Brief:

• Apple introduced three iPhones and revealed low prices for its streaming TV and gaming services, stressing value as the tech giant copes with falling sales for its key product. The iPhone 11 series reportedly has longer-lasting batteries, new colors and fresh camera features including a night mode for low-light photography and video shooting tools.
• The company cut the price of its most popular model by $50, reversing three straight years of price hikes. Apple introduced the new Watch Series 5 with improved battery life and ability to show time without a finger tap or raising the display. It also cut the price of the Apple Watch Series 3 to a new low of $199, or $299 with a cellular connection.
• Apple revealed the prices for its previously announced streaming video and game subscription services. Apple TV+ will start streaming on Nov. 1 with a starting price of $4.99 a month, and will be free for a year with the purchase of a new iPhone, iPad or Mac. Apple Arcade will be available on the App Store beginning Sept. 19, and will also cost $4.99 a month after a free one-month trial.

Insight:

Apple's hardware announcements tend to mean less for marketers than changes to its mobile operating system, such as stronger privacy protections that limit data sharing for ad targeting. However, changes to the iPad, which will now contribute to desktop traffic — not mobile — will likely affect the ad rates that publishers can charge brands.

"With iPadOS being based on the iOS 13 operating system, traffic previously attributed to tablet is now going to be marked as desktop traffic," Alexian Chiavegato, VP of marketing at ad-tech firm Marfeel, said in emailed statements to Mobile Marketer. "Publishers that offer a premium tablet experience, with a lot of traffic and higher eCPMs from iPads than desktop are going to be the ones affected. These publishers are going to lose that tablet 'premium' eCPM, with the difference swallowed by their desktop rates."

Apple's decision to maintain or even cut the prices of iPhones was a surprise, considering the company's strategy for the past few years has been to push the ceiling on prices, testing consumer willingness to pay for slightly better hardware. Price hikes historically had helped to drive higher revenue even as unit sales declined, but that strategy hasn't worked well this year as people are holding onto their older phone models. IPhone shipments fell 18% in Q2 from a year earlier, the second straight quarter of declines measured by the International Data Corp., outpacing the smartphone industry's 2.3% slide.

The tech giant this year stopped reporting unit sales of iPhones to mask the scale of its sales declines, but its quarterly reports show that revenue has fallen for three straight quarters, including a record 17% plunge for the quarter ended in March from a year earlier. A 12% drop in iPhone revenue during the following quarter showed that Apple had begun to slowly reverse the declines.

Now, Apple needs to grow its user base as it becomes more dependent on services revenue, and its aggressive pricing strategy for Apple TV+ and Arcade indicate that the company is serious about gaining subscribers. By offering its streaming video service for free for one year with a device purchase, Apple is giving people another reason to buy its hardware while also undercutting rivals on price.

The $4.99 monthly charge for Apple TV+ is less expensive than most other over-the-top (OTT) services, including the upcoming Disney+ that starts at $6.99 a month and Netflix's most popular plan at $12.99. While Apple's strategy is aggressive, its low prices may allow consumers to afford multiple streaming services instead of forcing them to choose between its service and rivals'. Like Netflix and Disney+, Apple TV+ is ad-free and will compete for limited audience viewing time, lessening the chance they'll see messages from sponsors.