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.”
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.
