In a cost-of-living crisis, Apple is counting on upscale shoppers

Phone maker is hoping latest iPhone is a hit as spending on devices slows

The iPhone 14 costs at least €1,339 in Ireland.

The latest iPhone has hit stores and Apple is counting on well-heeled shoppers to make the device a hit during a year of roaring inflation and shaky technology spending.

The iPhone 14 line-up reserves the best features for the high-end Pro models costing at least $1,000 in the US and €1,339 in Ireland. And based on preorder data, the strategy is already working with consumers, who have turned the most expensive new iPhone into the most popular version.

Though overall spending on mobile devices and computers is slowing this year, there is still an appetite for top-tier smartphones which is Apple’s strength. That has allowed the company to hold production steady at a time when much of the industry is scaling back plans.

“The data continues to point to robust demand for the iPhone 14 Pro and Pro Max, which could have a materially positive impact for both mix and margins,” Amit Daryanani, an analyst at Evercore ISI, said in a report this week.

The iPhone 14 line was unveiled earlier this month alongside new Apple Watches and AirPods. The company did not raise prices, a surprise to analysts who thought inflationary pressure would force the move. But Apple is still attempting to upsell consumers more than ever before.

The preorder data suggests the iPhone 14 Pro Max is more in demand than the same model was last year, part of the shift upscale, according to a report by KGI Securities.

The question now is whether that momentum is strong enough for Apple to overcome a broader slump. Worldwide, the smartphone market is expected to decline 3.5% to 1.31bn units this year, according to market research firm IDC.

In China, both a manufacturing hub for Apple and a key market, smartphone sales have tumbled this year. But Apple shipments are up 5% compared with an overall decline of 23%, according to Mr Daryanani.

“Apple continues to gain significant share in China and we expect the share gains to continue,” he said.

A successful iPhone 14 launch could help ease investor jitters after a rollercoaster of a month. The stock has whipsawed between gains and losses in recent trading sessions, with the shares suffering their worst single-day rout since 2020 on Tuesday. 

A higher-than-expected inflation report and concerns about interest rate hikes have hit tech stocks especially hard.

Apple shares are down 14% for the year, though that is a bit better than the S&P 500, which has fallen 18%. The tech-heavy Nasdaq Composite Index has tumbled 26%.

• Bloomberg