Will 5G make Apple iPhones even more expensive? – The crazy fool

Apple (NASDAQ: AAPL) Analyst Katy Huberty asked Tim Cook, General Manager, to comment on how the company is approaching a new technology, such as: [5G], given the higher cost but also a potentially significant benefit? "

The analyst also asked Cook to give an overview of the "importance" of the transition to 5G "as a demand engine for upgrades to the installed base of your iPhone?"

Let's look carefully at Cook's answer and, from there, try to fill in the gaps he left behind.

A punt

Cook largely refused to answer Huberty's question, but presented a global perspective.

"We are looking at a lot of different technologies and trying to look at and select the right time when things get set up and get those byproducts as soon as possible," said the executive. He also added that "from the point of view of costs, there have been – the technologies have undergone pressure on costs over the past two years".

At the same time, he observed that the prices of DRAM and NAND memories, essential parts of the typical nomenclature of an iPhone, "go in the opposite direction", which "makes difficult" the projection of which will happen next. "

Beyond the punt

Apple has always lagged behind its peers in adopting the latest cellular technologies. The company, for example, has adopted the gigabit LTE until the end of 2018. This feature was available on flagship smartphones based on Android since at least early 2017. Apple has also been slow to adopt 4G LTE technology.

It has been reported that Apple was planning to launch 5G smartphones by 2020 – presumably in the second half of 2020, since Apple is usually launching new smartphones in the fall – about a year and a half after the launch of the first 5G smartphones. It should be noted that the initial 5G smartphones seem to be limited edition devices, with real high volume runners entering the first half of 2020. Apple still seems to be a little bit later than the competition – at least in terms of deployments in volume – but this does not seem particularly serious.

In the long run, Apple will have to balance a different equation than it had before. In the past, the global smartphone market was growing, which meant that Apple could increase unit shipments and its business even though it was lagging behind on some technologies and key features compared to its competitors. While the market is stagnating or even declining and competition is fiercer than ever, Apple may want to rethink that strategy.

I would not be surprised to see Apple become more aggressive about adopting the latest technologies, such as modems, cameras, screens, etc., in order not to give its competitors so many ways to attack obvious. In addition, if Apple were to engage in higher product cost structures if it accelerated the adoption of new technologies, these could allow the company to maintain or even increase prices. selling means of his iPhone.