00:00In April, Apple said that the iPhone had been less affected by what's happening with memory.
00:07Does IDC think that the iPhone is next for potential price hikes?
00:14Hi, thank you for having me.
00:16Yes, absolutely.
00:17The iPhone isn't spared.
00:19This is just a delay.
00:20You know, iPhone's the largest revenue driver for Apple.
00:23And given the hike in memory costs, if they are to maintain their profit margins, there's no way that they're
00:29not going to be.
00:32I think what's interesting is that level of increase, right?
00:36That's the question is when and how much are they going to increase?
00:40So I don't think it's a matter of if, but really when and how much.
00:45And what we're thinking is, in fact, you know, the memory situation and the crisis has already been in talk
00:50since, what, late last year.
00:52So even in our last forecast, we had already baked in the assumption that Apple is going to raise prices
00:56on iPhones.
00:57And our thought at the time was, you know, $100 on Pro Max models.
01:01But given, you know, the rate of increase that we saw at the max going up to even $300 and
01:06$500 on some variants,
01:07I'm beginning to think now that it's going to go up as much as $200 on the Pro Max models.
01:13Nabila, I'm just going to reiterate that for the audience.
01:15So you had an assumption prior to the news yesterday that Apple would raise prices on the iPhone.
01:22And in your forecast, you assumed a hike of $100 to Pro and Pro Max models, a $50 hike to
01:30base models.
01:31Again, I know I'm asking you to repeat what you just said, but based on today's information,
01:36you think that actually those price hikes may be higher on smartphone or iPhone handsets?
01:42You know, and again, this is my personal assessment.
01:45I think that it could go as much as $200 on the Pro Max.
01:48And I'll give you two reasons.
01:51The churn, you know, if I'm starting to have the price increase is going to impact upgrades, right?
01:56If the consumer is going to start drop, you know, not purchasing or not upgrading this year.
02:02And I don't think that the impact will be very negligible in terms of the churn.
02:06One, because, right, the value proposition they have on the devices is Siri AI and Apple Intelligence.
02:12That's not going to be available to any devices prior to 15 Pro, right?
02:18I mean, right?
02:18So that means only 466 million devices have the capabilities to run Apple Intelligence and Siri AI.
02:27So we all know how large Apple's installed base is.
02:30That means a significant portion of Apple's install base is not going to be able to run those features.
02:34So that creates a compelling upgrade reason, right, for those users.
02:40And on top of that, if you think about how much, you know, so I do think,
02:43we do think that most of the majority of the price increase is going to focus on the Pro Max
02:47models.
02:47And given those consumers are less price sensitive, a $200 increase really amounts to, you know,
02:52most people are buying devices at 36-month installment plans, right?
02:56So that only amounts to about a $5 price hike per month.
02:59So that's really not going to dissuade that kind of consumer segment.
03:02So for those two reasons, I think that makes sense.
03:06The reason that's interesting is, you know, basically the situation is quite clear.
03:11Micron is saying memory supply will be tight for 18 months.
03:15Prices will remain elevated.
03:18Bloomberg Tech producer Zoe Thomas picked out among the dozens of stories we've had this morning the key bit,
03:23which is, in the end, the question is now whether higher prices dampen consumer demand, right?
03:31That's the bit that's unknown.
03:33You seem to be indicating, well, the buyer of an iPhone's got a lot of money anyway.
03:38They're not as sensitive to those price hikes.
03:42Market-wide, is that going to be true?
03:46And that's why I don't think they're going to create that level of price hike to all of its models.
03:52That's why they're going to be very strategic and better.
03:54Even if you look at the way they're facing the announcements,
03:57last week was just a broader announcement that prices are going to increase.
04:01This week it was announcements on the iPads and the Macs, right, and a few other products.
04:05And so I think what they're really trying to do, so they're being very strategic in terms of the timing,
04:10the announcement, and also the level of price increase they're going to do.
04:13So I think they're going to be the lesser models, the base models, the older models might see, you know,
04:18half of that, right?
04:19But I do think the days of the $50 price increases are gone.
04:24So it's just a matter of, you know, Apple understands its brand propositions.
04:29Apple understands, even in emerging markets, we're seeing Apple rise at rates that we haven't seen before, right?
04:35And again, this is the spread of financing, even that's going beyond to emerging markets.
04:39So I do think that Apple is really aware about it and they're being very strategic in how they go
04:44about it.
04:44The other thing is that my conjecture is that the reason they made the announcements now and also to other
04:50products
04:50is so the consumers get psychologically prepared, right?
04:54They don't want the story at launch to be the price hike, but really the value proposition that the phones
04:58bring.
04:58And I think that's what this is going to achieve by making all these announcements now.
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