Apple Inc. is once again facing scrutiny over its pricing strategy with the release of the iPhone 15 lineup, which lacks groundbreaking feature improvements.

Limited Changes, Watchful Investors

Ahead of Tuesday's launch event, Wall Street analysts were not anticipating significant updates to the iPhone's features. Instead, they were primarily focused on how Apple AAPL, -0.72% would approach pricing, considering the company's history of keeping iPhone prices steady. Speculation suggested that Apple might increase the prices of its Pro-level models by $100 or $200 compared to their predecessors.

Unexpected Developments

Contrary to expectations, Apple decided to discontinue the cheapest Pro Max option, which had a storage capacity of 128GB. As a result, the starting price of an iPhone 15 Pro Max is now $1,199, compared to $1,099 for the least expensive iPhone 14 Pro Max. However, the new Pro Max offers an increased storage capacity of 256GB. It is worth noting that a 256GB iPhone 14 Pro Max also had a price tag of $1,199. As a result, industry analysts are divided on whether Apple has indeed raised prices.

Unchanged Prices for Other Models

In contrast to the adjustments in the Pro Max series, Apple has maintained the same price points for its other three models, including the regular iPhone 15 Pro.

Disappointment in Pricing Decisions

UBS analyst David Vogt expressed his disappointment with Apple's pricing decisions, citing concerns about average selling prices. Vogt estimates that 40% to 50% of iPhones sold during the initial quarters are Pro or Pro Max versions. A $100 increase in all storage configurations could have potentially boosted iPhone revenue by 4% to 5%. With lower-than-expected sales so far this quarter and the absence of a price increase, Vogt worries about the potential impact on September and December iPhone units and revenue.

In conclusion, Apple's pricing choices for the iPhone 15 lineup have garnered mixed reactions. Industry experts remain cautious about the potential effects on sales and revenue in the coming months.

The unveiling of the highly anticipated iPhone 15 lineup sparked mixed reactions among industry analysts. As the new devices boast advancements such as upgraded silicon, enhanced cameras, and titanium casing, questions arise regarding their impact on product contribution margins.

Vogt, a renowned expert, notes that the surge in component costs and increased complexity may potentially raise the bill-of-materials for the new Pro and Pro Max models compared to the previous year. However, he refrains from making a final judgement until teardowns by experts occur.

While the stock's neutral rating remains unchanged, Vogt sets a target price of $190.

Pricing and Mix Implications

Samik Chatterjee from JPMorgan adds his perspective, highlighting how the starting price for the Pro Max has increased and the price differential between models has widened. He suggests monitoring early consumer demand indicators to assess any negative mix implications when compared to previous years.

Chatterjee's outlook on the stock is overweight, with a target price of $230.

A Significant Upgrade

In contrast to some analysts' concerns, Citi Research analyst Atif Malik expresses enthusiasm for the iPhone 15 lineup, deeming it a remarkable improvement compared to the iPhone 14 series. By offering a "much bigger spec upgrade," Malik believes that the vast user base currently owning the iPhone 12 will be enticed to upgrade, potentially leading to a strong replacement cycle.

Malik also evaluates Apple's strategic pricing decisions. While eliminating the cheapest and smallest Pro Max option, the company maintains the prices of the other three models. Malik suggests that this flat pricing strategy could uplift unit sales in a challenging macroeconomic environment.

With a buy rating on the stock, Malik sets a target price of $240.

In light of these varying perspectives, it is evident that the iPhone 15 lineup has generated significant interest and discussion within the industry. As experts delve into the teardowns and early consumer demand indications, the true impact on Apple's product contribution margins will become clearer. However, with a potential strong replacement cycle and the strategic pricing moves made by the company, the future of the iPhone 15 series looks promising.