One of the primary things Steve Jobs did when he returned to Apple in 1997 was to simplify Apple's product lineup. Back then, that meant 4 computers: two laptops and two desktops, each in a professional and consumer version.
“If we had four great products, that would be all we needed,” Jobs said said at a product launch in 1998.
Three many years later, Apple's product range is way broader. The company was founded in 2024 4 iPads, 4 MacBooks, two desktop Macs, a Vision Pro headset, two Apple Watch models and three sorts of AirPods. But in terms of iPhones, 4 stays the magic number.
That's what number of iPhones the corporate has released yearly since 2020, and in September it released the iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max.
Apple introduced the four-phone lineup as the corporate's iPhone sales have seen the strongest growth previously when it expanded the lineup. If Apple can see growth within the 4 recent phones it launches every year without them cannibalizing one another, the corporate has one of the best likelihood of seeing a meaningful increase in iPhone sales for the primary time since 2022 .
The company doesn’t disclose sales figures for its individual products and total iPhone sales for fiscal 2024 were $201.18 billion. That shall be relatively flat until 2022.
Unfortunately for Jobs' company, not all iPhones are equally popular.
Every 12 months since 2020, one among the brand new iPhone models has lagged behind the sales figures of its siblings. This 12 months it’s the iPhone 16 Plus that lands in the midst of the product range. At $899 within the US, it's dearer than the bottom iPhone 16, but cheaper than the iPhone 16 Pro and Pro Max, which have higher screens.
DSCC, a research firm specializing within the smartphone display industry with estimates from the panel supply chain, has picked up on this trend. Shares of Pro and Pro Max phones have increased annually, while the Plus model fell from about 21% of total Apple screen orders in 2022 to 10% in 2023, based on DSCC's data for annual panel procurement through October emerges. DSCC says it's up barely to 16% this 12 months, but still the bottom volume amongst the corporate's recent iPhones.
“They still have major problems with this fourth model,” said DSCC founder Ross Young.
Other data also shows that Plus is lagging behind. According to survey results from Consumer Intelligence Research Partners, the iPhone 16 Plus accounted for 4% of total iPhone sales within the US within the third quarter, while each the Pro and Pro Max each accounted for six% of sales. The regular 16 also accounted for 4%, although based on CIRP, early iPhone sales are heavily skewed toward early adopters and the Pro models.
The metric only includes just a few weeks of latest model sales within the third quarter, however the 2024 results are consistent with last 12 months, where the 15 Plus accounted for 3% of total sales a few month after launch.
Apple's iPhone 15, iPhone 15 Pro and iPhone 15 Pro Max took the highest three spots in Counterpoint's data on the best-selling individual smartphone models worldwide within the third quarter of 2024. The Plus model didn't make it to the highest 10 list.
The mini and plus failures
When the iPhone was introduced in 2007, there was a brand new model yearly. Since then, the range has expanded significantly, while Apple keeps older models on shelves as budget options.
In 2014, Apple introduced the iPhone 6 Plus, the primary iPhone available in two sizes, resulting in three consecutive quarters of over 27% growth in 2015. After Apple launched the iPhone in 2017 with the event of mobile phones and the creation of a product range of three models, the corporate recorded growth of greater than 15% for 3 consecutive quarters.
After Apple switched to a four-phone offering in 2020, growth skyrocketed, reaching 54% in a single quarter, although this was boosted partly by the pandemic. But since then, iPhone sales have essentially remained stagnant.
When the corporate introduced the iPhone Mini in 2020, it was the most cost effective recent iPhone on the time at $699.
Apple maintained the identical strategy in 2021, hoping that the vocal minority of consumers who had previously demanded smaller phones would flock to the device. It didn't work and Apple not sells devices with a 5.4-inch screen.
By 2022, Apple modified its approach and introduced the iPhone 14 Plus, which had the identical chip and features as the corporate's entry-level iPhone 14 but a bigger screen. This reflected Apple's successful strategy from 2014. According to the DSCC, Apple increased its panel sourcing for the iPhone 14 Plus to as much as 21% of the whole panels ordered this cycle.
But the plus strategy not worked in addition to before.
Is Air next?
Looking ahead, Apple is maintaining its four-iPhone strategy, but could also be changing its approach to seek out a successful fourth model for the 2025 lineup.
Instead of a fourth Mini model at the underside of the lineup or a Plus model in the center, Apple could introduce an Air model at the highest of the lineup. An Air offer could subsequently be characterised by a lighter device and the next starting price an August report from Bloomberg News.
Despite the upper price, Apple could have to compromise on the Air device and limit it to a camera as a result of its lighter weight and slimmer design. Apple's current high-end phones, the Pro and Pro Max, have three large cameras that expand photography capabilities but additionally add weight. DSCC's Young said he expects the Air's screen size to be 6.55 inches, which is between this 12 months's Pro and Pro Max sizes.
A brand new high-end phone could make sense for Apple. In recent years, Max models have outperformed lower-end models, suggesting there is larger demand for more powerful and feature-rich phones at the highest of Apple's range than for cheaper models.
In October, Apple said it had enough inventory of the iPhone 16 and iPhone 16 Plus to satisfy demand, however the dearer Pro and Pro Max models were still briefly supply.
Outside the U.S., Apple's dearer models have seen stronger growth in recent times. In the primary three weeks of iPhone 16 sales in China, the 16 Pro and Pro Max models increased by 44% in comparison with last 12 months's high-end models.
Model preferences also vary by region, Counterpoint analyst Varun Mishra told CNBC.
“In China, the Pro series is doing well as consumers there tend to prefer the Pro models,” Mishra said in an email. “In India, the Pro series is strong, partly due to a lower launch price compared to last year thanks to local manufacturing.”
Apple has previously released thinner and lighter models of its existing products to boost prices and push the boundaries of its technology. In 2008, Apple introduced the MacBook Air and marketed it by saying it was thin enough to slot in an envelope. Initially it was dearer than Apple's other Macs, starting at $1,799, but over time the MacBook Air has turn out to be Apple's entry-level laptop.
In 2013, the corporate did the identical with its iPad, introducing an iPad Air with a thinner design, regardless that it was Apple's recent flagship iPad model released that 12 months. Apple now uses the iPad Air as the center option in its iPad lineup.
For Apple, a switch from Plus to Air could mean more iPhone sales, especially if the brand new model is priced higher than the opposite iPhones, which could help Apple increase its margin and proceed the recent trend of upper average iPhone sales price . It could also help focus Apple's early adopters and fans on a single high-end iPhone model.
“Next year they’ll try something different,” Young said.
REGARD: The iPhone 16 upgrade could also be a multi-year cycle, says BofA's Wamsi Mohan
image credit : www.cnbc.com