While nearly all consumer electronics goods decline in price over time and most of the smartphone industry is scraping by on razor-thin margins, Apple and rival Samsung are upping the ante with flagship handsets that cost $1,000 and up.
Apple's introduction of a smartphone with a $1,000 had been widely predicted. Even so, it's still a bit of a bombshell.
While prices for nearly all consumer electronics goods are in constant decline and while the vast majority of smartphone vendors scrap by on razor thin margins, Apple and rival Samsung — which together account for nearly all smartphone profits — are upping the ante.
Why? Because they can.
"Apple, more than any other tech company, has been able to create a premium brand for its products, and according to the laws of supply and demand, there is a certain demand at every price point," said Jim McGregor, principal analyst at Tirias Research.
Apple's iPhone X.
The iPhone X is not ticketed for the mainstream. Despite the near universal appeal of the iPhone, $1,000 is a bridge too far for the vast majority of smartphone buyers — even existing iPhone users. This is precisely why Apple simultaneously rolled out the iPhone 8 and iPhone 8 Plus, incremental upgrades to the product line with similar price points to their competitors (still a relatively robust $699 and $799, respectively).
Ian Fogg, senior director of mobile and telecoms at IHS Markit, predicted that iPhone X "will still sell in enormous volumes because Apple has repeatedly demonstrated its ability to persuade consumers to shift their overall spending to place a greater share of their disposable income towards a smartphone purchase."
"Part of what iPhone has always been is aspirational," said Ken Hyers, director of emerging device strategies at Strategy Analytics. The iPhone is a "luxury or near luxury device that really should be thought of as a halo product," he added.
"If you are buying iPhone X, you are already part of the iPhone ecosystem," Hyers said. "And if you want to stay in the ecosystem, this is the best you can get."
The iPhone X — billed by Apple CEO Tim Cook as the future of the smartphone — is Apple strutting its stuff, packaging together a bunch of cool technologies — some of which may well be ahead of their time — to produce what amounts to a highly visible and well recognized status symbol complete with its own built-in flashlight. And, $1,000 sticker price or not, you can bet there will be lines around the block when it becomes available on November 3.
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