Alyssa Meka
Mr. Jim Reuter
Economics
16 September 2014
iCraze
Whether we like it or not, the current generation consists of a flurry of typers, tappers, and swipers who are intrigued with, more than anything, their electronic devices. From smartphones to tablets to wearable fitness devices, the gadgets that entrance us are bending the limits of technology, as well as the barriers of our budgets. But how far will companies stretch to introduce “the new thing”, and just how much is one person willing to pay for it?
It seems the answers to these two questions are exactly the same- limitless. Take the Apple company for example. Since the production of the first iPhone, they have introduced ten different versions of the phone. For each of these new versions, Apple has claimed to have added different assets and/or improved features. As these features have accumulated, the price has too. One source claims that “phones account for more than half of Apple’s total sales” and says that in the past year alone, Apple “has sold more than 163 million of them” (“iNeed?” Time Magazine). With production costs of these phones ranging from about 170 to 220 dollars, the company is definitely profiting from phones that are bought without a contract “rang[ing] in price from $649 to $849” (“Here’s How Much it Costs Apple to Build New iPhones” CNBC). This profit only helps the company to further advance and refine their product and make it cater to our every need, even if we weren’t previously aware of certain needs the producers at Apple are addressing.
This is exactly part of the draw of Apple products and the similar products of other tech companies. It is stated that the advertisement and portrayal of the gadgets “takes products we never wanted and convinces us we can’t live without them” (“iNeed?” Time Magazine). Take this recent ad for example. It stresses that the iPhone can help us achieve our wildest dreams. Even so, companies like Apple often dance around the idea of a new product when introducing the hottest new commodity. It is apparent that companies like Apple are skilled in the art of refinement, taking what has previously not passed the test of the market and mastering it to make it useable. Could it be only their advertisements making it seem like we need their products? Or is it also the draw of anticipating a new product that keeps so many people loyal to the company? Here is a compilation of most of the products to this date.
Whatever it is, it seems that Apple has literally struck the gold mine (really, they have a gold iPhone) with their products over the past years. Just look at this dotplot of their sales from 1990 to 2011.
That’s one heck of a steep increase! With the release of their new products soon, the much anticipated iPhone 6 and Apple Watch, these sales can only increase.
Aside from the fact that Apple has had the ability to increase their sales by billions throughout the years, they have also been able to multiply the amount of returning customers they have. By creating products that cater to the needs we have to stay organized and connected, Apple has been able to generate millions who both want and love the products because of the many capabilities they have. Despite the high costs, Apple has been able to create quality products that offer benefits many customers find far outweighing the pains to their bank account. Do you think it’s worth it?
Works Cited
Adhikari, Richard. "Apple's New IPhones: Ho-Hum and Controversial Too." TechNewsWorld: All Tech. N.p., 11 Sept. 2014. Web. 15 Sept. 2014. <http://www.technewsworld.com/story/81031.html>.
"Apple - IPhone 5s - Dreams." YouTube. YouTube, n.d. Web. 15 Sept. 2014. <https://www.youtube.com/watch?v=PQBTd4xF6tU>.
"Evolution of Apple." YouTube. YouTube, n.d. Web. 15 Sept. 2014. <https://www.youtube.com/watch?v=KvdVhl4FlEc>.
Goldman, David. "Apple's Financial Empire." CNNMoney. Cable News Network, 25 Aug. 2011. Web. 15 Sept. 2014. <http://money.cnn.com/galleries/2011/technology/1101/gallery.apple_sales/>.
Grossman, Lev, and Matt Vella/Cupertino. "INeed?" TIME 22 Sept. 2014: 40-47. Print.
Thompson, Cadie. "Here's How Much It Cost Apple to Build New IPhones." CNBC. N.p., 24 Sept. 2013. Web. 15 Sept. 2014. <http://www.cnbc.com/id/101058725#.>.
As Apple continues to release new phones, it will be interesting to see how much people are willing to pay for it. You mentioned that as the advancements of the iPhone continue, so do the prices. If this trend continues, the iPhone will reach the $1000 mark soon. At this price, many people will question whether the marginal benefit outweighs the marginal cost.
ReplyDeleteAs you mentioned in the post apple has created 10 new models since it first started but will they ever run out of ideas? As price and the waiting time increases I wonder if people will still be willing to pay the price for only small changes if they start to run out of ideas. It was also very interesting to read this article since so many kids and even adults now are attached to their cell phone. The cost of the iPhone versus the price to build it was quite interesting. Who knew what kids are willing to buy and pay for just to get the new fad.
ReplyDeleteHello Alyssa! My question to you is, do you think that Apple deserves their incredible revenue? Often times in similar articles I hear people villainizing Apple saying that it is a scam to squeeze extreme amounts of money out of the consumer. But isn’t that what any business tries to do? Isn’t that capitalism at its finest? If people are willing to pay for a product, I say let them pay. When it comes down to it, the consumer has the ability to either say ‘yes’ or ‘no’ and there is no mandate which requires them to dish out hundreds of dollars towards the new Apple product. If anyone in this situation is to blame, it’s the consumers. And for Apple, well, all I can really say is, good for them.
ReplyDeleteNot that I don’t love apple products myself, because I do, but the “craze” like u stated, for these products has become ridiculous. People tent out, or line up for hours, even days, just to get these new and “improved” products immediately. There is no contentment with what we currently have because there will always be someone creating a “better” product. One that is over advertised and appeals to the needs we never knew we had, so that we cannot go a couple minutes without seeing some type of reminder that shows us just how badly we want these products. But this is not only in Apple products, we see this with food and other products we buy daily. In this day in age we are so overly- attached to these products, the demand for new and better just keeps on increasing and there will not be a limit to this “craze.”
ReplyDeleteI completely agree with you there, Macauley. All I remember from French class freshmen and sophomore year, was Mrs. Larson-Horne constantly talking about apple products. It’s insane how crazy people get. Of course, I do love apple products, but I’m not going to camp out and wait for it overnight. And when you mentioned how it’s not just technology that people are waiting for, it food too…all I thought about was when I drove past Chick-fil-A the night before its grand opening and people were camping out! It’s unbelievable the types of measure people will go to to get what they want. So, Alyssa, this topic was definitely a great one to talk about due to all of its controversy, and I think you brought up great topics of discussion. Props.
DeleteAs the features on the iPhone get better then there will need to be more expensive parts that go into the phone that can handle the new capabilities so it is only natural for the price to increase. However Apple will have to think of how much they increase the price so they do not end up losing revenue.
ReplyDeleteI think it is crazy how even though the prices do increase a little, like you said, there are always alternatives that go for the same price as the model before. For example, when the iPhone 5 came out, the cheapest model was $200 and now the cheapest model of the 6 is also $200. Apple has a crazy way of making you pay for the more expensive one though, because with the iPhone 6 plus, people think that one extra feature is worth it and the cheapest model of the iPhone 6 plus is $300
DeleteIn today’s world, it seems like almost everyone has some sort of Apple product. I used to own an iPhone myself, and I still use my iPod and Apple headphones almost everyday. However, it is clear that products like the iPhone, iPad, and Mac computer, are way overpriced. I find it interesting to see that the prices for these items are continuing to grow higher with each new generation, but the amount of product bought by consumers also continues to grow. I wonder at what price will people stop buying?
ReplyDeleteApple is one of the biggest companies in the world, and having sales that reach up to 65 billion dollars in 2010 it makes me think how much Apple can control us. Everytime they come out with a new phone, everyone has to have one. They know that people will pay anything to have the newest and greatest products, allows Apple to sky rocket the prices and make the largest profit. People don’t always think of the cost they just want the product because they know that if you want to be cool you have to have the greatest products.
ReplyDeleteAfter watching the keynote and tracking the phone and it's sales, over 4 million were sold in 24 hours. 4 million. And then after that more were sold as well. More than they originally produced for. Each new apple product is bigger and better than the last, and with increasing sales, they put a huge boost to the economy every year or so with billions in revenue. Soon the apple watch will be a big hit with consumers as well putting them with two major sales within 1 year. That's a lot of money or the economy to work with and grow.
ReplyDeleteAlyssa, I completely agree with your viewpoints discussed in your post. Us, as consumers, desire the most expensive and talked about "stuff," for lack of a better term, and we do go past our limits to receive it. I'm sure we have all seen in the news the large amounts of people lining up for days for the iPhone 6, and personally, I think it's a little ridiculous. Being an owner of Apple products myself, I definitely enjoy the benefits of the iPhone - the ease of use, the iPod within, infinite amount of apps, etc; but some go to unbelievable extents just to hold this device in our hands. It was hilarious when Mr Reuter showed us the "no-phone" advertisement, but this is really what society has boiled down to. My dad is an employee of Verizon Wireless, so we all get a hefty discount on our phone bills and data packages, and so for us, buying an iPhone is somewhat justified. However, ultimately, it is up to the consumers to decide for themselves whether to own the "next best thing" it is worth it or not. Androids virtually do provide people with the same amount of wonder that iPhones do, but they are not as hyped up as iPhones are because of Apple's brilliant marketing team, who lift the iPhone up to such a level, that it catches the eye, and wallet, of a large percentage of people. As long as the iPhones keep getting nicer and nicer, there will always be people that will pay anything for the next best thing.
ReplyDeleteThere is no way to make a 'new and improved' product. Is it totally new product like something crazy like an iVacuum or just a slight improvement on the last product including every 'new' ipod/iphone/ipad? It is good for apple that they have found the Achilles heel of america, consumerism. We so badly want to be part of the group that we don't care about the product and what it actually does we care that there are other people who use this product. A person is smart and people are foolish and apple has found a way to appeal to the masses and has reaped the economic rewards with minimal improvements in the products themselves while only having to really do any work on making an actual new product every few years.
ReplyDeleteIt really is amazing to see how Apple has increased their annual revenue so exponentially in the past couple years. As Apple keeps coming out with "innovations" the question that you propose is an interesting one. I personally think that Apple does deserve all their new found revenue. They have proven that they do make a quality phone and they seem to have found the perfect combination of advertisements and marketability. They have a loyal customer base, and they are obviously doing quite well for themselves. It will be interesting to see what happens when the new innovations that Apple brings to the table force the phone to be over $1000. Bringing us back to the original question of "how far are people willing to go to break the bank for the latest and greatest Apple device?"
ReplyDeleteThat is crazy on how much they revenue they have brought in over the recent years, and being an owner of an iPhone I am one of the people who have benefited Apple. They they greatly over charge their products when they only cost them a cheap amount when people from all around the world will fork over hundreds of dollars for a cheaply made phone. I believe that that consumers will continue to spend their money on apple products for a little while, then it will slowly start to slow down, and apple will slowly start to lose more business when something newer and greater appears on the shelves. Then they won't know what to do, so I believe many people will continue to go farther and farther into the Apple world until something newer and greater arises from another company. Sooner or later people will get sick and tired with the same old same old Apple products and switch to another company that will also scam them out of their money. People will never stop paying to much for products they don't need.
ReplyDeleteGood question! I think it is crazy how, like you said, apple makes minimal changes to a previous model and still have so many repeat customers. People always just want the newest thing, even if they have the close second. I think this is something that is pretty ridiculous, however, I am personally guilty. It is definitely an interesting question, though, because even though we know barely anything is changing, we still buy more. Maybe they are just changing the right things? For me, it seems like there is usually just one feature that i feel makes the new phone better and would make my life easier, but I guess that is enough for me!
ReplyDeleteIt is truly remarkable how much apple charges for an iphone based on the production cost. Sure it can help them improve but if they were to lower the price they would be able to sell a lot more due to the fact that there are people who would want them but simply cant afford them. Another thing is why do almost no other phone companies advertise their products like apple does? It seems like 90% are apples and 10% are the rest, it doesn't make much sense.
ReplyDeleteYou bring up a very good question. I personally just got my first smart phone in my history of owning a phone due to the fact that I am paying for it all. I was recently faced with this decision of whether I should get an iPhone or not. I am well aware of this hype around the phones, however it is all mainly hype. Their prices don't match their substance and their quality is growing questionable as it is more common to see a crunchy iPhone than a crisp one. Their advertisement has grown ridiculous as they shamelessly advertise their phones in ridiculous formats, while other phones that are actually cheaper and of good, if not better quality are easily able to sell their products because the products are able to sell themselves.
ReplyDeleteHowever people are now buying more Android phones than iPhones, showing that Android phones are no longer an inferior good, and in fact are viewed as better than iPhones by most of the population
ReplyDeleteI agree that Apple has gone to extreme lengths to attempt to maximize profits. Often times this is through an 'innovative' marketing strategy but this only magnifies the profit margin that they have been able to make through minimizing their production costs and making the price higher so that they can move on the supply curve to a point on the supply curve that would sustain a higher quantity supplied.
ReplyDeleteThe topic is interesting, especially with the new iphone being released. Sometimes it seems that people buy apple products just because they are apple products, not caring so much about whether the phone is actually better than an android or the competing brand of phone. Personally, I have an iphone, mainly because my parents liked apple better and so that is the phone that they got. I've gotten used to apple and the products it provides, and so I wouldn't switch over to get a galaxy phone, instead I would just stick with an iphone. I feel as though this is the way it is with many people, they just stick with what they know, and as there is supposed "improvements", they just go buy it because it's claimed to be better, whether it actually is or not isn't so important.
ReplyDeleteIt would be interesting to look at the demand curve for Apple products over time. As you said, we as consumers have become more devoted to the latest technology, and this shift in our taste represents a change in demand. Similarly, by expanding to foreign markets, Apple increases the number of buyers, changing demand again. The rising price, however, lowers the quantity demanded, and Apple loses some potential customers. A question, then, is how do the quantities gained by changes in demand and the quantities lost to higher prices stack up?
ReplyDeleteWow I haven't thought about this in so much depth before. Apple has entranced us into the rhythm of buying each new product. Personally I don't see the worth of buying a new phone for $849, but so many do. Even when our phones are one year old, we are looking to replace them for the next big thing. I would find it interesting to see how many people pay full price for the new iPhone compared to those using an upgrade. It can be hard enough for many companies to get buyers, but the fact that Apple can multiply there returning customers is mind blowing. From my experience I never truly knew what I was missing by not having an iPhone and now it would be hard to go back. This is a great topic as the craze of new iPhone has started up once again. It was just a year ago that we had the 5s and now it is already not good enough for so many people.
ReplyDeleteAlyssa, based on the production costs of Iphones, i think it's insane how much apple charges us for them. I think this was a very appropriate topic to write about considering the iphone 6 was just released today. Honestly, I get very caught up in all the hype of the iphone and all the glitz and glam it offers. The advertisments apple puts out really draw me and a lot of others in. However, I know I am personally paying way to much for my phone and all that comes with the "joy" of owning a smart phone. I feel that as long as consumers continue to spend their money apple will just charge more and more. Great column!
ReplyDeleteI'm a little ashamed to be one of the people who is obsessed with Apple products now that I see how much more they charge us for them, but then again I kind of admire them for getting away with it. As much as it angers me that I'd have to pay an extra four hundred dollars more than necessary, it won't stop me from doing so. Our world is love struck by these products and I think those working at Apple deserve everything they are getting because they were the ones that got us hooked, good for them! It really is impressive, they're getting pretty dangerously close to a monopoly these days. Good thing there are the Galaxy phones to compete so we can still keep getting excited about the newest iPhone.
ReplyDeleteSince the demand for Apple Iphones is going up, the price in this case is increasing too. People are obsessed with getting the newest thing, sometimes regardless of the price. Apple is taking advantage of those who are always in need of the newest thing, and making the prices much higher than necessary.
ReplyDeleteI agree with your idea, and I think it is insane that people are always waiting for the new Iphone, Ipad, Mac. The prices are beginning to sky rocket and the product itself isn't improving. Take the Iphone6 what is so different from that phone and the new Galaxy5...the price. But what seems to be even scarier than the idea of monopoly Apple can produce anything they want at any price and everyone will still want to buy it.
ReplyDeleteIt's crazy how much people are willing to spend to get these products. Apple always claims they have the next best thing when the changes to their products are normally just changing the size of it. I'm amazed at how much a iPhone cost without a contract. Paying 600 dollars or more for a phone seems crazy to me. However they have so many people that want to buy their newest products they could sell them for almost anything. I can't wait to see what product they come out with next and how many changes the iPhone 6 has from the iPhone 5.
ReplyDeleteOne slight risk that Apple has will so much of its income coming from phones, is the fact that the company is not diversified if they put all their eggs in the phone basket. With the addition of the iwatch peoples demands will not only change, the companies profits will be diversified. This is a positive for the company because if one new iphone were to not meet the expectations of its consumers the company would have other products to benefit from with those consumers who have changed their consumer tastes resulting in a demand for new products.
ReplyDeleteI really like your argument, Alyssa, it is a very relevant argument as well. I don’t think it is worth it for the same reasons that you made light of specifically. The capabilities that Apple has had to make so many more devices through the empowerment of creating the phone is increasing. While demand doesn’t have an effect on what a business is able to produce it has definitely allowed for them to come up with a variety of ideas that have become a reality with each successful sale. I agree that these new gadgets are a huge distraction and proves more thoroughly that there is such thing as the invisible hand in our economy.
ReplyDeleteIts so cool to see how far apple has gone since they first launched there ipod and iphone. When looking at what kind of phone people have most have a iphone. But I do agree the prices are rising way too high it out of this world. I believe that if it costs to make an Iphone between $170 and $220 it should be manufactured in the United States. Even though that the prices have reached to over 500 thats without a contract. Most people are going to want to get the Iphone with the contract to move the price lower. Also I believe that people are going to want to upgrade their phones because most people want the new and greatest thing.
ReplyDeleteAlyssa, I definitely agree that Apple uses their marketing techniques to brainwash consumers into believing they need everything that the company has to offer. Fortunately, I am not one of these consumers, and although I do own an iphone, I do not limit my technological items to just Apple products. However, I think that Apple’s success is not just due to their marketing strategies, in fact, celebrities are unintentionally influencing the company’s success as well. Actors, actresses, singers, and models all seem to obsess over Apple products. This is a huge benefit to the company since these celebrities are marketing their products and influencing their fans to get them as well! Thus, Apple has become a brand that represents sophistication, elegance, and class, things that common folks like us love to get a taste of! Another reason why Apple fans are willing to wait several hours in line to get the latest products is because the stores have limited items in stock! Apple does this intentionally, they are very capable of manufacturing enough iphones so that every store does not run out stock, but doing so would take away the urgency to get the product. Consumers do not want to wait, they want access to the latest technology right away. Such “scarcity” acts as an incentive to motivate people to get the latest iphone/piece of technology.
ReplyDeleteApple has come far to get where they are at. With the new iPhone just coming out, they have already made so much money in just 2 weeks. Apple will eventually crash because they can only go so far with the fun and cool features. People will eventually realize that iPhones aren't all that special. Apple can only put in so many different features to make the community want to buy their product.
ReplyDeleteHey Alyssa, great research and discussion on Apple's incredibly speedy growth! Hypocritically, I own a few Apple products, and while they are proven to be sold for more than they're built for, they're products that have lasted me years. That being said, I'm in an entire state of agreement in your hypothesis that Apple takes previously-failed features, only to add them into the newer editions of their products to lure in those who want to stay up-to-date and modernized. It's without a doubt a growing problem. I've had the same Apple product for 6 years, and despite its lack of technical support from Apple due to being outdated, it still runs great. I don't understand why everyone needs 2x more megapixels in their phones and animated backgrounds. It's just frosting on a cake that was fine to begin with! Granted, they have one of the best business models I've ever seen, so it's no surprise to me that they've attained so much success. The future holds interesting results. Who knows what's next...iCars?
ReplyDeleteNo, it's definitely not worth it. Ever since I got the iPhone I can't seem to put it down. It distracts me from everything I'm trying to do school, work etc. Smart phones are a waste of knowledge. This is what are generation have come to . We expect iphones to do most of the work for us with Google maps and siri how are we ever going to learn new things when we have machines doing it for us. I'm not going to lie my Iphone is awesome but it's not helping me with general knowledge
ReplyDeleteWe live in a world where having a smartphone is almost required, it’s no surprise that Apple is selling so many iPhones and making such a big profit of it. It’s a little ridiculous how much the newest iPhones and any other smartphone cost. But, people are willing to pay so much for the newest technology and are willing to wait in line for hours for the latest iPhone. And, people are so addicted to their smartphones and are almost unable to put them down to have a normal conversation with someone. I, for one, am one of those people and I admit that I like to get the newest smartphone technology like the rest of the population of smartphone enthusiasts.
ReplyDeleteiPhone's aren't even that great, I have had one for 2 or 3 months and I hate it with a passion. I have problems with my iPhone that don't even exist in the Android world. Apple is making so money off of a "new phone", but it seems like all they do is change the shape and the overall layout of the phone.
ReplyDeleteWe live in a world where having a smartphone is almost required, it’s no surprise that Apple is selling so many iPhones and making such a big profit of it. It’s a little ridiculous how much the newest iPhones and any other smartphone cost. But, people are willing to pay so much for the newest technology and are willing to wait in line for hours for the latest iPhone. And, people are so addicted to their smartphones and are almost unable to put them down to have a normal conversation with someone. I, for one, am one of those people and I admit that I like to get the newest smartphone technology like the rest of the population of smartphone enthusiasts.
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