Apple Eliminates Baseline iPhone Models, Shifts Focus to Premium Tiers
Apple's new CEO John Ternus announced the foldable iPhone Duo during a major hardware event and revealed that baseline models of the upcoming iPhone 18 lineup would be eliminated. The decision reflects Apple’s strategy shift toward higher-margin Pro and Pro Max tiers, with prices for the foldable model reaching up to $3,000. This move is partly driven by surging DRAM costs described as a '100-year flood' by Tim Cook, which have compressed product gross margins to 40%. By focusing on premium models, Apple aims to protect its unit economics amid ongoing memory price volatility. The company's decision narrows the addressable market and reduces pressure from producing lower-cost devices that could hurt profitability. Despite this shift, Apple continues to generate strong cash flow with a $4.6 trillion valuation and remains confident in maintaining fiscal 2027 margins through strategic pricing adjustments. However, by excluding first-time buyers, there is concern about long-term growth potential for the iPhone franchise as well as its ability to expand into new user segments that historically fueled services revenue. The move signals a more defensive approach from Apple under Ternus compared to previous years when it prioritized broader market penetration.
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Topics: Apple iPhone Duo Margins Pricing Strategy Tim Ternus