For months now the leaks have all been in alignment: the radically redesigned iPhone 8 (I predict simply ‘iPhone’), will be very expensive. In fact a price tag starting at over $1,000 is the common consensus. Until now…
In a new report from global financial services giant UBS , company analyst Steven Milunovich reveals Apple AAPL -0.50%’s pricing structure of its 2017 iPhones is expected to be dramatically lower than previously expected. Obtained by MacRumors, the report also says we can thank Samsung for Apple’s pricing rethink.
In short: Milunovich says Samsung’s decision to push highly compact 5.8-inch and 6.2-inch displays into the Galaxy S8 and Galaxy S8 Plus is a game changer and has pushed Apple to recalibrate its range.
As such the UBS report says the incrementally upgraded iPhone 7S will stick to its predecessors $649 price point, with the iPhone 7S Plus pushed back to $749 from $769 and the new flagship iPhone 8 starting from circa $850.
“Contrary to some perceptions, Apple prices quite competitively,” the report explains. “Apple likes to position its entry-level products at the mid-market with ‘Pro/Plus’ products close to competitors at the high end.”
That said, if the $850 iPhone 8 comes in three storage tiers like iPhone 7 and iPhone 7 Plus, then we are still likely to see the first $1,000+ iPhone Apple has ever released. But this remains a far cry from starting the range at this price point.
The Bad News
As influential as UBS is, however, there is growing evidence to suggest that - in construction at least - the iPhone 8 will cost significantly more to make.
In fact some iPhone 8 components have been pegged at up to 60% more than on the same parts for the iPhone 7, and the UBS report goes on to acknowledge its own Asia hardware analyst Arthur Hsieh who estimates overall factory costs could be $70-90 higher. Should that be the case, I think it’s highly unlikely Apple will pass on those additional costs to customers with no profit margin whatsoever.
Price aside, the iPhone 8 is shaping up to be something special. With an ‘all glass’ chassis, fast wired and wireless charging, a fingerprint sensor integrated into an enlarged display plus the aforementioned switch to OLED with True Tone enhancements. So if Apple gets this model right, I suspect many customers won’t care what it costs…
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