Editor’s note: Ezra Gottheil is Principal Analyst at Technology Business Research.
HAMPTON, N.H. – With the introduction of three new iPhones, Apple created a new step in the smartphone price pyramid: super-premium. The super-premium iPhone X starts at $999, and Apple must have some concerns about pushing up the price of its top-of-the-line smartphone.
TBR believes, however, that Apple has found the right combination of features, design and aura to maintain the company’s dominance of high-end smartphones.
The 8 and 8 plus are logical next steps in iPhone evolution. Slightly more expensive than the 7 and 7 plus when they were introduced, but with more storage, the 8 and 8 plus incorporate the kinds of improvements and new features that keep iPhone customers loyal, while the X adds enough “extra” to attract those with more disposable income.
The biggest surprise is Portrait Lighting, which enables the camera to take better pictures of people. In the demonstrations, the improvements were dramatic, and the feature is officially still in beta, but TBR believes Portrait Lighting is both an important feature and the first of what will be an avalanche of AI-driven computational photography innovations coming from both Apple and its competitors. Other improvements include wireless charging, increased precision in location and movement for augmented reality, a pressure-sensitive screen, and internal AI capacity available to developers.
The X adds an OLED screen and image stabilization on both cameras, as well as increased battery life. Apple put a lot of effort into the facial recognition that replaces the fingerprint sensor, because on the X, the screen extends to the bottom of the phone.
TBR believes these improvements over the 8 are sufficient to drive many purchasers into the new super-premium price tier.
The most important change to the iPhone business, however, was barely mentioned during the two-hour presentation. There are now offerings ranging from $349 to $999, giving customers a broad array of choices. In fact, almost hidden in yesterday’s event is the announcement of an array of price cuts: $50 on the SE, 7 and 7 plus, and $100 from previous prices for the 6 and 6 plus. Retaining the 2-year-old 6 and 6 plus is a new move for Apple, creating a pricing pyramid with enticing steps along the way.
As usual for Apple, there are no entries in the lowest price tiers, but the global available market for new iPhones is very large, and having a full array of offerings at many price points broadens Apple’s appeal and will drive Apple sales. In consumer goods, there are really three price ranges: as inexpensive as possible, good value for money, and you only live once. With iPhone’s new range of offerings, Apple has improved its position in all three.
(C) TBR
