Apple Inc.'s new lineup of iPhones will have a lower price point than Wall Street expected, raising hopes for strong mainstream demand.

The company on Sept. 7 unveiled its iPhone 14 lineup, including a base model that starts at $799, the same amount that it initially charged for last year's iPhone 13. The higher-priced iPhone 14 Pro Max starts at $1,099, the same as the iPhone 13 Pro Max.

Analysts were widely expecting a price hike of at least $100 due to the inflationary climate and ongoing component shortages that are still impacting device manufacturers around the world.

"It was a shocker Apple did not raise prices given component costs, but [Apple CEO Tim] Cook read the room well and did not want any demand destruction," said Wedbush analyst Dan Ives.

Anticipation for the iPhone 14 has caused Apple's stock to jump more than 15% in the last two months, while consistently outperforming the tech-heavy Nasdaq index year-to-date.

Pricing strategy

The unchanged iPhone pricing could provide Apple with a boost, especially as the global economy gets weaker and worries of a recession impact consumer spending, said Morgan Stanley analyst Erik Woodring.

"While the consumer spending environment remains challenging and a debate that is still unresolved, we believe Apple remains best positioned to weather the storm," Woodring said.

Meanwhile, Citi analyst Jim Suva cautioned that the unchanged price could impact investor sentiment.

"Apple maintained the price points across the range of devices introduced, despite higher component costs and supply chain costs, which we believe will likely weigh on investor concerns around margins," Suva wrote in a note to clients.

However, Ives said the move should not place too much of a drag on Apple's margins due to Apple's own in-house semiconductors.

"The A16 chip and control of its ecosystem gives Apple flexibility in pricing vs others," Ives said, adding that Wedbush is sticking with its projection that Apple placed an initial order of 90 million iPhone 14 units out of the gate, roughly flat compared to the iPhone 13.

"This speaks to the underlying demand story that Apple anticipates for this next iPhone release with our estimates that 240 million of 1 billion iPhone users worldwide have not upgraded their phones in over 3.5 years," Ives added.

Moreover, Apple, like most businesses, would rather sell at a slightly narrower margin than not make the sale at all, said Milan Ringol, an analyst at Kagan, a media research group within S&P Global Market Intelligence.

"Given the fact that the Pro models will only be for sale for practically one year based on historical trend, raising their price points is only going to deter consumers in the current market environment and prevent Apple from capitalizing on the lucrative holiday season coming up soon," Ringol said.

While Apple is also keeping the pricing of the iPhone 14 the same in mainland China, it is increasing it in some of its biggest markets globally, including the U.K., which is seeing a £70 to £150 price increase depending on the model. Other markets where the price is increasing include Germany, Australia and Japan.

New features

All models of the iPhone 14 offer better battery life and camera features than their predecessors, which are among the most appealing reasons for consumers to upgrade their existing smartphones, said Ringol.

The new phones are also ditching the SIM card slots in the U.S. models in favor of eSIMs, which allow the usage of cellular plans from carriers using software instead of a physical SIM card. While this frees up some physical space, another key reason to sell an eSIM-only iPhone is for device lock-in purposes, said Ringol.

"Switching from an eSIM phone to another is generally more inconvenient than pulling out the physical nano SIM card from one phone and inserting it into another," Ringol said. "That bump on the road will help keep users from switching to another manufacturer's device, even if it also has an eSIM, and will secure recurring iPhone upgrades for Apple."

Both the iPhone 14 Pro and Pro Max feature always-on displays and replace the notch with the camera lenses and speaker at the top of the screen on other models with a new pill-shaped cutout that Apple calls Dynamic Island. This area acts as a notification center that can shift in space and size depending on the tasks being performed on the phone.

"The iPhone Pro devices continue to be the core success story of this impressive iPhone upgrade cycle taking the baton from iPhone 13," Ives said.

Other products

Apple also unveiled three new Apple Watch models. Starting at $399, the new base Apple Watch Series 8 has the same design as the Series 7 smartwatch but includes a larger display, better battery life and new features such as body temperature monitoring and car crash detection.

For $249, the second-generation Apple Watch SE will offer the same core experience and features as the Series 8 smartwatch. Meanwhile, the new high-end Apple Watch Ultra will retail for $799, and its plethora of features and build materials are aimed at extreme sports enthusiasts.

Apple also unveiled the second-generation AirPods Pro with an upgraded H2 chip that provides up to twice as much active noise cancellation and longer battery life.

"The Apple Watch and AirPods have transformed from a rounding error to a significant tangential product segment at Apple and speaks to the monetization of a golden 1.8 billion iOS installed base that remains unmatched globally," said Ives.

Notably missing from the event was the company's new range of iPads, which are expected to be unveiled at a separate event in October. Apple is also reportedly working on augmented and virtual reality headsets, which analysts expect will show up sometime next year, if not later.