A Thought on the Pricing of the Upcoming New iPhones

Daisuke Wakabayashi, reporting for the WSJ yesterday:

Apple is considering using sapphire screens in more expensive models of the two new, larger iPhones it plans to debut this fall, if it can get enough of the material, people familiar with the matter say. Some analysts expect Apple to charge more for the phones than previous new models, because of increased component costs.

First, I don’t understand how a report on August 14 could plausibly imply that Apple still doesn’t know what material they’re going to use for the displays on the new iPhones they plan to introduce on September 9, and which (if the schedule is like last year) they probably plan to ship to customers on September 19. I would think that people who are truly “familiar with the matter” already know, today, whether the new iPhones are going to use sapphire displays.

As for the persistent rumors that the new iPhone is going to cost $100 more, I have a thought. Last year, Apple put two phones at the $199 subsidized price point: the 16 GB 5S, and the 32 GB 5C. What Apple could do this year is drop the 16 GB size from the top-tier new device(s), and start the new iPhone(s) at 32 GB/$299. Raising the entry price, not the price. That’d leave the $199 pricing tier for the mid-range iPhone (maybe the 16 or 32 GB 5S?).

Even better would be if Apple doubled storage capacities at each price point: start the new iPhone(s) at $299 for 64 GB, and $399 for 128 GB. And then start the mid-tier phone at 32 GB instead of 16, and switch the lowest-tier “free” iPhone (the 5C?) to 16 GB. A bump in storage capacities feels due.

Update: Abdel Ibrahim tweets:

What @gruber maybe forgets to realize is how important price is to people. Nobody wants to be forced to pay $299 for the newest iPhone.

I didn’t say Apple should raise the entry price for the new top-tier iPhone from $199 to $299. What I’m saying is, if the rumors are true that they’re going to raise the price, dropping the lowest storage tier could be how they do it. Honestly, I think it sounds weird and somewhat un-Apple-y for them to raise the entry price for any product, let alone for their most important product. Entry prices tend to go down over time, not up.

Another possible explanation: the new iPhone ships (as widely rumored) in both 4.7- and 5.5-inch sizes, and the 5.5-inch model costs $100 more than the corresponding 4.7-inch one with the same specs.

β˜… Friday, 15 August 2014

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