I created
a bit of a stir the other day when I suggested the OLED iPhone Pro could start at $1,500.
Lets take a serious look at this. $1,500 as a starting price is probably way too high. But I think $1,200 is quite likely as the starting price, with the high-end model at $1,300 or $1,400...
Apple reports its company-wide profit margin each quarter, which tends to hover around 37 or 38 percent... any new iPhone must have a profit margin of at least 35 percent for Apple to maintain its company-wide profit margin...
Its not enough for Apple to create a phone that can be sold for $649/749/849 with 35 percent profit margins. They have to create a phone that can be sold at those prices, with those margins,
and which can be manufactured at scale. And for Apple that scale is massive: anything less than 6070 million in the first quarter in which it goes on sale is a failure possibly a catastrophic failure...
It sounds to me like the OLED iPhone is a phone which Apple cant make 40 million of per quarter, at least not today. And if thats true, that means it should be more expensive. Not
should in any moral sense, but simply because thats how the principle of supply and demand works. When supply is constrained and demand is high, prices go higher...
What many people want, obviously, is for the new OLED iPhone to simply be the iPhone 8 and wow us with a new design at the same old prices. But what is Apple supposed to do if, say, Samsung can only produce 10 million OLED displays for Apple per quarter?
The prices for these iPhones need to be high enough so that tens of millions of people still want to buy the iPhone 7S and 7S Plus. If the iPhone Pro or iPhone Edition or whatever it is that Apple is going to call this phone starts at $800 or even $900, who is going to buy an iPhone 7S or 7S Plus? Not enough people, thats who. Apple needs tens of millions of people to buy the 7S and 7S Plus because they arent going to be able to produce the Pro/Edition model in sufficient quantity...
Furthermore, why shouldnt there be a deluxe Pro tier for phones? For many people, phones are every bit as much an essential professional tool as their laptops...
If you want to argue that Apple should never create an iPhone with a higher starting price than what we have today, youre implicitly arguing that Apple should never put any components into a new iPhone that cant be made at iPhone 7s scale.
I think thats dangerous strategically, leaving Apple open to attack from competitors making premium phones with components (cameras, displays, new sensors, new battery technologies, etc.)...
Personally, I think this strategy makes sense, and arguably is overdue... And Id bet my bottom dollar there are more people who consider their iPhone a pro tool (and be willing to pay pro prices) than who think so regarding their iPad, and well have had iPad Pros for two years by the time new iPhones are announced in September. If there are iPad Pros and MacBook Pros, why not iPhone Pros?
