The Biggest iPhone News on Tuesday Wasn’t the iPhone 11 Pro

One of the most surprising narratives from the tech giant’s big event was iPhone pricing, particularly for the company’s lower-end models.

| More on:
young woman celebrating a victory while working with mobile phone in the office

Image source: Getty Images

The Apple (NASDAQ: AAPL) product launch on Tuesday was packed with news. On the hardware front, the tech giant released the iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max; the Apple Watch Series 5, and a new version of the entry-level iPad. But the tech company also shared more details on two of its upcoming services: Apple Arcade and Apple TV+.

With the iPhone segment accounting for over half of Apple’s revenue, it was no surprise that the company’s latest versions were the main event for the keynote. But what was interesting is that it wasn’t necessarily the flagship iPhone that stole the show on Tuesday. Instead, it was the aggressive pricing of the new iPhone 11 and the subsequent price cut to the current iPhone XR that grabbed the spotlight.

Here’s a look at the newest iPhones, and why the competitive pricing was a narrative that caught investors’ attention.

Meet the newest iPhones

As was the case last year, the lineup is made up of three new iPhones: one lower-cost iPhone and two high-end models. To differentiate the two higher-end smartphones from the cheapest new one, Apple gave the more expensive models a “Pro” designation this year.

Here’s how the new lineup breaks down.

iPhone 11 (starting at $699): In many ways, this is the successor to the iPhone XR that Apple launched last year. Priced lower than the iPhone 11 Pro and iPhone 11 Pro Max, it is available in more colors, has a liquid crystal display (LCD) instead of the organic light-emitting diode (OLED) version on the higher-end models, and has a display that measures 6.1 inches. Setting it apart from the iPhone XR, the new phone has a better camera, improved battery life, and Apple’s new A13 Bionic processor.

iPhone 11 Pro (starting at $999):ÂCompared with the iPhone 11, the iPhone 11 Pro has a smaller display size of 5.8 inches. But it has an OLED display, and an even better camera system than the iPhone 11. It also includes the latest A13 Bionic chip.

iPhone 11 Pro Max (starting at $1,099): The new flagship iPhone replaces the iPhone XS Max. It is mostly the same as the iPhone 11 Pro but has a 6.5-inch display and five more hours of battery life compared with the iPhone XS Max, giving it the longest battery life of any iPhone.

More affordable pricing

While the iPhone 11 certainly isn’t cheap, it’s notably priced $50 lower than the iPhone XR’s $749 starting price last year. Perhaps even more surprising, Apple dropped the price of its one-year-old iPhone XR by $150, to $599.

The aggressive pricing could give the iPhone segment a much-needed boost. Its revenue has been declining, and iPhone unit sales, which the company stopped reporting as they started to trend downward, are likely still falling as well.

As Apple transitions to a business model that is focused on monetizing its base of active users with an increasingly robust slate of services, it makes sense to make its iPhones more affordable. This could reinvigorate unit sales growth, which could ultimately bolster the company’s installed base of active users, who it can monetize with apps and services in the coming years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

More on Tech Stocks

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

Woman has an idea
Tech Stocks

Prediction: 1 Stock That Could Trounce the Market 

The TSX has been favouring tech stocks, but not this one. However, it has the potential to trounce the market…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Businessman holding AI cloud
Tech Stocks

AI Will Transform Everything: Investors, Be Early Adopters and Buy These 3 Stocks

Investors looking to invest in companies doing big things in AI should consider these three stocks for their portfolios.

Read more »

stock research, analyze data
Tech Stocks

Forget Shopify: These Unstoppable Stocks Are Better Buys Today 

Should you consider buying Shopify stock while rivals consider a buyout or should you go for stocks with a stronger…

Read more »

A colourful firework display
Tech Stocks

2 Potentially Explosive Stocks to Buy in March

These two growth stocks are destined for many more years of market-crushing returns.

Read more »

edit CRA taxes
Tech Stocks

TFSA Millionaires Are Learning They Can Still Be Taxed

If you day trade stocks like Shopify (TSX:SHOP) in a TFSA, you may be taxed.

Read more »