Apple Inc. (NASDAQ:AAPL) is expected to launch three new iPhones in its 2018 lineup. A revamped version of iPhone X, phablet-sized iPhone X Plus and the ‘middle device’ iPhone X SE will hit the market later this year. Nearly five months after the launch of iPhone X, few people still pay for the outrageously priced device with a heavy heart. Doubtlessly, the flagship iPhone X has been a flop by any measure but has experienced “limited success” possibly due to production issues in 2017 and lower than expected sales.
Probably Apple has realized that its latest flagship is a little too expensive for some which can lead to revisiting its pricing strategy in 2018. Reportedly, the coming versions of the iPhone X will have lower manufacturing bill of materials (MBOM). This will have a direct impact on the price of iPhone X 2018 models.
A new report from RBC Capital Markets sheds some light on the pricing strategy of the upcoming flagship model. Amit Daryanani, an analyst from RBC Markets, stated that the second-gen iPhone X – also dubbed as iPhone X 2018 or iPhone X2 – could be priced at $899 and the iPhone X Plus can amount to $999, respectively in the US. This $100 price cut can supposedly revive the sales.
A series of supply chain reports have suggested that iPhone X sales have slowed down significantly. However, we can only be sure about it after Apple releases its next earnings report which is likely to come in April. What we know at this point is that iPhone X was most likely an important contributor to Apple’s record-high revenue of $88.3 billion last quarter, up from $78.4 billion in the year-ago quarter.
RBC’s research highlights the new iPhone X lineup in terms of pricing and apparently, this could be the most diversified iPhone lineup to date. A 6.1-inch iPhone X SE with LCD could be priced at $799 and the two OLED devices – 5.8 inch iPhone X2 and 6.5 inch iPhone X Plus is estimated at $899 and $999, respectively. All three devices are expected to have Face ID and probably more advanced and evolved than the previous generation.
For the LCD variant, a $799 doesn’t seem unreasonable as the older 8 Plus runs at the same price and they will likely share similar specs. The 6.1-inch variant is perhaps a step-down version which is likely to sport aluminium edges vs. premium steel in the other two OLED devices.
Apple’s iPhone X, currently priced at $999, a bit higher than iPhone 8 Plus has excelled in terms of specs and design, which was not even closely iterative compared to the previous iPhones. The other brands have slowly and blatantly adopted the notch and the bezel-less frame. For few, it might not be pricey but for many, it was capable of burning a hole through the pocket. The price cut, if it happens, can bring good news for Apple fans who have not yet upgraded as they’d get a waiver of $100.
An analyst team at Nomura have lowered their own forecast of estimated iPhone X sales due to its high cost. The prediction of iPhone X production volume came down from 18 million to 12 million for Apple’s fiscal Q2 2018 (Q1 of this year) and from 13 million to 8 million in the fiscal Q3 2018.
Perhaps, if Apple wants more positive results, it should aim at selling more devices and not just leverage on the margin gained per unit. Just last month we analyzed Apple’s last fiscal quarter results and it is clearly outlined that it’s high time for Apple to employ a customer-first strategy over margin-first. Its instinct has always been to keep the unit price sky high to extract maximum revenue. iPhone X received ambitious orders in Q1 2018, but not-so-encouraging projections by analysts for Q2 and Q3 is disappointing. The recent declining sales have been nightmarish for Tim Cook and Apple. The pricing strategy is expected to attract additional customers which will eventually reinvigorate the sales figures.