Apple Jacked (Premium)

You might have missed this, but the most surprising thing about this week's Apple event was that the firm just quietly raised prices again.

And not just on the new versions of existing products like MacBook Air, Mac Mini, and iPad Pro. Apple also raised its prices on important peripherals like the Apple Pencil and Smart Keyboard.

Depending on your view of the company, this is either par for the course---Apple, maker of luxury products, continues to overcharge customers---or a bit of a surprise given its past pricing strategies. But I view this move through a slightly expanded lens. And I think it's part of a broader new strategy to wring as much money as it can from its smaller but very faithful audience.

Indeed, this isn't the first time this has happened in 2018. Just last month, Apple revealed new iPhone and Apple Watch models with much higher average selling prices (ASPs) than the products they replaced.

So what's changed this year vs. previous years? Simple: From a market share perspective---which is to say, Apple product sales vs. those of the competition in both the PC and smartphone markets---Apple's platforms are sliding downward. Yes, yes. The Mac and iPhone are highly profitable product lines. But Mac sales have fallen in the past few years. The iPad has only recovered from its own multi-year slide because of a new low-cost model. And iPhone sales are flat year-over-year.

To counter these market realities, Apple has engaged in an interesting strategy. It is raising prices across the board in an attempt to bump up the average selling price (ASP) of its products. And if you look at any of the announcements they've made this fall, you can see this strategy unfolding everywhere.

Consider the new iPhones.

Last year, Apple announced its first $1000 phone, the iPhone X. Despite its heady price-tag, this product was successful enough---Apple claims it was the best-selling iPhone model for its entire four quarters in the market---that the firm has expanded the X lineup this year to include three models, the XS, XS Max, and XR.

The iPhone XS picks up where the X left off: The base model, with a paltry 64 GB of storage, is $999. But instead of offering an affordable 128 GB upgrade, the next step up is 256 GB, which costs $1150. The iPhone XS pricing is unchanged, year-over-year, from that of its predecessor.

But the iPhone X launched alongside two less expensive iPhones in 2017, the iPhone 8 and 8 Plus. For 2018, Apple is offering an even more expensive iPhone, the XS Max. This handset starts at $1099, but since the 64 GB of storage it provides would be unacceptable to anyone shopping in that price range, most will choose the 256 GB version for $1250.

What's $1250 between friends? Well, it's $100 more than the most reasonable iPhone flagship from a year earlier (the 256 GB iPhone X). More to the point, it's an incredible $381 more than the $869 the same buyer would have spent two years prior on a similarly up...

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