Is a $1,000+ iPhone too rich for your blood?
There’s little doubt that Apple’s tenth-anniversary iPhone 8 is going to be expensive, adding another digit to the price tag and breaking the $1,000 barrier (although the upside to this could be that the price of the “regular” iPhone 7s/7s Plus could see a steep cut).
All the current evidence – ranging from the more reliable supply chain chatter and analyst prognostications, to the far flimsier pundit wild dreams – suggests that Apple will slap a price tag that’s upwards of $1,000 on the iPhone 8 (or whatever it ends up being called). Apple already sells an iPhone for a shade under $1,000 – the 256GB iPhone 7 Plus is a cool $969, so the expectation is that the iPhone 8 will break the $1,000 barrier.
Also, a $1,000+ price tag isn’t as outrageous as you might think. Take a regular iPhone, slap in an OLED display, more storage, wireless charging, and improved cameras, and then take into account Apple’s generous +30 percent profit margin, and you can easily get to that price.
In fact, an iPhone with a thousand dollar price tag only needs a bill of materials (BOM) of about $330.
Anticipating the question of how Apple could justify charging $1,000 for a smartphone with a BOM of $330, remember that this price doesn’t include costs such as R&D (this iPhone seems like it’s going to be a radical departure from the existing line up, both in terms of cosmetic appearance and user experience, and that sort of change costs money), marketing, stores, and so on. Based on past figures and estimates, I’d say that these costs would add some $330 to the BOM price.
But that does mean that Apple would be making around $330 per iPhone 8 sold. Which isn’t bad at all. And it leaves room for Apple to drop the price of the standard iPhone line up.
It all comes down to how many people are willing to drop that sort of money for a smartphone?
My guess is that there are enough. In fact, my guess is that demand will outstrip supply (because OLED display yields are nowhere near as good as it is for regular LCD displays). An additional guess would be that by next summer (maybe as soon as next spring), we’ll see Android handset makers such as Samsung, LG, and the like come out with their own “limited edition” handsets with sky-high price tags.
But if Apple does slash $100 off the price of the regular iPhone line up, that’s also going to put pressure on the likes of Samsung and LG to cut the price of their flagship devices, which could be difficult to do given that these companies don’t have super-high-end $1,000+ smartphones to cushion the cut.
Once again, Apple is going to change smartphones forever.
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