With a $1,000 Price Tag, Apple’s iPhone Crosses a Threshold
When Apple unveils its new top-of-the-line iPhone on Tuesday, it isn’t just expected to offer features like infrared facial recognition and wireless charging for the first time.
The company will also enter new territory on price: The latest phone will start at about $1,000, compared with the $769 minimum for its current top phone, the iPhone 7 Plus.
“It’s a whole new threshold,” said Debby Ruth, a senior vice president at the tech consulting firm Frank N. Magid Associates. I really do think it’s going to make people pause.”
From the iPhone’s introduction a decade ago, Apple has always priced it as a premium product — a more refined and polished alternative to the legions of cheaper smartphones available in the market.
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But this time, the company is pushing into luxury territory. The new phone will cost as much as the company’s entry-level MacBook Air laptop. “They’re doubling down on their strategy: They are going much more to the high end,” Ms. Ruth said.
Apple declined to comment before the product announcements scheduled for Tuesday. (On Saturday, Steven Troughton-Smith, a developer who combed through the iOS 11 software, found references indicating that the new high-end phone will be called the iPhone X.)
Investors are betting that Apple’s move up the price ladder will pay off with much higher profits, especially in mature markets like the United States and Western Europe, where many of the buyers will be people upgrading from older iPhones. The company’s stock has risen by nearly 50 percent over the past year as anticipation has built about the 2017 models.
Apple’s strategy carries risks, however, especially in developing countries where smartphone sales are growing briskly but its market share is a blip compared with devices running Google’s Android software.
In Brazil, for example, Apple devices will account for just 8 percent of the 125 million active smartphone subscriptions this year, according to Forrester, a research firm.
Steep taxes, higher retail profit margins, and added costs from a botched attempt at building iPhones in Brazil have pushed the price of an iPhone 6s, a two-year-old model, to more than $1,000 at Casa Bahia, a store in the Copacabana neighborhood of Rio de Janeiro. In late August, the retailer was selling Apple’s most basic smartphone, the iPhone SE, for more than $600, while a Samsung Galaxy J1 Mini, which runs Android, was just $136.
At another Rio store recently, Vanessa Perreira, 25, a university student, was browsing the 65 models on display, looking at the offerings from Samsung and LG but ignoring the six from Apple. She once owned an iPhone, she lamented, but could not afford to continue buying them. “Price is the most important factor for me,” she said.
Still, the iPhone is coveted by wealthier Brazilians, many of whom buy the phone while traveling abroad to avoid their country’s high costs. “There will always be users in Brazil that will be interested in buying it,” said Tina Lu, a senior analyst with Counterpoint Research.
China’s reception to the $1,000 iPhone will be even more crucial to Apple. The Greater China region, which includes Hong Kong and Taiwan, contributed $8 billion to Apple’s revenue last quarter, but sales have been sluggish.