Apple launched Apple Upgrade yesterday, a Klarna-backed leasing program starting at $17.99/month for iPhone. IDC’s read is that the timing isn’t incidental – lower monthly payments are a way to soften the effect of hardware costs that are climbing because of the memory shortage.
The bigger story is what that shortage is doing across the rest of the device market. Jitesh Ubrani, who tracks mobile and PC devices at IDC, says this one is behaving differently than the last:
“There was a memory shortage pre-pandemic that also impacted many devices, though it wasn’t as drastic as the one taking place right now. At the time, vendors shifted their mix towards premium SKUs while keeping entry level the same. This time even the entry level is being impacted.”
He also expects vendors to lean on accessories to protect margin:
“The price increases on devices will hurt margins for many vendors, and as such many brands are likely to resort to upselling additional accessories to help recoup some of the margin lost on the device itself,” Ubrani says.
Not every category is exposed. Headphones have seen minimal increases because they carry little to no memory, and the same holds for products like robotic vacuums, he adds.
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