iPhone Plus becomes another failed product! Will Apple launch a high-end "Air" series to recover sales?

According to Zhitong Finance APP, since 2020, Apple (AAPL.US) has adhered to a four-model strategy, ensuring that each generation of iPhone offers multiple choices. This year is no exception, as the company launched the latest generation iPhone 16, which includes the iPhone 16 standard version, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max.

Historically, when Apple expands its product line, iPhone sales experience the strongest growth. If the four new phones released by Apple each year can achieve growth without competing against each other, this would be the best opportunity for the company to achieve meaningful growth in iPhone sales for the first time since 2022.

However, the reality is quite the opposite. In fiscal year 2024, the overall sales of iPhones amounted to $20.118 billion. This figure has remained relatively flat since 2022.

Moreover, not every iPhone is equally popular. Since 2020, there has been a new iPhone each year that lags behind its peers in sales. This year, it is the iPhone 16 Plus, which is positioned in the middle of the product lineup, priced at $899 in the U.S., more expensive than the iPhone 16 standard version but cheaper than the better-screened iPhone 16 Pro and Pro Max.

DSCC, a research firm focused on the smartphone display industry, has noted this trend based on estimates from the panel supply chain. According to DSCC's annual panel procurement data as of October, the share of Pro and Pro Max phones has been rising year by year, while the Plus model's share of Apple's total screen orders has dropped from about 21% in 2022 to 10% in 2023. According to DSCC, although this year's sales have rebounded to 16%, it remains the lowest-selling model among the company's new iPhones.

DSCC founder Ross Young stated, "They are still struggling with the fourth model."

Other data also show the lagging sales of the Plus. According to a survey by Consumer Intelligence Research Partners (CIRP), the iPhone 16 Plus accounted for 4% of total iPhone sales in the U.S. in the third quarter, while the Pro and Pro Max each accounted for 6%. CIRP's data also shows that the iPhone 16 standard version reached a 4% share, despite early iPhone sales primarily targeting early adopters and Pro models.

This metric only includes sales from the latest models for a few weeks in the third quarter, but the 2024 survey results are consistent with last year, when the 15 Plus accounted for 3% of total sales about a month after its release.

According to Counterpoint, Apple's iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max ranked as the top three best-selling smartphone models globally in the third quarter of 2024, while the Plus did not make it into the top ten The Failure of Mini and Plus

When the iPhone was launched in 2007, a new model was released every year. Since then, Apple's product line has expanded significantly, and Apple continues to keep older models on store shelves as budget options.

In 2014, Apple launched the iPhone 6 Plus, marking the first time the iPhone was available in two sizes, which drove growth of over 27% for three consecutive quarters in 2015. In 2017, Apple released the iPhone X, raising the price of its highest-end model and introducing a three-model lineup, after which the company achieved over 15% growth for three consecutive quarters.

After launching four models in 2020, Apple experienced rapid growth, with a quarterly growth rate reaching 54%, although this was partly driven by the pandemic. However, since then, iPhone sales have remained relatively flat.

When the company launched the iPhone Mini in 2020, this model was the lowest-cost new iPhone at the time, priced at $699.

Apple maintained the same strategy in 2021, hoping that the few consumers who wanted a small-screen phone would flock to this device. However, the result was unsuccessful, and Apple no longer sells the 5.4-inch small-screen phone.

By 2022, Apple changed its strategy and launched the iPhone 14 Plus, which features the same chip and capabilities as the entry-level iPhone 14 but with a larger screen. This reflects Apple's successful strategy since 2014. According to DSCC, Apple increased the panel procurement volume for the iPhone 14 Plus to 21% of the total screen orders for that cycle.

However, the Plus strategy did not work as effectively as before.

The Next New Model: Air?

Looking ahead, Apple is expected to maintain its four-model strategy, but the company may change its approach to finding success with a fourth iPhone in its product line by 2025.

Apple may introduce an additional Air model at the high end, replacing the fourth Mini at the low end, or launch a Plus model in the middle of its product lineup. Reports from August indicated that the Air model would feature a lighter weight and a higher starting price.

Despite the higher price, due to its lighter weight and thinner design, Apple may have to make compromises on the Air device, limiting it to just one camera. Currently, Apple's high-end phones, the Pro and Pro Max, both have three large cameras, enhancing photography capabilities but also increasing weight. DSCC's Young stated that he expects the Air's screen size to reach 6.55 inches, falling between this year's Pro and Pro Max.

A new high-end phone could make sense for Apple. In recent years, the sales of Max models have surpassed those of lower-end models, indicating a stronger demand for more powerful and feature-rich high-end phones in Apple's product line compared to low-cost models.

In October, Apple stated that the company has sufficient inventory of the iPhone 16 and iPhone 16 Plus to meet demand, but the more expensive Pro and Pro Max models remain in short supply Outside the U.S. market, Apple's high-end models have also shown stronger growth in recent years. In the first three weeks of sales for the iPhone 16 in the Chinese market, the 16 Pro and Pro Max models grew by 44% compared to last year's high-end models.

Counterpoint analyst Varun Mishra stated that preferences for models vary by region.

Mishra said in an email, "In China, the Pro series performs well because consumers there tend to prefer Pro models. In India, the Pro series is performing strongly, partly because the launch price is relatively lower compared to last year due to local manufacturing."

Apple has previously released thinner and lighter models than existing products, aiming to increase prices and push the limits of its engineering technology. In 2008, Apple launched the MacBook Air, marketing it as thin enough to fit into an envelope. Initially, the Air was more expensive than Apple's other Mac computers, starting at $1,799, but over the years, the MacBook Air has become Apple's entry-level laptop.

In 2013, the company did the same with the iPad, launching the thinner iPad Air, although this model was the flagship new iPad released by Apple that year, the company now positions the iPad Air as a mid-range option in its iPad product line.

For Apple, shifting from Plus to Air could mean an increase in iPhone sales, especially if the new model is priced higher than other iPhones, which could help Apple expand its profit margins and continue the recent trend of higher average selling prices for iPhones. It could also help Apple's early adopters and fans focus on a high-end iPhone.

"They will try something different next year," Young said