Apple is Dead, Long Live Apple: the iPhone X and Apple’s Shift in Business Strategy

Apple has just unveiled the iPhone 8, 8 Plus and X today. The 8 and 8 Plus will be available on 22 September here in Singapore and in most other countries, while the X (pronounced “ten”) will be available on 3 November.

Here’s the thing: the iPhone 8 costs S$1148 for the baseline 64GB model while that of the iPhone 8 Plus will cost S$1308 off contract. That’s expensive, but still palatable, and what we’ve come to expect from Apple for about 4 years now.

The 10th Anniversary iPhone X, on the other hand, will set you back at least S$1648.

I’m not going to tell you that you can buy a good laptop with that kind of money (but you sure as hell can), or that it’s ridiculously overpriced for what it is. Because what it is is a business move by Apple. The iPhone X is a brand new category of Apple’s iPhone lineup – the halo product, the veblen good, the phone that is so exclusive because of its price that (enough) people will lust for it.

I would like to argue that the iPhone X is a culmination of Apple’s gradual shift in business strategy since around 2015. Apple has been shifting away from premium and professional goods to luxury goods. It’s been visible in their new generation of MacBook “Pro”, iPad “Pro”, and now, in their iPhones.

For instance, the MacBook Pro has always been expensive for what it was, yes, but the price had always been justified due to its premium build quality, excellent functionality, and great software. A professional-level laptop at a professional-level price. But ever since the new generation of MacBook Pros were released, this has ceased to be the case.

I still own a late-2013 13-inch MacBook Pro with Retina Display, equipped with a 256GB SSD, 8GB RAM and i5 processor. At that time it cost me a little under S$2000. Expensive, yes, but justified and a good choice considering that the Windows alternatives at that time which offered similar specs did not come with such good build quality or battery life.

Today, a new-generation 13-inch MacBook Pro with the same specs as mine (i5, 256GB SSD, 8GB RAM), without a touch bar, would cost you $200 more than what I paid. That’s a 10% increase in price for no perceivable reason. Yes, it has Intel’s newer generation processor, and faster storage than mine, but these do not justify an increase in price; it is the nature of the tech industry that when hardware gets refreshed with new-generation tech, their prices remain relatively stagnant while the old tech depreciates in value.

So why the increase in price? Sure it’s now slimmer (by just 3mm) and weighs a little less (by 200 grams), but you lose all the ports that made the MacBook Pro so convenient and functional – MagSafe, USB-A, SD – and instead only have two USB-C ports to work with (#donglelife). It’s two steps forward and one step back. Why are consumers paying more?

Because the MacBook Pro has stopped being primarily a product for Pro users. It’s unintentionally become a status symbol for non-professionals. Sure, Pro (read: professional) users such as content creators will likely still fork out the cash for a 15-inch fully specced-out MacBook Pro for all their video-editing needs on Final Cut Pro, but the money is with the large majority of non-professionals who just want a cool laptop.

It doesn’t matter that the products are less functional. Can’t fit in a headphone jack while making it waterproof? Screw it, we’ll spin it and make it sound like we’re paving the way for a wireless future. I don’t care if you have to take away ports, just make the MacBook look thinner and cooler, that’s where the money is at. We’ll spin it and say we’re paving the way for a USB-C future. We can’t fit TouchID on the iPhone X? Let’s make a face recognition system, say something about how it’s super advanced, and call it FaceID. Spin it such that we’re paving the way for the future of mobile authentication.

Because, as much as we hate to admit it, people are going to buy the iPhone X because it’s the phone that has FaceID and not TouchID. It’s unique. The only phone that can turn your facial expressions into an animated shit emoji.

iPhones have always been sort of a status symbol, but the X takes it to a whole new level. It’s the physical manifestation of Apple’s transformation from a premium professional company to a luxury company.

From a business perspective, Apple is doing really well for itself. It’s going to rake in the cash this holiday season. Now Apple has the full spectrum covered: from the affordable iPhone SE (S$568) to the luxury iPhone X (up to S$1888), and the iPhone 6s, 7 and 8 in between. It’s brilliant. There’s an iPhone no matter which income class you’re from, and the idea is that you’ll buy the one corresponding to your price bracket, or higher. Profits maximised.

Here’s how it works. The iPhone X functions as what is called a “halo product”. When it is released on November 3rd, just in time for the holidays, everyone is going to know about it. The media is going to be flooded with news about the iPhone X’s release. You’ll look at the iPhone X and think, “Damn. I want an iPhone X.” You’ll look at the price and think, “Damn. Maybe not.” But the iPhone has already left an impression on you, so you look at the cheaper options available: an iPhone SE, iPhone 6s, iPhone 7, or iPhone 8, all sitting comfortably in their own price tiers, not competing with one another.

So even if you don’t end up purchasing an iPhone X, you’re far more likely to purchase an iPhone – be it SE, 6s, 7 or 8 – instead of some other phone. Sales for all models of iPhones will go up. Genius.

From a tech reviewer/analyst’s perspective – ie myself – the iPhone has undoubtedly stagnated in the past 2-3 years of iterations, with no major improvements since the iPhone 6s. Things like waterproofing and wireless charging/fast charging were long overdue. Other than these, improvements have been minor. But this is the current trend in the smartphone market, not just for iPhones, and it actually bodes well for savvy consumers.

Because you can actually benefit from Apple’s new business strategy, since good iPhones are getting a lot cheaper. The iPhone 6s, for instance, now costs S$728 for 32GB. Mind you, the 6s has an excellent camera, and a processor which is faster than the Snapdragon 821, ie faster than anything that was released before the Samsung Galaxy S8, with the exception of Apple’s own iPhone 7.

In fact, comparing the iPhone 6s with the iPhone 8, if you decide to fork out the extra S$420, you’re getting a display with the same resolution, similar battery life, a processor and camera which are hardly noticeably better for most consumers, and oh, the lack of a headphone jack. Granted, you do get wireless charging, which is cool, but not a must-have. Perhaps the only truly beneficial thing that you get is waterproofing.

Oh, you get fast charging too, but Apple doesn’t give you a fast charger when you purchase the iPhone 8. You’ve got to purchase a fast charger and a cable from Apple, which will set you back another S$100. Classic Apple.

So if you’re smart, and you want an iPhone (I shall refrain from making a joke about how those two are mutually exclusive), you’d get the iPhone 6s because it gives you a similar experience for a lot less money. If you’re even smarter you’d buy an iPhone X on contract and sell it for a ridiculous profit margin, then use the profit to get yourself a phone with a better bang for buck.

Unfortunately, most people will not do so.

I used to watch Apple product releases with anticipation. Anticipation for new technology. But for the past couple of years my commentaries ceased being analyses of new technology and became instead analyses of business strategies and the market.

The old Apple, which dazzles us with the latest technology, is no more. The new Apple, which dazzles us with luxury, is here.

Apple is dead, long live Apple.

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