Can Apple Win Customers With $700 iPhone In 2018?

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The Wall Street is abuzz with rumours of Apple Inc. (NASDAQ:AAPL) facing the worst quarter in the history as neither the price of iPhone X nor the specification of iPhone X could pull customers to the Apple Stores. It is estimated that Apple could manage to sell only 8 million iPhone X during Q1 2018, resulting in the unprecedented sales decline in just a few months of the launch. Apple might have seen it coming and that’s the reason Tim Cook and team is restlessly brainstorming to arrive at a magical figure they could tag the upcoming iPhone with and see people falling for it, like 2015.

The Price of 2018 iPhones

According to the report by Steven Milunovich of UBS, Apple may be juggling with two pricing strategies for the next generation of iPhone. The first strategy allows Apple to price tag the next generation of iPhones with $750 and more, while in the second scenario Apple will have to cut down at least $50 from the proposed price of iPhones as suggested in the first strategy.

While it’s too early to be conclusive about the exact price of iPhone scheduled for the launch in late 2018, one thing is quite certain – Apple will not play below $700 arena for any of its upcoming iPhones.

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The report of UBS also suggests that iPhones price tagged with $700 or more would account for over 70% sales of iPhone during Apple’s ongoing fiscal 2018. It is a sharp increase in the estimated sales figure of high priced iPhones, which accounted for nearly 40% of the overall iPhone sales in fiscal 2017.

Decoding Apple’s Pricing Strategy For iPhone

While Apple is yet to settle down with a clear pricing strategy, it is apparent that the company don’t want to make any mistake once again as far as the prices of the upcoming lineups of iPhone are concerned.

Milunovich believes that Apple has a three-point agenda behind the new strategy that defines the price of iPhones scheduled for the launch in late 2018. The company wants to extend the offerings of the top-of-the-line features to mid-level iPhones, upgrade mid-level iPhone users to premium iPhones, maintain the higher price bands on new features while tapping the emerging markets with older devices.

 

The strategy will not only help the premium iPhone users maintain their status quo but will also lure existing iPhone users to go for an upgrade, besides making the onboarding for new users much more affordable with older versions of iPhones.

Apple is expected to introduce three new models of iPhone late this year. The 6.4-inch iPhone with OLED display is expected to be the most expensive iPhone Apple has ever launched, comparatively smaller iPhone with a 5.7-inch OLED display will make existing customers remain stick with Apple. Interestingly, the third iPhone, which is expected to spot a bigger but LCD display, will help the company to rope in early adopters of technologies who don’t want to pay the exorbitant price of iPhone.

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In Q4 2017, or call it Apple’s fiscal Q1 2018, the high price of iPhone helped to see a record increase in the ASP (Average Selling Price), which clocked $796, up $100 YoY.

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