Inflation has hit just about everything and everyone. The iPhone? Not so much.
Apple (ticker: AAPL) is expected to release details for its newest generation of phones, likely called the iPhone 15, at a product launch event on Sept. 12. While Apple hasn’t announced the price or details of the new device, Wall Street sees the base model costing just a little bit more than the price of the original iPhone, after adjusting for inflation.
Media reports put the cost of the iPhone 15 base model at $799, the same price as the base iPhone 14 model launched late last year. The original iPhone cost $499 when it launched in June 2007.
On the surface, that’s a sizable jump. But it’s much smaller when you take inflation into account.
Barron’s calculated the cost of the original iPhone in today’s dollars using the Bureau of Labor Statistics’ inflation calculator. In 2007, $499 would have the equivalent purchasing power of roughly $730 today. Effectively, the new iPhone—with all its bells and whistles—could end up costing about $70 more than the original iPhone.
Furthermore, the new iPhone could be cheaper than the base models of the iPhone 11, 12, 13, and 14 on an inflation-adjusted basis. In today’s dollars, all of those devices cost more than $800.
“It’s a phenomenal deal for consumers,” Wedbush analyst Dan Ives tells Barron’s. “I believe [Apple] could charge significantly more with minimal churn if they wanted to.”
Of course, our calculations only look at the prices of a base iPhone model. Apple’s iPhone lines have expanded to offer a number of upgrades that make it difficult to compare price points across generations. The iPhone 15 Pro, for example, is expected to cost $1,099, according to media reports, a $100 increase from the iPhone 14 Pro.
Apple didn’t respond to a request for comment on iPhone pricing.
It’s no secret that consumers are feeling the pinch of rising prices. Inflation is falling but remains stubbornly high, and the cost of financing big purchases is increasing as interest rates rise. According to Apple’s latest earnings results, iPhone sales declined from the previous year.
Declining demand isn’t just an Apple problem. Worldwide smartphone shipments dropped from the prior year in the second quarter “as the market struggles with soft demand, inflation, macroeconomic uncertainties, and excess inventory,” Market research firm International Data Corporation said in a report dated Aug. 11.
That could be one reason Apple isn’t increasing the cost of its new iPhone. There is also speculation that the new model will have minimal updates. And Ives points out that Apple has been able to significantly cut the cost of iPhone production by manufacturing more of its own chips.
A new iPhone with a more advanced camera, additional storage, and faster speeds at essentially the same price point as the original iPhone could spur “a renaissance of growth [for Apple stock] over the next 12 to 18 months,” Ives says.
Ives has previously said the iPhone 15 could benefit from people choosing to upgrade their old models. “Based on our current analysis we estimate roughly 250 million iPhones have not been upgraded in over four years,” the analyst said in June.
Ives rates Apple shares as Outperform with a $230 price target, implying 25% upside from a current price of $184. He has one of the highest price targets on Wall Street; the average target among analysts tracked by FactSet is $201.78.
Food, water, and their phones are the average person’s biggest priorities, Ives says. If that’s the case, price certainly won’t stop people from lining up to get their hands on a shiny new device.
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