Commentary

Apple Shifts The Direction Of Its Pricing

The lead-ups to Apple’s annual September “Event” at the Steve Jobs Theater in Cupertino yesterday dampened expectations for any startling new hardware reveals, or drastic deviations from the sc ript of past shows, and it apparently didn’t disappoint on those scores. But it did reveal an interesting turn of fortune for users who have been complaining about the escalating cost of their mobile devices and streaming entertainment options.

“The most surprising new features Apple Inc. debuted at its iPhone launch event Tuesday were the price tags, in a much different way than we have seen previously from Apple,” Therese Poletti writes  for MarketWatch.

“Apple surprised consumers and investors alike with the pricing of its new Apple TV+streaming service at $4.99 a month, as well as lower prices on its cheapest new iPhone and a lower-priced Apple smartwatch. Apple usually positions itself as offering the most high-end, highly designed products, but its streaming service especially appears headed a different way, including an offer of one free year of Apple TV+ to buyers of new iPhones, iPads, Macs and Apple TVs,” Poletti continues.

“The company is making just a handful of shows available for the TV+ debut in November, so the service will be a tough sell against the deeper programming catalogs offered by streaming rivals Netflix Inc. and Walt Disney Co. But at $4.99 a month, TV+ is much cheaper than Netflix’s $12.99 monthly standard option and Disney’s $6.99 monthly fee for a service expected to arrive in November,” Tripp Mickle writes  for The Wall Street Journal.

“Clearly, they want their customers to use it and not feel forced to choose between it and Netflix or Hulu,” Creative Strategies analyst Carolina Milanesi tells Mickle. 

“Netflix doesn’t see the low prices as a threat, because they make it more likely Netflix customers won’t be forced into a choice if they want to add another streaming service, an executive familiar with the company’s strategy said,” Mickle adds.

But Netflix stock dropped more than 3% after Apple’s announcement yesterday, as did Disney's, and Roku's fell more than 12%, CNBC’s Ari Levy reports.

“I think the pricing on the Apple TV service was definitely a positive surprise. That’s why you’re seeing the hammering in some of the other video service-related names like Netflix, Amazon and Roku. Clearly, that was a positive that people were happy to hear,” Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, tells  Reuters’ Stephen Nellis and Noel Randewich.

“There was no bundle with Apple Music or other services as some analysts had expected. But Ben Bajarin, an analyst with Creative Strategies, said the TV service, a $5 a month ‘Arcade’ gaming service and the base model iPhone 11, seem designed to draw in users for the longer term,” Nellis and Randewich add.

Apple also released three new versions of its smartphone yesterday “marking the 11th upgrade of its top-selling product. However, the benchmark iPhone 11 version was priced just under $700, a $50 discount to the current iPhone XR, and pricing for older adaptations of the phone will either be held in check or modestly reduced in order to spur demand as customers continue to extend the life of their current handsets,” Martin Baccardax writes  for The Street.

“Apple also announced an update for its budget iPad, and the new seventh-generation model is 10.2 inches, moving up from the standard 9.7-inch display size. This model starts at the same price, $329, but it has a few improvements over the last-generation iPad,” Cameron Faulkner reports for The Verge.

The new Apple Watch Series 5 (GPS) starts at $399, or $499 with cellular. The Series 3, with built-in GPS, optical heart rate sensor and water resistance, starts at a new low price of $199 and Series 3 (GPS + cellular) is $299, according to a news release.

As for those Apple new-product spectacles, their time has passed, as far as The New York Times’ Charlie Warzel is concerned. He opines“What started as a Steve Jobs TED Talk has become a parody -- a decadent pageant of Palo Alto executives, clothed in their finest Dad Casual, reading ad copy as lead-ins for vaguely sexual jump-cut videos of brushed aluminum under nightclub lighting. The events are exhausting love letters to consumerism complete with rounds of applause from the laptop-lit faces of the tech blogging audience when executives mention that you (yes you!) can hold the future in your hands for just $24.95 per month or $599 with trade-in.”

Oh, well. They’ll probably figure out a way to make an e-sport tournament out of these events, which date back to 1997, and get with the century.

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