Apple’s decision to raise prices of several hardware products last week could be the first step towards a broader repricing of its device portfolio, with analysts expecting iPhones to become costlier in the coming months and festive discounts to be far less generous than in previous years.
The company has increased prices of MacBooks, iPads and accessories, while leaving iPhones untouched for now. Industry experts, however, say the move reflects mounting pressure from soaring memory chip costs and supply constraints that are unlikely to ease anytime soon. They expect Apple to avoid another immediate revision before its September launch event, but believe the upcoming iPhone lineup, particularly the Pro models, could see global price hikes that would also push up prices in India.
“Apple is one of the last ones to raise prices because it was in a better position than most manufacturers from a supply chain perspective,” Navkender Singh, associate vice president, IDC India, said. “The reason is that memory has become the biggest cost component in devices and supply issues have only worsened since the beginning of the year.”
Apple had managed to absorb higher component costs over the past several months because of its scale, supplier relationships and higher margins, but analysts say that cushion has now narrowed.
“Apple has been holding prices for a long time. A memory component that cost around $30-40 is now over $100. At some point, those costs had to be passed on,” Tarun Pathak, research director at Counterpoint Research, said.
Upasana Joshi, senior research manager at IDC India, said the upcoming Pro lineup of iPhones could see global price increases of $50-200, with currency movements potentially adding to the impact in India. While Apple has so far protected iPhone prices, analysts say its biggest revenue driver is unlikely to remain insulated if component costs keep rising.
The ripple effect could extend beyond Apple. Android smartphone makers have already been raising prices since late last year to offset higher component costs, and analysts believe Apple’s move gives them greater room to increase prices further. “If Apple is increasing prices, other OEMs also get more room to do so,” Pathak said, adding that some manufacturers could raise prices by another 10-15% before the festive season across categories.
That could also change the dynamics of this year’s festive sales. Promotional offers are expected to continue, but analysts say effective selling prices are unlikely to match last year’s levels. “It is highly unlikely there will be meaningful festive discounts. Consumers looking to buy should not wait because devices are only likely to become more expensive,” Joshi said.