Sour Apples

Putting the premium into pricing

Apple has been raising prices across all of its product lines, most famously with the iPhone X last year, the first smartphone to sell for $999 ($1349 Canadian). This year’s “budget” phone, the iPhone Xr sells for $749 ($999 Canadian).

Other products that have seen significant price increases since 2016:

  • MacBook Pro
  • MacBook Air
  • Mac mini
  • Apple Watch
  • Apple TV
  • iPad Pro

The only product to see a substantial price drop is the base model iPad, which went from $499 to $329 after Apple reverted a lot of the improvements found in the iPad Air 2 to better differentiate the iPad from the iPad Pro. Technically the Mac Pro (see below) has also seen a price drop, but it is dead hardware.

If you look at the above list, you may be wondering what is missing? Here’s the short list:

  • MacBook
  • Mac Pro
  • iMac Pro

The MacBook has not seen any upgrades other than minor processor updates since it debuted in 2015. It has not been updated in over a year.

The Mac Pro was released in 2013 and in 2017 Apple admitted its design was “thermally constrained” (it overheated) and promised a new model…in 2019.

The iMac Pro was introduced a year ago and has seen no updates since then.

Older iPhone models also get discounted, but these are, well, old phones. Apple can’t sell them at the same price as current models, so their hand is forced here.

The argument can be made that Apple is justified in that many of these products have seen more than just incremental updates. The iPad Pro, for example, has smaller bezels and Face ID. The MacBook Air now has a high resolution display. And so on.

But other companies regularly improve products without significantly increasing prices. And a lot of these upgrades are simply Apple catching up to the current market.

The Mac mini, left untouched (including its price) for more than four years was upgrade this year, with the base model sporting an unimpressive Core i3 CPU, a measly 128 GB SDD and at least, mercifully, 8 GB of ram. But these specs rank it is as merely average for a desktop PC, even slightly below (most desktop PCs start with Core i5 CPUs, unless they are specifically budget models, which the Mac mini is absolutely not). Where the base price of the mini was once $499 it has skyrocketed to $799 ($999 Canadian). It’s not a bad system, but it’s a terrible value. Unless you are absolutely wedded to macOS, it makes little sense to buy it.

The Apple watch this year got a 30% larger display…and a 20% increase in price. What was once $519 Canadian is now $649 Canadian.

The so-called Apple Tax has been around nearly as long as the company itself, the idea that you pay a premium price for premium products. Given Apple’s record revenue and profits, it would seem people are happy to pay these premiums. But Apple is now pushing pricing to ever-higher levels, often with little to no justification. The new MacBook Air finally has a high definition display, catching it up to…the entire rest of the laptop market. And for this Apple now charges $200 more ($350 more Canadian). Some people will keep paying, no matter the price increase, because they value Apple’s devices so highly.

But the last year has seen sales of Apple devices either go flat (iPhone), decline (iPad) or decline sharply (Mac). When this happens to a company that wants to keep its revenue steady, they generally do one of two things:

  • cut prices, hoping to boost sales sufficiently to make up for lower revenue-per-unit
  • raise prices, hoping to boost revenue-per-unit enough to offset the lower sales

The first is basically hoping to turn around flat or declining sales, the latter is accepting the declines and trying to make more money from your remaining customers. Apple is taking the second approach, and this is one of the few times I think people saying “Steve jobs would never have done this!” are actually right. He would not have raised prices to simply maintain revenue. He would have pursued new products and product lines. Apple is doing this, to an extent–rumors persist that an Apple car is still in development, for example, but the company seems to be moving away from things to services and counting on them to help keep revenue up. The services range from iCloud storage to Apple Music and the iTunes store. And this part of Apple is growing.

So maybe Apple is content to squeeze as much as they can from their hardware sales, knowing that the established base of devices (100 million Macs, over a billion iOS devices) is sufficient to keep services growing for a very long time.

These apples cost too much

For me, though, everything is just too damn expensive now. I was originally thinking about upgrading my Series 2 Watch to the Series 4, or getting one of the flagship phones. But the prices are just too high. I’ll keep and continue to use the devices I have, but when it’s time to replace what I have, I think it will be easier than expected to extract myself from the hallowed Apple ecosystem.

Here’s a current-gen list of replacements. The ones in bold I already have:

Apple device Non-Apple replacement
iPhone 8 Google Pixel 3
Apple Watch Series 2 Garmin Forerunner 645
MacBook Pro without touch bar Lenovo Thinkpad X1 Carbon
Apple TV 4K Xbox One
iPad Pro 10.5″ No replacement
Apple Music Spotify
iCloud storage/Photos OneDrive

In most cases the replacement either costs less (eg. Pixel 3) or does more (eg. Xbox One). Without even trying, I am already partly ready to make the jump.

Why do I have no replacement for the iPad Pro? Android tablets have never really established themselves (a lot of this can be blamed on Google not pushing the form factor more or doing more to get developers to make tablet-specific apps) and the market has largely been ceded to the iPad. When my iPad Pro is ready for replacement, I’d consider buying a refurb, used or waiting for a sale (not from Apple itself, of course). But everything else is ready for the switch and in a way I’d look forward to it, not just because Apple’s stuff is so expensive now, but because I’m growing increasingly weary of the limitations Apple imposes as it insists it knows better than its users. iOS is particularly bad for this, letting you do things like use different browsers, then having all web links open in Safari, anyway. I’m tired of getting a second-rate experience because Apple wants so much control over my experience. All they do now is largely get in the way.

And the iPad Pro is wonderfully adept hardware, shackled to what is still essentially a phone OS. They added a USB-C port to the newest models, but plug in an external drive to copy files and nothing happens. Apple doesn’t support that, unlike any other tablet out there. It’s silly. And fir this they want you to pay ultrabook laptop prices.

Is the future pear-shaped?

It will be interesting to see where Apple is in a year. During its last quarterly report the company announced it would no longer report unit sales. The tech market, already going bear, did not react well, and Apple’s stock has shed much of its value and has yet to recover.

Some dismiss the decision to not report unit numbers, as Apple is again expecting record revenue in the next quarter, but really, there is only one reason to start hiding the numbers–it’s because they expect them to go down. And they will. I am curious to see where the declining sales and higher prices intersect, and how Apple will react if and when they get to that point. It’s hard to imagine them cutting prices, but it’s happened before. It’s entirely possible Apple will ride out their flat or declining sales with ni major impact to the company’s bottom line. I don’t think that will be the case, though.

We shall see.

Leave a Comment