iPhone Inflation
Smartphone prices vary on a country by country basis, with logistics and currency playing a significant roll in setting those prices, and with the rapid depreciation of the yen against the dollar this has become quite apparent as Apple (AAPL) raised iPhone prices in Japan as of July 1 in order to protect profitability as profits are converted back to dollars. Not only are current models now more expensive, but older models have also seen price increases and less expensive models like the iPhone SE are becoming scarce, particularly the iPhone SE (2nd Generation) Apple’s low-priced offering released in April 2020. That phone (used) used to sell for ¥20,000 ($146.34 US) but is now selling for ¥30,000 ($219.51 US), a 50% increase according to retailers in Tokyo.
Other iPhone models have also seen increases, such as the iPhone 13 (128GB), which was released in September 2021, and has gone from ¥98,800 ($722.91 US) to ¥117,800 ($861.92 US), a 19.2% increase, and the iPhone SE (3rd Generation), which was released in March of this year, has increased in price from ¥57,800 ($422.92 US) to ¥62,800 ($459.50 US), an 8.6% increase since its release., and the iPhone 11[1] (released 9/2019), the iPhone 12 (released 10/2020), and the iPhone 13 (released 9/21) have increased in price by 15.4%, 8.5%, and 7.8% respectively. A recent survey added that ownership of used phones (purchased used or refurbished) in Japan in April of this year was 11.6%, almost 2 times the rate over the last 20 years.
While certainly disconcerting from the Japanese consumer’s standpoint, however iPhone prices in Japan are still below those of the equivalent phones in other countries as shown in the table below, which shows both the pre and post price increase in Japan compared to the US, Germany, and China representing the North American, European, and Chinese markets[2], although the US price does not reflect retail sales tax as they vary from state to state. As the price rises in Japan it pushes the iPhone purchaser’s income threshold higher but still represents a bargain for those in most other countries and ‘pre-increase’, the Apple direct sales sites in 34 countries averaged $925.23 for the iPhone 13 (128GB), while the Japanese site price was $723.02, the lowest of all. Some Japanese retailers have noted that since Japan’s COVID tourist restrictions have been eased the number of iPhones sold, both new and used, has increased, with some purchasing more than one, leading to speculation that they are being resold in other countries.
[1] 256GB for all iPhone 11,12,13
[2] Table conversion rates are 139¥, 1€, and 6.7 yuan to the dollar.
Other iPhone models have also seen increases, such as the iPhone 13 (128GB), which was released in September 2021, and has gone from ¥98,800 ($722.91 US) to ¥117,800 ($861.92 US), a 19.2% increase, and the iPhone SE (3rd Generation), which was released in March of this year, has increased in price from ¥57,800 ($422.92 US) to ¥62,800 ($459.50 US), an 8.6% increase since its release., and the iPhone 11[1] (released 9/2019), the iPhone 12 (released 10/2020), and the iPhone 13 (released 9/21) have increased in price by 15.4%, 8.5%, and 7.8% respectively. A recent survey added that ownership of used phones (purchased used or refurbished) in Japan in April of this year was 11.6%, almost 2 times the rate over the last 20 years.
While certainly disconcerting from the Japanese consumer’s standpoint, however iPhone prices in Japan are still below those of the equivalent phones in other countries as shown in the table below, which shows both the pre and post price increase in Japan compared to the US, Germany, and China representing the North American, European, and Chinese markets[2], although the US price does not reflect retail sales tax as they vary from state to state. As the price rises in Japan it pushes the iPhone purchaser’s income threshold higher but still represents a bargain for those in most other countries and ‘pre-increase’, the Apple direct sales sites in 34 countries averaged $925.23 for the iPhone 13 (128GB), while the Japanese site price was $723.02, the lowest of all. Some Japanese retailers have noted that since Japan’s COVID tourist restrictions have been eased the number of iPhones sold, both new and used, has increased, with some purchasing more than one, leading to speculation that they are being resold in other countries.
[1] 256GB for all iPhone 11,12,13
[2] Table conversion rates are 139¥, 1€, and 6.7 yuan to the dollar.
With 4 of the top 5 selling smartphones in Japan being iPhones (52% share in April 2022), the Japanese smartphone consumer is very sensitive to Apple smartphone price changes and fears that further price increases in existing or upcoming iPhone models will price them out of the Japanese market, despite their low cost relative to the global averages, so it will be up to Apple as to whether it will continue to increase prices if the yen depreciates further against the dollar. That said, Apple has US investors to consider and a larger vested interest in the US Federal Reserve’s policy moves than it does in the Bank of Japan’s and the US smartphone market alone is over 5 times the size of the Japanese market, so the decision to raise prices based on the spread between the yen and the dollar was actually an easy one and will continue to be so if the trend continues.
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