Apple is on sale. Look around and you will find almost everything Apple sells with a discount, sale price, bundle, or promotion. Marketers know that demand is price sensitive and Apple is a first class marketer, so why sale prices for the past six months or so, but few sale prices in years past.
Supply, meet demand. Discounted prices, meet Apple’s new Services revenue stream. Wearables and Accessories, meet the need for Apple to pull ever more revenue and profits from a more slowly growing customer base.
Let’s face it. The heady days of annual smartphone growth are gone. Nearly everyone who wants a smartphone, regardless of quality, features, or prestige, has one. Here’s why that ongoing trend does not hurt Apple.
Apple occupies the premium end of every product spectrum and it’s been that way since I started following Apple well back in the last century. What is different today? The iPod and iPhone halo effect no longer prop up Mac sales. Many less expensive mid-range smartphones have features almost comparable to Apple’s iconic iPhone.
What’s the problem?
For Apple, not much. Last year the company raised prices on all new products; from iPhone XR to iPhone XS and XS Max, while discontinuing the entry-level iPhone SE. New iPad Pro models saw a price increase. So did MacBook Air and Mac mini.
At a time when sales of techno-gadgets were slowing down, what was Apple thinking?
Apple’s second largest and most rapidly growing revenue stream is Services; App Store, Apple Music, Apple Pay, AppleCare, iTunes, et al. Apple makes money with each and ever more customers means more money for Apple.
Apple’s newest rapidly growing revenue stream is Wearables and Accessories; those are bound to iPhone, iPad, and Mac. Watch, AirPods, Beats headphones, and more. Revenue from Wearables tops iPad now.
No other technology company I know extracts money from the customer base like Apple. I can remember a time where all I owned from Apple was a Mac and a printer. Today, I’m fully infested with Mac(s), iPad(s), iPhone, Watch, AirPods, Apple TV, and plenty of Services to match in Apple Music, Apple Pay, AppleCare, iTunes, and far too many app subscriptions.
So, why is Apple on sale? Why do we see so many discounts, sales, promotions, and bundles on almost everything with an Apple logo; iPhone, Mac, iPad, Watch, AirPods, et al?
Apple knows there is a limit to how much revenue and profits can be extracted from the customer base. Apple knows there is a limit to how many products customers can buy and how much they’ll pay. Simply put, Apple raised prices last year so it could discount prices– a little– this year, thereby keeping the sales going when competitors struggle, keeping both revenue and profits high while competitors sag by comparison.
Apple is on sale because Apple knows how to make money better than any competitor.