Apple raises prices, and profits keep booming

Since Apple introduced the iPhone 11 years ago, smartphones have become ubiquitous, and the market for them is saturated. To maintain growth, Apple has employed a shrewd strategy: Charge more for the devices.

Journalists and analysts have explained how Apple is doing that by dividing the number of iPhones sold in a given quarter into the revenue Apple earns from them to calculate the average selling price.

That’s not going to be so easy anymore.

[…]

But after those figures were reported, Luca Maestri, Apple’s chief financial officer, said in a conference call that the company would no longer disclose how many iPhones, iPads or Mac computers it sold. As a result, journalists and analysts will no longer be able to track how Apple’s swelling prices are improving its profits.

Here’s the problem for Apple: iPhone sales have flatlined, and Mac and iPad sales have consistently been going down for a while now. Since Tim Cook’s Apple has been unable to find the next big thing (after the iPod and iPhone), the only way to maintain growth is to increase the average selling price. Sell less units, but charge more for each unit sold.

This strategy is working – for now. This gravy train ain’t infinite, though, and there’s only so many price hikes you can pull off before you reach a ceiling.

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