The real news is probably the extreme price increases. The basic version of the iPhone 14 costs a whopping 1000 euros in Germany, breaking the four-digit sound barrier. The premium version with a particularly large amount of storage space even broke the 2000 euro mark for the first time.
When the new model goes on sale on Friday, customers almost everywhere in the world will have to dig deeper into their pockets. In Great Britain, the basic version is 70 pounds (80 euros) more expensive, in Germany by 100 euros and in Japan by as much as 21,000 yen (145 euros).
Almost the only country without a price increase: the United States. The iPhone 14 is available there for $799 – the same price as the entry-level iPhone 13. Prices will not be raised in China either.
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The reason for this is the strong dollar, which rose by 16 percent against the euro last year. For Apple In dollar terms, revenues in Europe are falling, and the price increases should at least compensate for this. With its strong market position, the iPhone manufacturer can afford this.
A quarter of IT spending is in dollars
This doesn't just apply to Apple. US technology providers are dominant in many areas. For example in the cloud. AWS, the cloud subsidiary of AmazonAzure of Microsoft and Google Cloud have a global market share of 65 percent.
US companies often charge for their services in dollars. Not only crude oil and natural gas are traded in dollars worldwide, but also information technology: smartphones, semiconductors, software and cloud services. Gartner estimates that global IT spending is approximately $1 trillion in dollar terms.
Accordingly, IT spending is becoming more expensive for German companies and consumers. According to Gartner, 161 billion euros will be spent on IT in Germany this year, almost a quarter of which will be in dollars. “The strong dollar hits Germany in combination with the inflation hard,” says Gartner IT Analyst John-David Lovelock.
IT is indispensable for companies
German consumers and companies react differently. According to Gartner, spending on computers, tablets and smartphones is the main decline. According to the advice, expenditure will fall by almost ten percent in 2022 to 20.1 billion euros. Consumers often bought new devices during the corona pandemic and are now putting off buying new ones - around the world.
The technology heads of German companies are also "hesitating" when it comes to IT spending, as Lovelock puts it. However, they are subject to other constraints, software and IT are central to every company. "Inflation and exchange rates will not deter companies from their investment plans for 2022," says Lovelock. "Companies that don't invest in the short-term will fall behind in the medium-term and risk failing in the long-term."
Sebastian Bluhm, founder and managing director of the management and technology consultancy Plan D, gives an example: In a pilot project with an insurance company, his company is developing artificial intelligence (AI) that selects the optimal insurance product for the customer. The program runs on the AWS cloud and trains once a month with around 1.4 million customer data.
In January 2022, the cloud service cost a little more than 3100 euros for the customer, in July 2022 it was 3500 euros for the same use. "On a dollar basis, the prices of all major cloud providers have remained the same," says Bluhm. "But in euro terms, they've increased about 16 percent over the past 12 months."
The customer bears the higher costs without complaining, reports Bluhm. The project is too important, after all it is about the important follow-up business with existing customers. In addition, the cloud costs are only a small part of the total costs of the project.
Rising prices for rented computers
Users of rental platforms such as Grover must also expect higher prices. The Berlin start-up that rents out computers, laptops and game consoles in addition to smartphones, passes its higher purchasing costs on to customers. Despite this, Grover manager Achille Mollon does not expect any dip in demand: “Renting is becoming more attractive. If a product is 100 euros more expensive, you only have to pay five euros more rent every month.”
This is manageable in times of high inflation. Mollon expects other US companies with sufficient pricing power to try to emulate Apple. However, falling consumer demand will keep price jumps in check.
Unlike consumers, companies can at least partially pass on the higher prices. According to the Central Association of the Electrical and Digital Industry, semiconductors worth 15.5 billion euros were imported last year. However, the German electrical and digital industry exported semiconductors worth almost 15 billion euros in the same year - not least driven by the weak euro, which is supporting sales.
Apple also has to consider where the group can raise its prices without losing market share. One thing is clear for the group: not in the USA and China, which together account for around half of iPhone sales. In America, there is no exchange rate effect, and China is in a difficult state with its long lockdowns due to the pandemic and with weak economic growth.
In Turkey, the iPhone 14 costs almost 1700 euros
Different laws apply to the rest of the world. Grover manager Mollon justifies Apple's pricing policy, which is limited to Europe, with the resilience of the local market, which makes it possible to increase prices without dampening demand. In Asia, the US group is pursuing a more aggressive growth strategy and acting differently in terms of price.
The first reports show that Apple is partly right with the iPhone 14 and the pricing policy. In the US, "demand is strong," reports Samik Chatterjee, an analyst at JP Morgan, who makes his statements based on the waiting time. In China, on the other hand, as in Germany, the strong demand is limited to the iPhone 14 Pro and 14 Pro Max.
One consolation for German iPhone buyers: In some countries, consumers have to dig much deeper into their pockets. Because of the high inflation and other factors, for example, the price in Turkey doubled. The basic version costs the equivalent of a proud 1680 euros.