Apple iPhone and Quality Inflation

Apple’s first iPhone, when launched 14 years ago, was a stunning price for $ 499. That’s about $ 640, adjusted for inflation today.

The current iPhone 12 is a bit higher at $ 700, but it’s technically far from the first 4 GB, 4.5-inch tall iPhone in 2007. The 12th iteration is more than an inch higher and the memory is 16 times higher. With a 10% surcharge, iPhone customers are making more money.

The iPhone 12 is the latest base model until Tuesday, when Apple will announce a slate of new products, including the next-generation iPhone. Apple hasn’t disclosed the price of the new version. This has always been part of increasing the excitement of the company’s product launch.

Shareholders are expecting another big profit center. Apple’s share price has risen by more than 20% in the last three months, well above the S & P 500. Investors expect the new phone slate to be as successful as 12 for Apple’s earnings. The company reported record revenue and profits in the first quarter thanks to this device.

The 13th version can be expensive due to the high price of the components. TSCM is the largest supplier of semiconductors for the iPhone, reportingly raising prices by as much as 20 percent. Still, Apple Watchers don’t expect the latest base version to represent a major technological leap like other launches. That may curb price increases, as Apple has already warned that the supply of new devices will be tight.

Whether the price of the latest iPhone is soaring or staying close to the latest iPhone, quality adjustments can be made if it includes the expected improved display, faster processing, and better camera. Become. Even if Apple raises the price tag, it can be difficult for customers to value these improved features.

Former Federal Reserve Chairman Alan Greenspan pointed out when Nokia made a best-selling cell phone. “When the characteristics of a product or service are changing rapidly … It can be very difficult to adjust the price of a product to improve quality,” he said in 1998.

Capturing product improvements is much more difficult than looking at higher prices and reflexively looking at evidence of inflation.

The new iPhone is expected to have the same 5.4-inch, 6.1-inch, and 6.7-inch screen sizes as last year’s iPhone 12 shown here. However, new devices include camera upgrades.

Financial journalist Tom Hudson hosts the “Sunshine Economy” at WLRN-FM in Miami and is Vice President of News. He is a former co-anchor and editor-in-chief of the Nightly Business Report on public television. Follow him on Twitter @ HudsonsView.

Apple iPhone and Quality Inflation

Source link Apple iPhone and Quality Inflation

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