In recent years, the tech giant Apple has gone through somewhat of an identity crisis. Amidst stagnating sales and an increasingly saturated personal computing market, the company has had to decide whether it wants to maintain its mass market appeal with younger customers, or cater to a more premium demographic.
Because the Cupertino tech company has struggled to maintain its legendary sales growth and market dominance, Apple has enacted several strategies to combat slowing sales. These strategies range from diversifying its service offerings with iCloud and Apple Music to courting the Microsoft and Google-dominated education market with cheaper, smaller iPads. But one strategy in particular has disproportionately hurt students the most.
A RISING TIDE LIFTS ALL PRICES
A core target of Apple’s brand identity and marketing has always been young creatives; people who are heavily invested in content creation and artistic production, and who rely on the obscenely thin and powerful anodized aluminum unibody designs of Apple’s computers to accomplish these tasks. A significant subset of this demographic is students who also complete similarly productive tasks and require those same powerful machines to do so.
Across its line of products, Apple has quietly tried to offset decreasing sales by increasing the average selling price of its newer devices. iPhone unit sales have stagnated over the past few financial quarters with almost no growth, but in spite of this, Apple has just ended its fourth quarter with a 29 percent revenue increase. It also ended its fiscal quarter with the average selling price of an iPhone jumping from $724 to $793.
Yet despite the bump in revenue, “these high prices are not sustainable in the long run as phones become commodities,” Georgia State professor Alok Saboo said.
These price increases are not just restricted to the iPhone lineup either. Its new line of Macbook Airs, a popular choice for students, has also seen a price hike from $999 to $1,199. Apple’s newest iPad Pro line also saw similar increases.
While It’s true Apple has always occupied a luxury position in the personal computing market, offering premium materials and social cachet in addition to its reliable machines, the tech company has never been so aggressive in its pricing as it is now. With these increases, Apple’s luxury appeal is becoming largely inaccessible and prohibitively expensive to its most financially precarious customers: students.
“I feel that having a Macbook or iPad would be more efficient and also much lighter than carrying around a bulky laptop or textbooks, but unfortunately I can’t afford either of those,” Georgia State student Maria Ahmad said.
Setting the tone for the rest of the market
This pricing strategy is not just harmful for Apple customers but also for the tech market as a whole. Because of its scale and reputation, Apple has a tremendous amount of influence on the tech market and its economy. If Apple increases its prices, other companies will do the same.
The effects of this can already be seen in companies like Samsung and Google, whose direct competition with Apple has led them to increase the prices of their latest phones. For example, Google’s Pixel 3 smartphone costs $150 more than its predecessor.
THE HIDDEN COSTS OF DATA STORAGE
Apple has even continued this trend with its newest iPads, a device it aggressively targets to students and the education market. The iPad presents a particularly insightful case study of Apple’s strategy. As many people are frustratingly aware, iOS and the devices that run it do not allow any simple or cost effective way to expand the built in storage that comes with the device at the time of purchase.
This means no flash drives, external hard drives or added storage of any kind aside from iCloud storage, which Apple will gladly provide for an additional fee. But even those prices are more expensive compared to other companies.
This restriction has been a frequent critique of the company but also highlights how it uses storage to justify its high pricing. Apple currently charges its customers for additional storage and actively limits them from adding additional storage in more cost effective ways. In doing so, Apple sacrifices the overall user experience and affordability of its computers in order to increase its profit margins.
INCREASING THE PRICES OF ACCESSORIES
Even its accessories offerings have seen price increases, with many of these accessories becoming necessary purchases to utilize Apple’s devices to their full potential. The Apple pencil now costs $129, up 30 percent from last year’s model. Likewise, the Smart Keyboard Folio begins at $173, a 13 percent increase from its previous iteration.
TO THROTTLE OR NOT TO THROTTLE
This phenomenon is even observable across Apple’s other product lines and service offerings. Within the past few years, Apple has repeatedly been criticized for reducing the performance of its devices in an effort to increase sales of new devices and other associated products.
It was first accused of removing the headphone jack from its iPhones and later its laptops in order to increase sales of its bluetooth headphones and headphone dongles. The company was then accused of throttling the performance of its processors in older phones to encourage people to upgrade their phones.
Apple has repeatedly defended its decision to omit the headphone jack from its newer models by saying the port was taking up much needed space in the body of the devices, preventing them from being thinner. It also insists that this is not an effort to increases bluetooth headphone sales.
Likewise, the company has explained its decision to throttle the performance of its older model devices by explaining that, as its lithium ion batteries degrade over time, they are able to handle less intensive computer processing. To reduce the likelihood of the iPhone’s processor becoming overloaded and having to shutdown randomly, Apple throttled the performance of the processors in its older iPhones.
As Apple is sued for this practice, and criticized by customers, its brand image is increasingly complicated and harder to reconcile with its mass market appeal. With each $1,000 iPhone or $10,000 Apple Watch, it’s becoming more of a luxury brand.
“Clearly, there will be some consumers who will shift to other brands who offer compelling alternatives. However, many students (or customers with limited budgets) may be more likely to purchase previous generation devices or upgrade their phones less frequently. This will eventually hurt Apple’s performance as we have seen in the recent lackluster iPhone sales data,” Saboo said.
Consequently, this product offering exposes the apparent hypocrisy of Apple’s core identity. At a time when it is aggressively trying to gain a foothold in the education industry and in the creative workflows of students and young professionals, its price gouging and system limitations necessarily prevents these demographics from actually affording its products.
