How High Could Prices for Apple Products Go?

September 11, 2018

By Carlo Versano

It's become an annual tradition, of sorts: as summer turns to fall, Apple unveils its latest product updates in a highly choreographed keynote affair, an event that Steve Jobs once presided over to the thrill of the company's fans and followers, who speculated wildly over what was in store.

These days some grumble the fanfare has become a little long in the tooth. With so many leaks leading up to the event, the opportunity for real surprise is minimal.

On the eve of this year's launch ー Apple's first as a $1 trillion company ー most expect the company to unveil three new iPhone models at various price points and an updated Apple Watch, said Quartz's deputy editor Mike Murphy.

With slowing growth in the company's signature smartphone and an escalating trade war with China ー Apple told the government last week that another $200 billion in tariffs on Chinese products coming into the U.S. may cause the company to raise its already-steep prices ー those different price points are increasingly important. The company has managed to ring out more revenue from its existing customers by jacking up prices every year, said Murphy.

"The crazy thing is this cheaper model is expected to come in at $700," which is what the high-end iPhone cost just a couple of years ago.

Apple's iPhone pricing is "increasingly ridiculous," Murphy added.

He said 2016's iPhone SE, which is the real "budget" option starting at $399, will likely stick around, at least for this product cycle.

But Apple is betting that people want bigger phones and is happy to push them. Andrew Keene, founder of AlphaShark Trading, said in a separate interview on Cheddar that a phone with a new, larger screen (6.5 inches, reportedly, compared to 5.8 inches for the iPhone X) is a smart reading of the market.

"They need something that's going to be a game-changer, and the game-changer's going to be that bigger screen," Keene said. "I think that's what's really going to make the stock go higher."

But further segmenting its most important product line would mark a notable shift for the company, which used to pride itself on building few products really well and have them, as Steve Jobs loved to say, "just work," according to Quartz's Murphy.

Indeed, as Apple has expanded its offerings, the company has seen an increase in problems that it once avoided ー from broken keyboards to throttling laptops.

"It's going to be very difficult to have the quality control they used to have," Murphy said. "I'm starting to wonder if Apple just doesn't really know what exactly people want."

For full interview click here.