Apple sticks to strategy: bigger, faster and pricier
Watch upgrades add health functions that should be a big sell
Apple has long had a playbook for iPhones, its most important product: Keep rolling out bigger, faster and more expensive models.
On Wednesday, it repeated that strategy by introducing another round of iPhones that are — you guessed it — bigger, faster and more expensive. The model with a 6.5-inch screen, the iPhone XS Max, is Apple’s biggest iPhone ever and will start at $1,100. (And, yes, its name is a mouthful.) Last year when Apple debuted its iPhone X, the starting price was $1,000.
More notable, perhaps, was how much Apple is now evolving its smartwatch into a clearly health-related device. The company showed off a new Apple Watch with an electronic heart sensor approved by the Food and Drug Administration. That could lead to new implications for health care — and prove to be a major selling point for a device that has played second fiddle to the iPhone.
Largest-ever iPhone
Apple on Wednesday unveiled the iPhone XS, a premium model with a 5.8-inch screen, and the iPhone XS Max, with a 6.5-inch screen, its biggest-ever smartphone. The company also showed the iPhone XR, an entry-level model with a 6.1-inch screen.
The XS models are generally sped-up versions of last year’s iPhone X. Apple emphasized the phones’ advanced processor, durable glass and Super Retina OLED display with a wide color gamut.
The iPhone XR will come in white, black, red, blue and yellow, and is just as fast as the XS models. It has a single-lens camera, unlike the XS models, which have duallens camera systems. And it uses LCD, a less expensive screen technology than the OLED used for the XS, and the casing is made of aluminum, unlike the stainless steel that the premium phones are composed of.
It’s obvious why Apple and other phone-makers like Samsung keep enlarging their phones: Phones with bigger screens are selling well.
But for mobile phones, there are trade-offs. For one, the larger phones are more difficult to use with one hand. With last year’s 5.8-inch iPhone X, it was difficult to reach your thumb across the screen to type a keystroke or hit a button inside an app.
Bigger, faster and pricier
As Apple has made its phones larger and faster, it is also charging more for them. The company said the new iPhones would start at $750, $1,000 and $1,100. The starting prices last year were $700, $800 and $1,000.
It’s a tried-and-true strategy for the company to milk a product line that has saturated the market; Apple said Wednesday that it had shipped nearly 2 billion iPhones and iPads.
Unit sales of the iPhone were about flat in the latest quarter compared with a year earlier, but iPhone revenue rose 20 percent, to $29.9 billion. Something else that rose 20 percent? The average selling price of the iPhone.
By going bigger, Apple is trying to grow not just by raising prices but also by getting customers to use their devices even more. Research shows people with larger smartphones use them more, particularly to watch movies and play games.
That’s good for Apple. A central part of its strategy is to get existing iPhone owners to pay for more services on their phones, like Netflix and HBO. For each subscription bought via its App Store, Apple takes a 30 percent cut for the first year and 15 percent for each subsequent year. That bet seems to be working: Apple’s services revenue rose 31 percent to $9.55 billion in the latest quarter.
iPhone XS pronunciation?
The iPhone is old enough now that figuring out what to call the new versions each year has become tricky. Last year, on the device’s 10th anniversary, Apple skipped the iPhone 9 and went straight to the iPhone X. (But it pronounced the model “ten” and not “X.”)
That X has now created an awkward situation for Apple. The company has typically appended an S to the name of the second iteration of each generation of phones, like the iPhone 5S, 6S and so on.
But this year, that meant calling it the iPhone XS. Never mind that XS is the abbreviation for extra small — not an adjective Apple wants for its $1,000 phones — but say “XS” out loud. In the age of smartphone addiction and devices that cost as much as some refrigerators, “iPhone Excess” may not be great for branding.
Instead, the new iPhone XS is pronounced “iPhone 10S,” or as the audience at the Apple event quickly realized, “iPhone Tennis.”
Add the new iPhone XS Max to the mix and you’ve got “iPhone Tennis Match.”
Apple Watch’s health bent
Apple introduced the Apple Watch Series 4, which it has designed to be more of a health aid.
It’s the first redesign of the company’s smartwatch since it was introduced in 2015. The new watch is slightly thinner, but the black frame around the screen — what is known as the bezel — has been removed to create a larger display area.
Significantly, Apple said the new watch had a faster processor and better health and motion sensors. For instance, the watch can detect when a wearer has fallen down, a leading cause of injuries. If you have fallen, the watch is designed to prompt you to alert emergency services; if it detects no motion by the wearer after a minute, it calls automatically. The watch can also perform an electrocardiogram, alerting you to worrisome heart rhythms.
Apple said the new watch would be the first over-the-counter ECG device offered to consumers and that it had been approved by the FDA. (Apple may want to check its claim of being first, as other companies said they had been ahead of it with the agency in this regard.)
The device’s new health features are sure to increase Apple’s dominance of the smartwatch category — and they underscore the company’s focus. When the watch was first released, critics and consumers were confused about its utility.
The Apple Watch will be available in several colors and band styles; watchbands from older models will work on the new model. The Watch starts at $399. It will begin shipping on Sept. 21.