Coverage: Will consumers pay $1,000 for an iPhone?
Apple will unveil its newest iPhone on Tuesday, and the $1,000 price tag for the latest smartphone has business media wondering whether consumers will pay such a steep price.
Vindu Goel of The New York Times had the news:
The company will also enter new territory on price: The latest phone will start at about $1,000, compared with the $769 minimum for its current top phone, the iPhone 7 Plus.
“It’s a whole new threshold,” said Debby Ruth, a senior vice president at the tech consulting firm Frank N. Magid Associates. I really do think it’s going to make people pause.”
From the iPhone’s introduction a decade ago, Apple has always priced it as a premium product — a more refined and polished alternative to the legions of cheaper smartphones available in the market.
But this time, the company is pushing into luxury territory. The new phone will cost as much as the company’s entry-level MacBook Air laptop. “They’re doubling down on their strategy: They are going much more to the high end,” Ms. Ruth said.
Tim Bradshaw of The Financial Times reported that the new phone has new components:
At the same time, Apple is bringing in costly new components. These include an OLED display that makes the front of the phone into one continuous screen. Depth-sensing cameras will offer new “augmented reality” features and allow the device to be unlocked by face recognition, instead of fingerprint.
At least one model of the next iPhone is expected to feature image-capture technology that can sense depth, and track faces and expressions. A range of new emojis include monkeys and robots, whose animated expressions can mirror the iPhone user’s face as Apple battles for users’ attention with the likes of Facebook and Snapchat.
More advanced components are in short supply, however, which could leave many customers waiting long after September to get hold of the new iPhone. That presents an opportunity for rivals such as Samsung’s new Note 8 or Essential, the smartphone maker led by Android co-founder Andy Rubin, which is targeting premium customers such as Apple’s with its slick $699 device. Google is also said to be preparing a new version of its Pixel smartphone, which has proved popular with early adopters.
Max A. Charney of MarketWatch.com reported that the new phone needs to reverse a decline in iPhone sales in 2016:
Stakes are high for Apple, despite its strong balance sheet, because iPhone sales — which make up two-thirds of the company’s revenue — declined in 2016 for the first time, both in units and cash, and demand for a $1,000 smartphone is far from guaranteed. Unlike other tech titans such as Amazon.com Inc. or Microsoft Inc., for Apple overall sales are heavily dependent on a single consumer product, so any valid questions posed about iPhone sales will concern investors.
However, last year’s downturn means there are many potential Apple customers with a 2-year-old iPhone in need of an upgrade, along with the ever-excitable Apple fans who will jump at the chance to own each new model. That combination has some analysts convinced Apple is on the brink of another so-called supercycle, in which case a loftier price would afford Apple a chance at an even bigger financial boost.
Recent surveys suggest there is, in fact, significant pent-up demand for and excitement surrounding the next-generation iPhone, and those factors, combined with the replacement needs among the 700 million–plus iPhone installed base, should power a supercycle for Apple this fall, RBC analyst Amit Daryanani wrote in a recent note to investors, saying 1,138 current iPhone owners had been interviewed.