“When Apple revealed its new iPhone line-up earlier this week, commentators were quick to point out the 2018 flagships carry the most expensive price tags of any iPhone to date,” Jeff Parsons reports for Metro UK.
“Buying an iPhone XS Max with the top level 512GB of storage space will set you back £1,449,” Parsons reports. “Now boss Tim Cook has revealed some of the thinking behind Apple’s pricing policy in a new interview. Speaking to the Nikkei Asian Review, Cook suggested that Apple products are geared towards a segment of the market that are willing to pay more for their gadgets.”
MacDailyNews Take: Gee, ya think?
The role of the iPhone has become much larger in people’s lives. We want to serve everyone. We understand that there is a wide range of what customers are looking for and a wide range of prices that people will pay. — Apple CEO Tim Cook
“Perhaps in a response to the accusations of cost, Apple introduced the iPhone XR this year which trades in the dual-camera and OLED display for a lower price that could appeal to those who aren’t willing to part with the money for an XS,” Parsons reports. “Then again, there’s always the iPhone 7. Which, at the entry level price of £449 is now the cheapest model Apple offers.”
Read more in the full article here.
MacDailyNews Take: There’s now an iPhone for everyone in Apple’s target market (premium smartphones), from the flagship iPhone Xs Max on down.
Unfortunately, even with its iPhone 7 being the new “entry level” phone, they’re still pricing lower end customers out of the market. And it will come back to hurt them in the end:
https://www.businessinsider.com/apple-iphone-xs-and-xr-mainstream-consumers-2018-9
They should go back to Steve Jobs’ strategy of being “the brand that just works” rather than “the rich people’s brand.”
Apple is now acting like Microsoft, chasing market share at the expense of hard ware (battery gate, butterfly key boards) and numerous software problems. The Apple motto of just a few years back that “it just works” is not valid anymore.
What? If Apple was chasing market share the way MS did they would lower the price so the wider market could justify getting there product. Apple is chasing $$$ Share a much different beast.
Apple in my mind could justify there super high margins years ago when 1 they needed to build a WAR Chest to cover them in case of a downturn like what happened in the 90s and 2. Their build quality was so much better than anyone else that it justified such a premium. At this point they have a stack of WAR Chests and with every product I buy now I have to get Apple Care because they are using low to average quality parts.
“They should go back to Steve Jobs’ strategy of being “the brand that just works” rather than “the rich people’s brand.”
Agreed. Also, “pleasing consumers” vs. “milking faithful customers to the limit and beyond while we can” attitude.
Apple has been increasingly trying to portray many of their products as fashion items, but it must be for the purpose of jacking up the profit. If you step back and see this craze, it is ridiculous to regard “any” of Apple’s gadget, watch, phone or otherwise, FASHION brand. I am prepared to pay premium for any good products, but not for the “fashion” That is saved for true fashion/aesthetic items.
They are fundamentally supposed to be the devices to make our life convenient. Blackberry tried it before for a while with Porsche Design and mostly Middle Eastern royals bought it, but it was a miserable failure.
But you know, Tim Cook is the one who hired Angela Ahrendts et al……
Tim Cook ‘Social Justice Warrior’ — using Chinese slave labor to overcharge the bourgeois and pad rich investors’ (and his) pockets with insane 30+% profit margins.
Unbelievable.
No they aren’t, you can always by a used or refurbished model. People will pay an extra $100-200 or more, even if they can’t truly afford it, because smartphones are the single most important objects that most people own. It’s the indispensable personal computer for the masses and the iPhone is the Rolls Royce/Porsche/Ferrari of them all that even poor people can scrape together $700 to buy.
Or they’ll switch to Android – even if they’ve been long time iPhone users. I know Samsung is really trying to push people to switch with their “Upgrade” ad campaign.
Bought my other half an Honor 9 lite, I’m very impressed what £150 buys.
I simply don’t have £450 to put down on the lowest iPhone fruit.
So the CEO of Microsoft was right, iPhone is a luxury item. Lol. Tim, make up your mind. Everyone else has already.
Devin Prater Assistive Technology Instructor certified by World Services for the Blind JAWS certified
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I’m on the iPhone replacement plan (paying about $50 a month) and would only be interested in the top of the line to replace my iPhone X (the iPhone XS Max with 512GB) but I’m not interested in incurring a $75 a month payment for the privilege. So there is a price limit for some even though I could afford it if I really wanted to. The problem is my iPhone X is still a damn fine phone and good enough to hold on to for another year.
I spent my money on a new Watch instead, replacing my first gen model. It was “time.”
The eSim feature is huge for me. Last year I went on vacation back and forth among 3 countries with 3 different phone markets. Every time I landed I was able to pick a new plan straight from my iPad (eSim) and was online, before the plane finished parking. For my phone it was a real hassle, finding a SIM card store, selecting a plan I wasn’t being gouged on, while trying to translate what the salesperson was saying, following sometimes archaic instructions, restarting phone, writing down a number to call in case I run out of data.
Nice name, BTW. 😉
That would be a really useful feature if you do a lot of international traveling. However, most of us aren’t international hoppers that could really make it worth our while to justify such a feature. Although I suppose the high end customers that Apple seems to be targeting do jet-set enough that maybe it would appeal to them.
I was wondering why Apple still asks what carrier you are going with when buying if the top of the line iPhone has an eSim? Just smoothing the process for the customer?
For $1500 I’d rather wait for a new Mac Mini
Exactly. If you’re going to make a phone cost as much as the computer, it’s a much better bargain to just get the computer. Even Apple loyalists will realize this.
Except for most people, the iPhone IS their computer. And phone. And entertainment system. Gaming rig. And Camera. And GPS.
Why would I spend $50k on a boat when I can get a bike for so much less? – You, basically
That comment just underscores your point that Apple is trying to turn the iPhone into a luxury good instead of a consumer product for the masses.
’cause a bike’s not gonna help you as much crossing that big lake as a boat would.
I figured out one time that HP inkjet printer ink costs $7000 per gallon and that it was 95% water. I wrote HP and asked them how and why they charged so much. They wrote back a nice, polite letter and said basically “because we can”.
Not too long after that I switched to Espon (who “only” charges $4000 per gallon) and then actively looked for a reliable source for third party ink. Right now all 4 cartridges of the Epson print can be replaced for less then $20. That is still over $1000 per gallon but at least it isn’t $7000. Third party ink is pretty reliable now a days, rarely do I have a cartridge that doesn’t work. I can generally print whatever I need for about $30/month.
Apple can charge $1500 for a phone because they can…..
How about the processor? It is the most advanced mobile chip, other company can’t produce one like it. When Apple makes a huge leap in technology the press seams to ignore it; even the ones that are pro Apple. Every other smartphone should be cheaper because their internals are cheep. I can’t wait to see the benchmarks.
Electronic components used in most consumer gadget are very cheap to manufacture, unless it requires a very different and difficult process/equipment etc, processor or not. It’s a typical mass production item to take advantage of scale merit too. New R/D cost to design new processor/PCB etc has to be implemented, but it is quickly amortized when the next generation comes in.
Even if the A12 Bionic required $250 million to develop (remember Apple is using TSMC’s fab line so that there’s no sunk cost to Apple for that fab line) since Apple expects to sell over 100 million phones this year, that’s less than $2.50 per phone for those development. This in no way justifies the cost of an iPhone. Further, in quantities of a million, the cost of those A12 chips are likely WELL under $50 each.
The last breakdown of the iPhone (an iPhone X) had the hardware costs at well under $400 for the most expensive version. Considering how and where they are assembled the manufacturing cost is likely under $50 per phone and the packaging likely less than $5 per phone. So the entire cost (not including shipping, etc.) is likely to be less than $460 dollars. How can Apple justify a $1449 cost? It’s because they want to present to Wall Street that Apple has huge gross margins.
Having > 59% gross margins is no different from Sculley pushing the early Macs to have 55+% gross margins.
I went from 6s+ to the X. No going to upgrade for awhile. The X is pretty awesome as it is.
When Apple products “just worked” they were worth the premium price. My son abandoned Apple products over the last year because they don’t just work anymore and there are decent alternatives out there. I love Apple products but this ever increasing cost across their product line is getting harder and harder to swallow.
$750 for their cheap phone? $1500 for the better one? I guess if I stick with Apple I’m going to be shopping at craigslist instead of the Apple store.
“…wide range of prices that people will pay”
yeah, wide range, starting from ‘too expensive’ and only up from there.
Sales Tax on that bad boy is gonna hurt…ouch.
No one is forcing anyone to buy the phone
And no 5G, just the Advanced LTE. Guess 5G will be next year’s incremental update.
Geezus! What a tone deaf, Microsoftian response Cook gave.
Such pedestrian issues should not come out the mouth of the CEO but from an underling, and he otherwise really needs a PR agent to formulate his pronouncements.