Apple’s new under-$650 iPhone could launch the biggest supercycle ever

“The rumor mill predicts that there will be three iPhone models [this year] where the cheapest iPhone could be priced under $650,” Rohit Chhatwal writes for Seeking Alpha. “Apple could surprise the market, analysts, and customers by launching a flagship iPhone at one of the cheapest price points in its history. It has focused on improving the average selling price, ASP, in the last product cycle through pricey iPhone X and big price jump for iPhone 8. However, this has had a negative impact on its unit shipment growth.”

“Apple still has a stranglehold in the premium segment through its iPhone X, which has outsold other phones in this category. But it also needs to address the challenge faced in the mid-tier segment,” Chhatwal writes. “According to Bloomberg report, Apple will come out with three iPhone models. One of them will be a successor of iPhone X sporting a 5.8-inch display and another iPhone X Plus with a 6.5-inch display. The third iPhone, let’s say iPhone 9, will have a 6.1-inch display.”

“The iPhone 9 model will have an LCD screen instead of OLED screen which will be available for other two models. This option alone reduces the bill of materials by $80, according to IHS Markit breakdown. The basic model will not have Apple’s 3D Touch feature and have a single rear camera. However, it will have an edge-to-edge screen and facial recognition, which are highly appreciated by customers across all regions,” Chhatwal writes. “The edge-to-edge screen could push more customers to upgrade their older models.”

“By lowering the base price of iPhone 9, Apple would be able to reduce the models available. It can discontinue all previous models and keep just an optional iPhone 8 at a more subsidized price,” Chhatwal writes. “There are already reports that this model will be in the price range of $600-700. I believe going under $650 mark would be a necessity for Apple if it is serious in expanding its ecosystem and transitioning into a bigger Services revenue base.”

Read more in the full article here.

MacDailyNews Take: It would make sense, from a Services point of view, to price the new models aggressively. Any move Apple makes downmarket, however slight, will hurt Android intensely. 🙂

Obviously, margins will take a hit, but increases in Services – recurring Services revenue – could well be worth making an aggressive move on iPhone pricing now. See iPod pricing vs. iTunes Store sales increases.

Apple Retail Store employee to an Android settler looking to finally upgrade to a real iPhone this fall: “We have OLED and LCD. LCD would be good for you.”

Ming-Chi Kuo believes Apple will release three new iPhones in September of 2018. Kuo predicts the 6.5-inch OLED “iPhone Pro” will be priced at $900 – $1,000, the 5.8-inch OLED iPhone X successor will be priced at $800 – $900, and the 6.1-inch LCD iPhone will be priced at $600 – $700.

Supercycle
Supercycle!

SEE ALSO:
South Korean dishwasher maker Samsung’s mobile profits fall as consumers pass on $1,000 iPhone knockoffs – July 31, 2018
Apple takes U.S. market share from Android, dominates with 8 iPhones out of 10 best-selling smartphones – July 26, 2018
Apple’s iPhone X made 5 times the profit of 600 Android OEMs combined – April 18, 2018
Apple’s iPhone captured 86% of global handset profits in Q417; iPhone X alone took 35% of global handset profits – April 17, 2018
Higher income U.S. states use Apple iPhones; lower income states use Samsung Galaxy phones – September 27, 2016
Apple’s App Store is destroying Google Play in services and subscriptions – April 18, 2018
Apple App Store users spent nearly double that of Google Play users in Q417 – January 26, 2018
Bernstein: Google to pay Apple $3 billion this year to remain the default search engine on iPhones and iPads – August 14, 2017
Higher income U.S. states use Apple iPhones; lower income states use Samsung Galaxy phones – September 27, 2016
iOS users are worth 10X more than those who settle for Android – July 27, 2016
Apple’s App Store revenue nearly double that of Google’s Android – April 20, 2016
Poor man’s iPhone: Android on the decline – February 26, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015
Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013
iPhone users smarter, richer than Android phone users – August 16, 2011

9 Comments

  1. So people that can’t pay for an x model will pony up monthly for services? I can see app sales revenue but other than that I’m not sure.

    But having more iphones in the wild helps drive home the brand and help it expand so it’s not like they can loose

  2. ““The rumor mill predicts that there will be three iPhone models [this year] where the cheapest iPhone could be priced under $650,””

    It’s already here….

    The iPhone SE starts at $350
    The iPhone 6s starts at $430
    The iPhone 6sPlus starts at $550
    The iPhone 7 starts at $550

  3. ““By lowering the base price of iPhone 9, Apple would be able to reduce the models available. It can discontinue all previous models and keep just an optional iPhone 8 at a more subsidized price,” Chhatwal writes.”

    So Apple is going to sell it’s high end iPhone 9 for $900 instead of $1000 while eliminating all others from the iPhone SE to iPhone 7s that start at $350 to $550.

    Then only offer the iPhone 8 that now starts at $700, to be reduced to $650………

  4. Biggest ‘supercycle’? Not really. This iPhone ‘supercycle’ BS is really being overdone. There probably is no such thing as a supercycle for iPhones as Apple will keep raising their prices and more consumers will decide not to upgrade. It’s not a bad thing. I doubt Apple requires any iPhone ‘supercycle’. I simply wish they’d stop talking about it as if it were going to happen. There’s probably no real reason for a ‘supercycle’ to happen for incremental model iPhones. Most Apple investors should be satisfied with Apple selling just a few percent more iPhones every year and it’s not going to get any better than that.

    Apple can’t beat Google’s Android smartphones when it comes to unit sales/market share percentage. Android manufacturers are willing to take huge losses to maintain or gain market share and Apple won’t do that. Whatever Apple charges for iPhones, the Android manufacturers will go lower and negate any chance of growth of iPhone sales. iPhone sales will be forever limited to what it already is and Apple might need luck to just stay in place.

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