On September 20, 2024, a series of iPhone 16 was displayed at the Apple store at Tun Razak International Trade Center in Kuala Lumpur, Malaysia.
Anne Slim | Getty Images News | Getty Images
One of the first things Steve Jobs did when he returned to Apple in 1997 was to simplify Apple’s product lineup. At the time that meant four computers: two laptops and two desktops, each with a professional and consumer version.
“If we have four great products, that’s what we need,” Jobs explain Product launch in 1998.
Thirty years later, Apple’s product line is even broader. Company launches in 2024 Four iPads, four MacBooks, two desktop Macs, one Vision Pro headset, two Apple Watches and three AirPods. But for the iPhone, four is still the magic number.
That’s the number of iPhones the company has released each year since 2020, with the iPhone 16, iPhone 16 Plus, iPhone 16 Pro and iPhone 16 Pro Max released in September.
Apple is launching four phone lines because historically iPhone sales have grown most strongly when the company has expanded its product lines. If the four new phones Apple releases each year can grow without cannibalizing each other, the company has its best chance of seeing meaningful iPhone sales growth for the first time since 2022.
The company did not give sales data for specific products. Overall iPhone sales in fiscal 2024 were $201.18 billion. By 2022, this number will remain relatively flat.
Unfortunately for Jobs’ company, not all iPhones are equally popular.
Every year since 2020, a new iPhone has lagged behind its siblings in sales. This year it’s the iPhone 16 Plus, which sits in the middle of the range. It sells for $899 in the United States, making it more expensive than the base iPhone 16 but cheaper than the iPhone 16 Pro and Pro Max, which have better screens.
DSCC, a research firm focused on the smartphone display industry, has taken note of this trend, with its forecasts coming from the panel supply chain. DSCC’s annual panel procurement data through October shows that the share of Pro and Pro Max phones has increased year by year, while Plus models have declined from approximately 21% of Apple’s total screen orders in 2022 to 10% in 2023. According to DSCC, although it has rebounded to 16% this year, it is still the lowest sales of the company’s new iPhones.
“They’re still grappling with the fourth model,” DSCC founder Ross Young said.
Other data also shows Plus lagging behind. According to findings from Consumer Intelligence Research Partners, the iPhone 16 Plus accounted for 4% of total U.S. iPhone sales in the third quarter, while Pro and Pro Max each accounted for 6%. According to CIRP data, although early iPhone sales were mainly concentrated on early adopters and Pro models, ordinary iPhone 16 models also accounted for 4%.
The metric only includes several weeks of sales of the latest models in the third quarter, but the 2024 findings are consistent with last year, when the 15 Plus accounted for 3% of total sales after a month on the market.
According to Counterpoint’s data on the world’s best-selling single smartphone models in the third quarter of 2024, Apple’s iPhone 15, iPhone 15 Pro and iPhone 15 Pro Max occupy the top three respectively.
The failure of Mini and Plus
When the iPhone launched in 2007, there was a new model every year. The product line has expanded quite a bit since then, with Apple keeping older models on store shelves as budget options.
In 2014, Apple launched the iPhone 6 Plus, offering two iPhone sizes for the first time, leading to three consecutive quarters of growth of more than 27% in 2015. With a lineup of three models, the company has grown more than 15% for three consecutive quarters.
After Apple launched four mobile phone product lines in 2020, growth surged, reaching 54% in one quarter, although this growth was partly driven by the epidemic. But since then, iPhone sales have been essentially flat.
When the company launched the iPhone Mini in 2020, it was the lowest-cost new iPhone at the time, priced at $699.
Apple is keeping the same strategy going in 2021, hoping that the minority of consumers who previously demanded smaller phones will flock to the device. But it didn’t work, and Apple no longer sells devices with 5.4-inch screens.
In 2022, Apple changed strategy and launched the iPhone 14 Plus, which has the same chip and features as the company’s entry-level iPhone 14 but with a larger screen. This reflects Apple’s successful strategy since 2014.
But the effect of the Plus strategy is not as good as before.
Is air next?
Going forward, Apple will maintain its four-iPhone strategy but may change its approach to finding a successful fourth model for its 2025 lineup.
Apple may not launch the fourth Mini model at the lower end of the product line, nor will it launch the Plus model in the middle, but will launch the Air model at the high end of the product line. According to reports, Air products are characterized by lighter weight devices and higher starting prices. Bloomberg News reported in August.
Despite the higher price, Apple may have to make trade-offs with the Air device, limiting it to a single camera due to its lighter weight and slimmer design. Apple’s current high-end phones, the Pro and Pro Max, are equipped with three large lenses, which increase photography capabilities but also increase weight. DSCC’s Young said he expects the Air’s screen size to be 6.55 inches, which would be between the sizes of this year’s Pro and Pro Max.
A new high-end phone might make sense for Apple. Max models have outsold lower-end models in recent years, suggesting there’s stronger demand for more powerful, feature-packed phones in Apple’s lineup than for lower-cost models.
In October, Apple said it had enough iPhone 16 and iPhone 16 Plus in stock to meet demand, but the more expensive Pro and Pro Max were still in short supply.
Apple’s more expensive models have also seen more growth outside the United States in recent years. In the first three weeks of iPhone 16 sales in China, the 16 Pro and Pro Max models grew 44% compared to last year’s high-end models.
Counterpoint analyst Varun Mishra told CNBC that model preferences also vary across regions.
“In China, the Pro range performed well as consumers there tended to favor Pro models,” Mishra said in an email. “In India, the Pro range performed strongly, in part due to low launch prices for locally manufactured products. last year.”
Apple has previously released thinner and lighter models of existing products to increase prices and push its engineering limits. In 2008, Apple launched the MacBook Air, whose marketing slogan was “thin enough to fit in an envelope.” Initially, it was more expensive than Apple’s other Mac computers, starting at $1,799, but over the years, the MacBook Air has become Apple’s entry-level laptop.
In 2013, the company did the same thing with the iPad, launching the iPad Air with a thinner design, even though it was the flagship new iPad model Apple released that year. Apple now uses the iPad Air as the middle choice in its iPad lineup.
For Apple, a switch from Plus to Air could mean higher iPhone sales, especially if the new models are priced higher than other iPhones, which could help Apple expand profit margins and continue the recent trend of higher iPhone average selling prices. It could also help Apple’s early adopters and fans focus on a high-end iPhone model.
“Next year they’re going to try something different,” Young said.
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