iPhone 12's price tag could be more important for Apple's success than ever
Apple's next-generation iPhones are facing challenges far beyond Samsung, Motorola and Google.
Ian SherrFormer Editor at Large / News
Ian Sherr (he/him/his) grew up in the San Francisco Bay Area, so he's always had a connection to the tech world. At CNET, he wrote about Apple, Microsoft, VR, video games and internet troubles. Aside from writing, he tinkers with tech at home, is a longtime fencer -- the kind with swords -- and began woodworking during the pandemic.
Apple's iPhone 12 family hits the market at an extraordinary time -- with the coronavirus pandemic leaving tens of millions of people out of jobs and kicking off a recession that has thrown everything into a state of uncertainty. The new phones feature a boxier look, a magnetic attachment called MagSafe and, yes, super-fast
, but the price tag of these typically premium
may be more important than ever.
On Tuesday, Apple announced its $699 iPhone 12 Mini, a handset the company says is the smallest 5G phone in the world. The Mini is nearly identical to the iPhone 12, only with a 5.4-inch screen, compared to the larger one's 6.1-inch screen. Both have the same new, sharper screen technology, "ceramic shield" screen protector system, faster A14 Bionic processing chip, and the new MagSafe charging and accessories system.
A smaller phone for the same price may come across as a price hike, which is likely why Verizon and Apple are offering that people can turn in phones as old as 2017's
and buy the $699 iPhone 12 Mini for $288 over 24 months, and its larger $799 iPhone 12 cousin for $320 over 24 months.
"This is an unprecedented leap forward for iPhone," said Kaiann Drance, Apple's vice president of iPhone product marketing. She especially called out the Mini, saying "we think this will be an incredibly popular iPhone."
For Apple, the lingering question is whether all that will be enough to kick off the "super cycle" of purchases that analysts expect to follow the hype that comes from a new design and upgraded 5G wireless technology. And whether the price will be justified.
Apple watchers are expecting the $699 iPhone 12 Mini (£699, AU$1,199), along with the $799 iPhone 12 (£799, AU$1,349), $999 iPhone 12 Pro (£999, AU$1,699) and $1,099 iPhone 12 Pro Max (£1,099, AU$1,849) will offer the right mix of new boxier designs and upgraded 5G wireless to kick off a super cycle of buying not seen since the
was released in 2014. Back then, it pushed Apple's holiday sales to 74.5 million units, up more than 45% from the 51 million it sold during the same period in 2014. Apple's holiday iPhone sales haven't budged much ever since.
This year could be the time Apple breaks through, analysts at Loup Ventures say, with a little less than half the 1 billion active iPhones around the world estimated to be more than three years old. "The larger the upgrade pool, the bigger the potential tailwind," they wrote Friday, using financial speak for increased sales.
A recent survey by electronics reseller Decluttr suggests they may be right. A "staggering" 53% of respondents plan to buy this year's iPhone, according to the company.
Apple critics may charge that the multitrillion-dollar company used the iPhone 12 Mini to effectively raise prices in the middle of a recession. But we've known for a while that 5G wireless technology chips cost enough extra that a price hike was likely.
The larger challenge, though, will be the widening coronavirus pandemic and resulting economic catastrophe, which upends any conventional wisdom. Apple was one of the first companies to warn in February that the coronavirus would hit manufacturing. And in July, it said its iPhones would come out "a few weeks later" than usual, prompting speculation that Apple may not be able to make enough smartphones for its fall release.
Watch this: Apple debuts iPhone 12 with 5G
"We've come so far for a device that's so important to our daily lives," said Apple CEO Tim Cook during the event. "This marks the start of a new era for iPhone."
Apple's big swing
Apple's events have a predictable cycle to them, with leaks and hype buildup beforehand, tons of attention during the event and then the post-announcement letdown. Questions start pouring in: Did Apple change enough? Did it screw up by not including a specific technology? Did it push too hard removing this or that feature? What about those Samsung phones?
Each time, Apple's largely put those questions and concerns to rest. Although iPhone sales growth has largely hit a ceiling since the iPhone 6 in 2014, they haven't fallen off a cliff either.
With the novel coronavirus still spreading around the world, Apple's widened its array of iPhones to offer devices for as low as the $399 iPhone SE, with last year's processing chip and the iPhone 6-inspired design, up to the $1,099 iPhone 12 Pro Max. Apple will also continue selling last year's entry-level iPhone 11 for $599, which is $100 off the original price.
"While iPhone SE remains the lineup value leader, Mini provides a 5G value offering that retains key elements of the 12 lineup," said Ross Rubin, an analyst at Reticle Research. He added that he expects the iPhone 12 Mini to be a standout hit.
Though Apple is facing a bumpy economic environment, it doesn't appear to be letting up on features for the sake of cost. The newly hardened glass screens, MagSafe charging and accessories technology, and advanced cameras are the latest ways Apple is hoping to compete against its rivals.
The company also announced a new $279 Apple Watch SE, which offers similar features to last year's
Apple Watch Series 5
without the added oxygen sensor and ECG app. This year's new Apple Watch Series 6, by comparison, has faster chips, an always-on display and the aforementioned health features starting at $399.
That's not to say Apple's suddenly dropping prices. When the company on Tuesday also introduced its HomePod Mini, a smart speaker to compete against
, it announced the price at $99. That's twice the cost of an Amazon Echo or Google Nest Mini, both of which are often on sale as well. But Apple says its Siri voice assistant and new interactions that allow you to control and communicate with the iPhone, CarPlay and other systems make it worthwhile. It's also much cheaper than the $299
, which debuted in 2018.
Watch this: Apple reveals the HomePod Mini
Whether the features alone make the difference is unclear. Analysts say that as the recession drags on, people and businesses are tightening their belts. That, more than any announcements, may be what determines Apple's success with its new iPhones. At least this year.
"The chaos and uncertainty of the pandemic may slow sales of other products, but I do not anticipate that this will impact Apple in the long run," said Barbara Peck, an analyst at Nucleus Research.