Apple reportedly probing carriers about potential $100 premium for next-gen iPhone

Posted:
in iPhone edited April 2014
Apple has apparently shown interest in raising the price of its next generation of iPhone models by $100, and has sought approval from carriers to do so, according to one Wall Street analyst.


"iPhone 6" mockup via Ciccarese Design.


The company's alleged interest in a $300 starting subsidized price for the so-called "iPhone 6" was revealed on Monday by Jefferies analyst Peter Misek, who said that thus far, carriers have not been receptive.

However, Misek believes that Apple may face a lack of competition in the smartphone space this year. In particular, he doesn't believe Samsung's new flagship Galaxy S5 has the kind of "wow" factor that will hurt Apple.




Misek believes that because of this, Apple will be able to get "at least some of the increase" it seeks, even if the additional costs are split between carriers and consumers. He believes a $50 increase in the average selling price of the iPhone could offset negative gross margins usually associated with an iPhone redesign, which is widely expected to occur this year.

Specifically, Misek estimates that a $50 increase in average selling price would increase Apple's revenues by 2 percent, while earnings per share could grow by 11 percent. A $100 average selling price increase would see revenue spike 6 percent, in his estimation, while earnings per share would benefit an estimated 24 percent.


"iPhone 6" mockup via Ciccarese Design.


Misek isn't alone. Last month, Pacific Crest also predicted that Apple will increase the subsidized price of its next iPhone to $299, justifying the change by giving the handset a larger screen than the current 4-inch display found on the iPhone 5s and iPhone 5c.

Pacific Crest's Andy Hargreaves said that he believes a $299 big-screen iPhone would increase gross profit on replacement sales, while also attracting new customers that may have otherwise opted for an Android handset with a larger display.

Well-connected analyst Ming-Chi Kuo of KGI Securities revealed in his own research note last week that he believes Apple will debut two new iPhone models this fall: He has predicted that a 4.7-inch model will still allow for one-handed use, while a larger 5.5-inch model will appeal to customers who have been gravitating toward jumbo-size handsets.
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Comments

  • Reply 1 of 159
    wurm5150wurm5150 Posts: 763member
    It's either "It's Peter Misek, what'd you expect?" Or Apple's has lost it's damn mind..
  • Reply 2 of 159
    rogifanrogifan Posts: 10,669member
    I'm wondering what would justify the price increase. Surely it can't just being going from 4" to 4.7". If true, perhaps it means the new iPhone will have sapphire display, 2GB ram and the base model will be 32GB.
  • Reply 3 of 159
    sestewartsestewart Posts: 102member
    Only Apple could price a phone as high as a macbook. Hopefully enough people will be on the carrier's new no contract option to stick it to these every two year upgrades. Prices have got to cone down on these things soon, or the market will lose steam.

    No one wants to go out and keep buying new cases/accessories/docks every two years for a phone. the iPad is 499 for a GIANT screen! What is the reason for a phone being 700$ as a base cost?
  • Reply 4 of 159
    asdasdasdasd Posts: 5,261member
    My guess is that the lower end phones will be significantly reduced to offset this.
  • Reply 5 of 159
    pmzpmz Posts: 3,433member

    Everyone calm down.

     

    If Apple is truly making 2 models, at 4.7" and 5.5", then everyone would reasonably expect the subsidized prices of these two models with 16 GB capacities to start at $199 and $299, respectively.

     

    When did any doubt about this enter anyone's mind?

  • Reply 6 of 159
    pmzpmz Posts: 3,433member
    Quote:

    Originally Posted by Rogifan View Post



    I'm wondering what would justify the price increase. Surely it can't just being going from 4" to 4.7". If true, perhaps it means the new iPhone will have sapphire display, 2GB ram and the base model will be 32GB.

    Think logically. The new 4.7" phone will be $199 for 16 GB. There is no room for doubt or conjecture here.

     

    If Apple is ALSO making a 5.5", it a stands to reason that one would cost more, correct? This is where the $299 comes from.

  • Reply 7 of 159
    pmzpmz Posts: 3,433member
    Quote:

    Originally Posted by sestewart View Post



    Only Apple could price a phone as high as a macbook. Hopefully enough people will be on the carrier's new no contract option to stick it to these every two year upgrades. Prices have got to cone down on these things soon, or the market will lose steam.



    No one wants to go out and keep buying new cases/accessories/docks every two years for a phone. the iPad is 499 for a GIANT screen! What is the reason for a phone being 700$ as a base cost?

    Speak for yourself. I could care less.

  • Reply 8 of 159
    zoolookzoolook Posts: 657member
    Quote:

    Originally Posted by pmz View Post

     

    Everyone calm down.

     

    If Apple is truly making 2 models, at 4.7" and 5.5", then everyone would reasonably expect the subsidized prices of these two models with 16 GB capacities to start at $199 and $299, respectively.

     

    When did any doubt about this enter anyone's mind?




    You're probably right, although 16GB as the base is getting a bit long-in-the-tooth, given it was the base in 2009 (5 years ago).

  • Reply 9 of 159
    pmzpmz Posts: 3,433member
    Quote:

    Originally Posted by asdasd View Post



    My guess is that the lower end phones will be significantly reduced to offset this.

    The iPhone 5s will stick around at 16 GB for $99.

     

    The iPhone 5c will live on as well at 8 GB for $0 and 16 for $99.

     

    iPhone 4.7" will start at 16 GB for $199

     

    iPhone 5.5" will start at 16 GB fro $299.

  • Reply 10 of 159
    zoolookzoolook Posts: 657member
    Quote:

    Originally Posted by pmz View Post

     

    Speak for yourself. I could care less.


    How much less could you care?

  • Reply 11 of 159
    pmzpmz Posts: 3,433member
    Quote:

    Originally Posted by Zoolook View Post

     



    You're probably right, although 16GB as the base is getting a bit long-in-the-tooth, given it was the base in 2009 (5 years ago).


    Its more than enough storage for the average user. The above average user pays the premium for more storage. Apple then makes lots o' money.

  • Reply 12 of 159
    asdasdasdasd Posts: 5,261member
    Quote:
    Originally Posted by pmz View Post

     

    The iPhone 5s will stick around at 16 GB for $99.

     

    The iPhone 5c will live on as well at 8 GB for $0 and 16 for $99.

     

    iPhone 4.7" will start at 16 GB for $199

     

    iPhone 5.5" will start at 16 GB fro $299.


     

    I have no idea why you think those are real prices. 

     

    I expect if they raise the prices on the top models that the lower models ( like the 5C) will fall below $300 off contract.

  • Reply 13 of 159

    "No one wants to go out and keep buying new cases/accessories/docks every two years for a phone"

     

    When you choose to upgrade your iPhone is entirely up to you, of course. This is true of Apple products or anything else you consume.

  • Reply 14 of 159
    rogifanrogifan Posts: 10,669member
    pmz wrote: »
    The iPhone 5s will stick around at 16 GB for $99.

    The iPhone 5c will live on as well at 8 GB for $0 and 16 for $99.

    iPhone 4.7" will start at 16 GB for $199

    iPhone 5.5" will start at 16 GB fro $299.
    Apple selling a phone with 8GB storage is just embarrassing,
  • Reply 15 of 159
    asdasdasdasd Posts: 5,261member
    Quote:

    Originally Posted by cherrypop View Post

     

    "No one wants to go out and keep buying new cases/accessories/docks every two years for a phone"

     

    When you choose to upgrade your iPhone is entirely up to you, of course. This is true of Apple products or anything else you consume.


    It matters for Apple's bottom line that people do it more frequently however.

  • Reply 16 of 159
    solipsismxsolipsismx Posts: 19,566member
    rogifan wrote: »
    I'm wondering what would justify the price increase. Surely it can't just being going from 4" to 4.7". If true, perhaps it means the new iPhone will have sapphire display, 2GB ram and the base model will be 32GB.

    Why not? That's a lot more additional screen area? Why assume that doesn't have an additional cost associated with it. What if they also increase the resolution or if it's a 5.5" display or if they double the NAND or use additional components because they have more room behind that larger display? Lots of reasons why the price might increase.

    sestewart wrote: »
    No one wants to go out and keep buying new cases/accessories/docks every two years for a phone. the iPad is 499 for a GIANT screen! What is the reason for a phone being 700$ as a base cost?

    What's the alternative? Buying a case every year if you have something like the Galaxy series where the casing changes dramatically every single time or keeping the same style for many years in a row? As it is now people bitch and moan that Apple isn't "innovating" when they use same external design for a 2nd year in a row. I think that systematic and stable release schedule is great for business.

    pmz wrote: »
    Think logically. The new 4.7" phone will be $199 for 16 GB. There is no room for doubt or conjecture here.

    If Apple is ALSO making a 5.5", it a stands to reason that one would cost more, correct? This is where the $299 comes from.

    Those prices are way too low. The current 16GB iPhone 5C is $549. Any dropping of price will likely not be by more than $100.
  • Reply 17 of 159
    rogifanrogifan Posts: 10,669member
    pmz wrote: »
    Its more than enough storage for the average user. The above average user pays the premium for more storage. Apple then makes lots o' money.
    Do you have a source for this? I thought hardware was supposed to get cheaper over time. Why should memory cost the same today as it did 4-5 years ago. Last year Apple reduced the price of the MacBook Air by $100 keeping the same amount of storage. There's no reason they couldn't offer 32GB for the same price as 16GB, except if accounting is running the show and it's all about margins.
  • Reply 18 of 159
    DaekwanDaekwan Posts: 174member
    Quote:
    Originally Posted by sestewart View Post



    Only Apple could price a phone as high as a macbook. Hopefully enough people will be on the carrier's new no contract option to stick it to these every two year upgrades. Prices have got to cone down on these things soon, or the market will lose steam.



    No one wants to go out and keep buying new cases/accessories/docks every two years for a phone. the iPad is 499 for a GIANT screen! What is the reason for a phone being 700$ as a base cost?

     

    1) Apple uses premium materials backed by premium software & customer service.  In other words (generally speaking).. when you pay more,  you get more.   Having used Windows laptops for 15 years.. and now having owned Macbooks for the past 3 years.. I have personally experienced the night & day difference between the average Windows laptop & average Macbook.   You literally cannot pay me to go back to using a Windows laptop again.  

     

    Devices like a laptop (or a smartphone) are items that I generally use for several hours every single day.   When I depend on a device for that many hours, every day, then I have no problem paying the higher price for something that is made with better materials, better software and delivers a better overall experience.  Millions of other people feel the same way, which is why millions of people have no problem paying extra for Apple devices.

     

    2) I agree that noone wants to keep paying for new cases, accessories or docks.. but can you name ANY smartphone manufacturer that uses the exact same design year after year?  While Apple did switch from the 30pin connector to the Lightning connector two years ago.. they had used the 30pin connector for the almost a decade.  Switching connectors once every 10 years is fine by me.

     

    Lets also remember that smartphones aren't just "phones" anymore.  This arent throwaway $30 prepaid phones that simply dial number or send text messages.   Most current smartphones can accomplish about 80% of the tasks that a user would do on a fully functional computer.  And users have all that computing power.. right in their pocket.  Speaking of pockets.. the reason why a phone will always cost more than a tablet.. is because it generally costs more to take the same technology and make it smaller.  Its fairly easy for an engineer to design a "GIANT" product.  It take much more resources, research, design and advances in technology to take that same experience and make it much smaller & thinner.. and able to fit in your pocket.  

  • Reply 19 of 159
    herbapouherbapou Posts: 2,221member
    That would be very very bad.
  • Reply 20 of 159
    rogifanrogifan Posts: 10,669member
    solipsismx wrote: »
    Why not? That's a lot more additional screen area? Why assume that doesn't have an additional cost associated with it. What if they also increase the resolution or if it's a 5.5" display or if they double the NAND or use additional components because they have more room behind that larger display? Lots of reasons why the price might increase.
    sure there are reasons the price could increase. I'm speculating what they might be. I don't know if just a bigger screen in and of itself is a good enough reason. I'm sure retina had a cost associated with it but the 3rd gen iPad didn't become more expensive than the 2nd gen. No doubt the iPhone 5 had lots of manufacturing complexities but it stayed the same price as the 4S, and the 5S with Touch ID didn't increase in price either. Unless this phone really has something unique I can't see a price increase being good for Apple. Of course if this $100 increase is in relation to some phablet like device then it would make more sense.
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