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00:00Okay, so this video is about the iPhone 11, the iPhone 11 Pro, the big boy expensive version,
00:09which I feel is kind of like a placeholder for next year's models.
00:13That is a very camera focused product, and I'll do a separate video for that another
00:17day.
00:18I want to talk about the $699 iPhone 11.
00:21I think this is the most interesting product that Apple has launched in the past two, three
00:28years.
00:29So, it's not the specs.
00:31The specs are super boring.
00:32It's the same phone as the previous generation.
00:34I would consider it to be a refreshed model with just a second camera.
00:37But the price tag of $699 is very interesting because at that price point, they are literally
00:43leaving billions of dollars on the table.
00:45So here's the thing.
00:47We recently saw the sales figures of the top 10 smartphone models sold around the world
00:51in the first half of 2019.
00:53So this chart has just from top to bottom, the best selling phone to the 10th best selling
00:58phone.
00:59On that list is the iPhone XR.
01:01That is a phone that sold for $749 US, so basically $750.
01:05But if that phone had sold for $1 less, like just $1 cheaper for the customer to buy, Apple
01:11would have made $26.9 million less money.
01:16This year, the iPhone 11 is selling for $699.
01:20That's $50 cheaper than the previous year.
01:23And if you take $50 and multiply it by that sales figure, that's over 1.3 billion US dollars
01:31that Apple is willing to leave on the table.
01:33Now obviously that number is going to be affected by carrier subsidies, but point being, it's
01:37a lot of money.
01:39And that's only six months of sales figures.
01:40Like if you go for the course of the year, it's like who knows how much that is.
01:45Point being, Apple willingly, knowingly lowered the price on their phone and just left that
01:50money on the table.
01:51Even though Apple is a super rich company, a billion dollars is still a lot of money
01:55for them.
01:56And especially in a market where a percentage gained here, a percentage lost here, is a
01:59big deal.
02:00Like people pay attention to that stuff and it affects Apple's stock price.
02:04Leaving a billion dollars out there is a big business decision.
02:07And what I think we're seeing here is two factors coming into play.
02:10Number one, I think that Apple is finally feeling market pressure.
02:15This is a company, like if you think about what Apple has been doing over the years,
02:18When other companies were releasing like $300 flagship killers, Apple's like, boom, here's
02:23my $1,000 iPhone X.
02:25That's Apple.
02:26They rarely fold to market pressure, but maybe it was all the cheaper Samsung phones out
02:29there, or maybe it's like the cheap phones from Xiaomi, or maybe, I don't know, OnePlus
02:32or Pixel's 3A devices finally got under their skin.
02:36Doesn't matter what happened, but I think that market pressure finally got into Apple's
02:40head and they lowered the price because they felt like they had to.
02:43But the second, more important reason why I think they lowered the price on this phone
02:46is because Apple's in a different phase right now.
02:48They are no longer as dependent on their iPhone revenue to stay profitable.
02:52They don't need to make a lot of money off of their phones because their services revenue
02:57is just growing so rapidly.
02:59It's actually quite surprising to analysts.
03:01We've got Apple Music, Apple Games, Apple News, Apple TV, like iCloud storage.
03:06There are a ton of services that Apple is selling to people, and what is the best way
03:10to snowball the revenue from those services?
03:14Cheaper iPhones.
03:15Sure, you lose a billion dollars in iPhone revenue, but as you capture a bigger audience
03:19with this cheaper phone, you just make that money back, maybe double, triple that with
03:24services.
03:25And now, when a consumer is looking at that mid-range market, I guess mid-range is relative,
03:29but if you look at that $700 price point, you now have a very compelling product from
03:34Apple with the iPhone 11.
03:36Now, if that price tag is still uncomfortable, if that $700 price tag feels a little steep,
03:41the iPhone XR from the previous year is $600.
03:44I think that's actually a pretty good value for what it is.
03:47I was actually one of the very few people last year that didn't rip on the XR, but I
03:51actually think it's a pretty solid experience for the money, and it's just even better of
03:55a value this year.
03:57But that's basically what this video is about.
03:59I'm very excited to see how Apple takes this.
04:02What's their next step?
04:03They have these cheaper phones.
04:04Obviously, their whole product line isn't super cheap, but the fact that they lowered
04:07this one by this much, it means something.
04:11It's significant.
04:12Okay.
04:13Hope you guys enjoyed this video.
04:14Thumbs if you liked it.
04:15Subs if you loved it.
04:16See you guys next time.