Home / iPhone / High iPhone prices are driving buyers to older models, early data suggests – The Australian Financial Review

High iPhone prices are driving buyers to older models, early data suggests – The Australian Financial Review

Apple may be paying a high price for the very high price tag it put on its latest generation of iPhones.

An analysis of more than 500,000 online shopping visits in Australia and in the US suggests that, while there’s an unprecedented level of interest in the new iPhone XS and iPhone XS Plus, the cost of the new phones is forcing buyers to turn to older, cheaper models in record numbers.

So great is the interest in older iPhones, it has outstripped interest in the latest models for the first time in Australia, according to the data collected by the phone comparison website WhistleOut.

“We noticed that we were having a bumper iPhone year, and the interest in iPhones seemed to be dramatically increased on previous years, but we suspected that because of the price of the new iPhone … it was driving people to look at other models,” WhistleOut publisher Joe Hanlon said.

What's behind the sudden spike in interest in older iPhones (seen in black)?
What’s behind the sudden spike in interest in older iPhones (seen in black)?

The least expensive iPhone XS costs $1629, and the most expensive model, an iPhone XS Max with 512 GB of storage, costs $2369. Meanwhile last year’s iPhone 8 and 8 Plus, which Apple has left on the market, range in price from $979 to $1399.

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“When we got into the data we found that, even though the interest in the iPhone is high, the proportion of that going to old iPhone models was much higher than the proportion going to the newer models, Mr Hanlon said.

Older models in spotlight

In 2016, 24 per cent of all “share of voice” for mobile phones (measured by people clicking to purchase or read about phones) was in the latest iPhone (at that time, the iPhone 7), compared to just 10 per cent for older iPhones. In 2017, 17 per cent of all phone interest was in the new iPhone X and iPhone 8, compared to just 8 per cent interest in older iPhones.

But this year interest in older models has skyrocketed, accounting for 22 per cent of all interest, eclipsing the 16 per cent interest in the iPhone XS and iPhone XS Plus, according to WhistleOut’s analysis.

That’s unprecedented in Australia, but it is a trend that showed up last year in the US, where WhistleOut also operates, Mr Hanlon said.

And it might not be a coincidence that, last year, US carriers began a move to more transparent pricing for mobile phones – the same move that Australian carriers, led by Vodafone, are making this year.

“The more obvious it is that the cost of phones is increasing compared to the monthly cost of a phone plan, the more price-sensitive people become,” Mr Hanlon said.

Apple has yet to release sales figures for this year, and declined to comment.

But the early trends showing up online might already be showing up in stores, with one retailer, speaking on the condition of anonymity for fear of retribution from Apple, describing iPhone XS and XS Plus sales as disappointing compared to previous years.

Another factor potentially dampening interest in the new iPhones already on the market is the fact Apple has promised to release a similar, cheaper model known as the iPhone XR in late October, a month after the iPhone XS went on sale.

According to a poll of 1000 Australians conducted by another phone comparison website, finder.com.au, more people are waiting for the iPhone XR to come out than are planning to buy the XS.

Around 5 per cent of respondents said they were waiting for the XR before deciding which model to buy, 4 per cent said they were planning to buy the XR, and 7 per cent said they had bought or were planning to buy the iPhone XS or iPhone XS Max, Finder found.

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If these early indicators of buyer intention do carry through to the sales checkout, then it will run counter to the sales trends that have emerged in the past few years, says Foad Fadaghi, managing director of the telecommunications analyst outfit Telsyte, which tracks Australian phone sales.

To date, the impact of higher prices has been to force people to delay upgrading their phone, rather than to force them to upgrade to a second-tier model, he says.

“Australians who are buying new smartphones still seem to gravitate towards the latest and best models when upgrading,” he said.

Regardless of which model people choose, Apple should still do well this year, Mr Hanlon said, and the trend towards looking at older models might well come to an end once the cheaper iPhone XR comes out.

“Obviously people are really interested in iPhones this year, and if price is a factor in them not choosing the iPhone XS, then a cheaper upgraded model could be the answer.

“The iPhone XR could be a really big hit,” he says. 


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