Apple's iPhone 16 Launch: JPMorgan Says 'Staggered Pricing Approach' Could Offset Rising Chip, Memory Costs

Author: Surbhi Jain | September 09, 2024 08:27am

As Apple Inc (NASDAQ:AAPL) prepares for its iPhone 16 launch on Monday, the biggest question on investors’ minds is pricing.

JPMorgan analyst Samik Chatterjee stresses that "pricing of iPhones to be a key watchpoint with premiumization expected for the less price-elastic high-end Pro models."

While the base iPhone 16 and Plus models are expected to maintain their previous pricing at $799 and $899 respectively, the Pro models could see a price bump.

According to Chatterjee, "We expect a staggered pricing approach with the new lineup, i.e., pricing being maintained for the more elastic base model and Plus model relative to iPhone 15 despite the inclusion of the AI features." The iPhone 16 Pro Max could range from $1,199 to $1,299, allowing Apple to offset rising costs tied to memory prices and the A18 processor chips.

AI Features, iOS 18 Rollout

Chatterjee also points out that the launch isn't just about hardware upgrades. Apple’s next-gen iOS 18 and its integration with AI-driven features are equally critical. The release timing is another pivotal factor.

Chatterjee adds, "We are looking for a release before the first half of October to enable consumers to try hands-on the features in the stores when evaluating purchases." This timeline could help Apple capture more consumer attention ahead of the holiday shopping season.

AI capabilities in the iPhone 16 lineup are poised to drive consumer interest, with Chatterjee stating that "the iPhone 16 line up of phones will be the first designated AI iPhone," which could offer a compelling reason for consumers to upgrade.

Read Also: iPhone 16 Could Kick Off ‘Biggest Upgrade Cycle’ In Apple’s History, Says Dan Ives: Wedbush Analyst Predicts ‘AI Revolution’ Through Cupertino

iPhone Users & Investors To Focus On Pricing

Given Apple’s history of hardware-driven events, this year's focus on AI could create new pricing dynamics. As Chatterjee notes, “The less price elastic demand for the Pro models will allow Apple the opportunity, in our view, to take pricing to pass through the incremental BOM costs.”

Investors will closely monitor how Apple handles potential price increases, especially with AI becoming a core feature. Pricing is expected to be a key focus for both users and investors at the upcoming product launch.

Read Next:

• iPhone 16 Series Production Data Unveiled By Top Apple Analyst: 9M To 16M Units Shipments For August And September Expected

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Posted In: AAPL