Consumer Electronics products have traditionally fallen in price in the years after their introduction. Economies of scale, lower component costs, integration of features etc., all offer the potential to reduce the cost and the price, even with incremental features added to enhance the product’s characteristics and functionality from the original version.
This paradigm was true until the advent of the iPhone. Apple has been betting that they can increase sales by jacking up the price of the iPhone with every subsequent iteration of the product. The latest introduction of iPhone X becomes the first smartphone to cross the $1000 barrier. Samsung was quick to catch on this questionable pricing trend as well, introducing its Galaxy Note 8 at $950.
At a time when kitchen appliances, TVs and laptops, all of which last more than few years and cost less than a $1000, the question is – Will users be willing to pay a premium for a smartphone that by all accounts has functionality very similar to previous versions? Or, has Apple crossed the forbidden pricing line that will make users think twice before shelling out $1000 for a phone?
Future Wealth’s View
There was a Subaru car commercial in the mid 90’s which went “A car won’t make you handsome, or prettier, or younger, and if it improves your standing with the neighbors, then you live among snobs with distorted values.” One could argue that buying an iPhone X for $1000 is reaching parallels to buying a Ferrari, owning it not so much for its functionality but rather for social acceptance as a “cool cat”.
The irony of Apple’s introduction of iPhone X at $1000 will not be lost on many average consumers, when they realize that they can instead buy two iPhone 6s (still available at the Apple store for $450 each) with much of the same functionality as the iPhone X sans the edge to edge screen, extra camera and slightly improved battery life.
With a $1000 price tag, we believe Apple has crossed the line from being cool to greedy. It is our opinion that consumers will balk at the price tag and instead choose one of the cheaper versions – iPhone 6, 7 or 8 and this will force Apple to lower its price on the iPhone X soon after introduction. Our advice is – wait for a few months and you too can be cool.
Taking a line out of Charles Sheldon’s book on the ethos of his approach to life, which asked the question “What Would Jesus Do?”, we ask “What Would Jobs Do?”