Apple/iPhone: Pro model will add bite to sales in China

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Apple customers are an affluent lot. The average selling price of an iPhone has increased by almost a fifth in the past three years, reaching nearly $1,000. The new $1,199 iPhone 15 Pro Max, with its Mars Rover-grade titanium frame, will lift that figure higher. 

Mostly, design tweaks across the latest range of iPhones are incremental. Apple did its best to make a switch to USB-C charging cables sound exciting. But the real reason was more mundane: EU legislation designed to reduce electronic waste by making charging interfaces compatible. 

The real changes come at the top end. Inside the iPhone 15 Pro and Pro Max is a new A17 chip that will improve battery life, gaming capabilities and camera function. Apple wants to encourage its customers to give up their old phones and spend more money on a highly priced model.

The iPhone is Apple’s most important product. That looks a problem when global sales of smartphones are falling. In the second quarter of the year, shipments dropped by nearly 7 per cent on the previous year, according to data from the International Data Corporation.

At least Apple has a strong grip on the premium phone market, a sector more resilient to economic downturns than cheaper handsets. Indeed, it raised its market share by nearly 1 percentage point. Pro models mean the average iPhone selling price has reached a record $988 in March, according to data from Consumer Intelligence Research Partners. 

Pricey handsets bolster Apple’s high profitability. Its year to date net margin has hit 25 per cent, a record. These phones are also the key to its popularity in China, which lacks a large range of ultra-premium phone models. In the last quarter, IDC estimated that the world’s largest smartphone market almost became the biggest buyer of iPhones.

Geopolitics puts this expansion in danger. The US wants China to remain a tech consumer while cutting it out of the supply chain and imposing sanctions. Beijing’s retaliation includes reports that state employees have been told to stop using Apple phones. This presents an opportunity for Huawei. But the iPhone 15 Pro’s power should keep it ahead.