Jason Snell on the “The evolving world of iPhone marketing”
For the first few years of the iPhone’s existence, Apple introduced a single new model every year. In that time, total iPhone sales shot up from nothing to $100 billion a year. Not bad!
But in the decade since then, the iPhone has had a huge growth spurt. Between fiscal 2014 and 2022, total iPhone revenue doubled, from $101 billion to $205 billion. (Thus far in fiscal 2023, the iPhone has generated $156 billion, and the fourth fiscal quarter will almost certainly vault it well over the $200 billion level again.)
What changed? Certainly, today’s iPhones are vastly more advanced than the iPhone 5S of ten years ago. But the single biggest change is the shift to treating the iPhone like a product line rather than just a product.
From 2007 to 2012, the iPhone was a single product. Sure, sometimes you could buy the previous year’s model at a discount (a practice Apple continues to perfect to this day), but there was only ever one new iPhone. Apple took its first steps to differentiate the line in 2013 when it introduced the iPhone 5C to go with the iPhone 5S.
The iPhone 5C was a flop, though its failure still vexes me. On paper, it was a great idea: rather than selling price-conscious buyers last year’s model, Apple spruced up the iPhone 5 with bright colors and a lower price. Maybe it was the plastic back, or maybe people really didn’t want bright colors. Regardless, the lesson Apple seems to have taken away from the iPhone 5C debacle is that differentiating on price isn’t the same as differentiating on functionality, and dressing last year’s phone in a new case won’t fool anyone.
Apple’s first big move came in 2014, when the iPhone 6 was joined in the product line by the iPhone 6 Plus. The iPhone 6 was bigger than the iPhone 5, but the iPhone 6 Plus was way bigger and at a price premium. iPhone sales leaped, and I’m sure the number one reason was that a lot of people wanted a bigger iPhone, and it had taken a bit too long for Apple to adapt.
In 2017, Apple tweaked the formula again. In addition to the iPhone 8 and 8 Plus, it added a new, high-end phone with a high-end price: the iPhone X. Not only did the iPhone X introduce a bunch of features that would become standard on most iPhones, like an OLED screen and Face ID, it also established that some iPhone buyers would pay a lot more for a high-end model.
The iPhone X marked the beginning of an era of experimentation. In 2018, the iPhone X was replaced by the XS and XS Max, bringing the big/little dichotomy to the higher end of the product line. Rather than revise the iPhone 8 again, instead Apple introduced a larger, more affordable model, the iPhone XR. In hindsight, the XR was the predecessor of 2019’s iPhone 11.
The end result is that Apple has scaled its iPhone line from a single new model to four, each of them with different attributes. The question for 2023 is if we’re in for another year of status quo or if Apple plans further experiments up at the high end. I’m intrigued by the conjecture that the high-end iPhone Pro might not be called Pro Max, but might instead take a cue from the Apple Watch and be dubbed iPhone Ultra.
I love the idea of an iPhone Ultra, but if Apple is going to commit to that product name, it needs to also commit to making that part of the product line live up to the name. This year’s rumors suggest the high-end iPhone will have a major camera upgrade, presumably a much larger zoom enabled by a periscope lens. Sounds great, but one look at the history of the iPhone would show that all past camera advancements on the big phone have rapidly integrated into the rest of the product line.
If Apple really does change the name of the Pro Max to Ultra, it suggests to me that the company is not done spreading out the iPhone product line and exploring just how much money its high-end users are willing to spend on the very best features.
I mean "Ultra" is catchier than "Pro Max"