point for a long time too. It seems overwhelmingly likely that the current release + pricing is merely fortuitous.
      - totalZero 6y ago
        Fairly unlikely that anything planned is fortuitous when we are talking about major product release by a trillion-plus-dollar company.... $399 is where the prior SE was unveiled, but handset MSRP has bloated since 2016. The iPhone 7 and 7 Plus base models came out at $649-$769 when new, compared to $699-$1099 for the base models of the iPhone 11. On the Samsung side, base model S20 Ultra is pushing $1400. My personal view is that the next major battlefield for Apple vs Huawei vs Samsung is the developing world, and consumers there are fairly price sensitive (plus they often pay a premium due to import taxes, importer costs, and other add-ons to the retail price). There has to be a huge divergence in the slate of prices -- on the one hand, you have flagship handset expectations going skyward due to 5G, multi-camera, screen improvements, etc -- and on the other hand you have countries like Ecuador and Colombia where an entire month's minimum wage (before tax and living expenses) is insufficient to buy a new iPhone SE, even without accounting for the economic slowdown due to the virus. Some of the market for the iPhone SE didn't even exist a couple of months ago. Apple only announced online sales and plans to open a store in India after Trump helped negotiate an entry point to that market during his visit a month ago. Are you suggesting that Apple doesn't respond to its consumer sales environment when choosing pricing?
        graeme 6y ago
        I’m suggesting that long-standing credible rumour said they intended the price to be $399, well before the pandemic. The same rumours accurately predicted the phone’s major hardware features. I would agree with you if rumours had said $449 or $499. But, they didn’t. So there appears to be zero evidence of a change in intent.
- Leherenn 6y ago
  It seems unlikely this was the cause though, you don't design and manufacture a phone in 2 months. Also there had been leaks for months now. See this leak from back in January. https://m.gsmarena.com/updated_iphone_8_might_arrive_with_face_id_bigger_screen-news-41022.php https://m.gsmarena.com/updated_iphone_8_might_arrive_with_fa...
  - totalZero 6y ago
    You certainly choose pricing within those two months.
    - deleted 6y ago
      [deleted]
    - 1123581321 6y ago
      This is the pricing people have been expecting for awhile.
      - deleted 6y ago
        [deleted]
      - totalZero 6y ago
        That's a kind of vague assertion as I don't know to whom specifically you're referring as "people," but the same phone at 449 would be another 12% to margin so "in the same ballpark as what some people were hoping" is not the same as "pricing that the market anticipated." Let's assume there was a speculated range. In a world with COVID-19 demand pressure and the speculated range is reasonably accurate, Apple is more likely to target the low end of that range than it would in a "normal" world. I think people don't like the sarcastic nature of my earlier comment but that doesn't mean the underlying notion is wrong. I find it hard to believe that Apple ignored reality and just priced the phone however it felt like doing prior to a major shift in their consumer base's economic habits.
        1123581321 6y ago
crazygringo 6y ago
I think it's at least partly a very intentional pricing strategy. Every ~4 years Apple comes out with reasonably priced products for budget customers to be able to buy/upgrade. The rest of the time they keep prices high so they can make their profit. Budget customers are willing to wait, people who want the flashy new things aren't. It's the same thing with premium clothing brands that hold only 2-4 sales a year.
proverbialbunny 6y ago
I have a strong suspicion it's come from user surveys, and is tied to data science or analytics. Sales were down and the butterfly keyboard caused so much complaining it was impossible for Apple to not eventually take note. If people are complaining and sales are down, the reasonable solution is to listen to your customer. They've done it for every product as of late, like the new Macbook Pro, the new Mac Pro, and while the Apple SE is more a budget project so it may have been inevitable for it to turn out this way, the iPhone 12 is supposed to be smaller, much closer to the iPhone SE.

by werber 6y ago

thekyle 6y ago

I'm sure there are many factors. But Jony Ive did recently leave.

werber 6y ago
I just read his wiki, what influence did he have over pricing? Like, design wise this all seems on brand but it feels like maybe it be a different part of the business for pricing. But, i have no hardware experience or knowledge

totalZero 6y ago

It's almost as if a major world event convinced Apple management to optimize their product line for consumers who have less money to spend on devices. Not sure what could have caused that, though.

graeme 6y ago
This has been in the works for a year or two at least. Hardware cycles don’t happen in weeks.
- totalZero 6y ago
  It is not a coincidence that MSRP is announced at a "sane price point" (uncommon for Apple, which sells a monitor stand for $1000) right when the mobile phone market shrinks. Apple's mobile handset prices have been cut by 10% or more in China. In the US, new iPad Pro and Macbook Air prices have been discounted about 20% by authorized retailers and new old stock of the fully loaded MBP15 was discounted 35% by Best Buy a couple of days ago. Apple typically reports a profit margin of about 1/3 for its devices on average, and 2/3 for its services. My understanding based on gross margin numbers from competitors is that handsets fall on the higher side of that average, and PCs on the lower side. In times when consumer demand for devices is expected to be price-elastic (eg when 15 million Americans get laid off in the span of three weeks and vast numbers of people are staying home so they don't need to replace mobile devices as frequently), margin can come down to increase unit sales and optimize net profit. Handsets are not sold in a free market; prices are set by Apple and its partners. If they don't bring the price down, there are some consumers who will say "this is nice; I want it, but I can't afford it right now." That cohort of near-miss buyers would constitute a deadweight loss -- an inefficiency between supply and demand, caused by the pricing scheme set by Apple itself. You can entice those shoppers to buy anyway (ie, eliminate the market inefficiency) by reducing the price. Pricing products expensively to widen gross margins works to increase profit in a time when demand is strong, but when demand is depressed and consumer discretionary spending becomes scarce, prices must come down to optimize for the new demand picture. On a separate note, this particular device re-uses many components from past Apple devices (as did the previous SE), so you ought to differentiate the timespan of its development cycle from a new flagship handset for which a new processor is developed and most third-party components are being implemented for the first time.
  - graeme 6y ago
    This is all reasonable, except for the fact that $399 has been rumoured as the price point for a long time too. It seems overwhelmingly likely that the current release + pricing is merely fortuitous.
    - totalZero 6y ago
      Fairly unlikely that anything planned is fortuitous when we are talking about major product release by a trillion-plus-dollar company.... $399 is where the prior SE was unveiled, but handset MSRP has bloated since 2016. The iPhone 7 and 7 Plus base models came out at $649-$769 when new, compared to $699-$1099 for the base models of the iPhone 11. On the Samsung side, base model S20 Ultra is pushing $1400. My personal view is that the next major battlefield for Apple vs Huawei vs Samsung is the developing world, and consumers there are fairly price sensitive (plus they often pay a premium due to import taxes, importer costs, and other add-ons to the retail price). There has to be a huge divergence in the slate of prices -- on the one hand, you have flagship handset expectations going skyward due to 5G, multi-camera, screen improvements, etc -- and on the other hand you have countries like Ecuador and Colombia where an entire month's minimum wage (before tax and living expenses) is insufficient to buy a new iPhone SE, even without accounting for the economic slowdown due to the virus. Some of the market for the iPhone SE didn't even exist a couple of months ago. Apple only announced online sales and plans to open a store in India after Trump helped negotiate an entry point to that market during his visit a month ago. Are you suggesting that Apple doesn't respond to its consumer sales environment when choosing pricing?
      - graeme 6y ago
        I’m suggesting that long-standing credible rumour said they intended the price to be $399, well before the pandemic. The same rumours accurately predicted the phone’s major hardware features. I would agree with you if rumours had said $449 or $499. But, they didn’t. So there appears to be zero evidence of a change in intent.
Leherenn 6y ago
It seems unlikely this was the cause though, you don't design and manufacture a phone in 2 months. Also there had been leaks for months now. See this leak from back in January. https://m.gsmarena.com/updated_iphone_8_might_arrive_with_face_id_bigger_screen-news-41022.php https://m.gsmarena.com/updated_iphone_8_might_arrive_with_fa...
- totalZero 6y ago
  You certainly choose pricing within those two months.
  - deleted 6y ago
    [deleted]
  - 1123581321 6y ago
    This is the pricing people have been expecting for awhile.
    - deleted 6y ago
      [deleted]
    - totalZero 6y ago
      That's a kind of vague assertion as I don't know to whom specifically you're referring as "people," but the same phone at 449 would be another 12% to margin so "in the same ballpark as what some people were hoping" is not the same as "pricing that the market anticipated." Let's assume there was a speculated range. In a world with COVID-19 demand pressure and the speculated range is reasonably accurate, Apple is more likely to target the low end of that range than it would in a "normal" world. I think people don't like the sarcastic nature of my earlier comment but that doesn't mean the underlying notion is wrong. I find it hard to believe that Apple ignored reality and just priced the phone however it felt like doing prior to a major shift in their consumer base's economic habits.
      - 1123581321 6y ago

crazygringo 6y ago

I think it's at least partly a very intentional pricing strategy. Every ~4 years Apple comes out with reasonably priced products for budget customers to be able to buy/upgrade. The rest of the time they keep prices high so they can make their profit. Budget customers are willing to wait, people who want the flashy new things aren't. It's the same thing with premium clothing brands that hold only 2-4 sales a year.

proverbialbunny 6y ago

I have a strong suspicion it's come from user surveys, and is tied to data science or analytics. Sales were down and the butterfly keyboard caused so much complaining it was impossible for Apple to not eventually take note. If people are complaining and sales are down, the reasonable solution is to listen to your customer. They've done it for every product as of late, like the new Macbook Pro, the new Mac Pro, and while the Apple SE is more a budget project so it may have been inevitable for it to turn out this way, the iPhone 12 is supposed to be smaller, much closer to the iPhone SE.