Ritchie and Gruber: How Apple markets a $1,000 smartphone

Two well-connected friends of the company make the case for a four-figure iPhone.

First, from Rene Ritchie’s iPhones of Future Past: Understanding iPhone 8 in iMore:

In addition to selling more iPhones, Apple can also sell more of an iPhone. The company can bring tomorrow’s iPhone to customers today, for a price.

iPhone 8 — or whatever Apple calls the higher-end model this year — is [an] attempt to fill a space, a more expensive and more premium one. Serendipitously, the relatively smaller size of the higher-end market also lets Apple embrace newer and more advanced technologies — the ones that are harder to scale — sooner…

As it becomes harder to sell more iPhones — the population of earth is now a limiting factor — selling more of an iPhone becomes beneficial. It’s the same benefit Apple gets from selling services revenue on top of iPhone, but in atoms, not bits.

Second, from John Gruber’s iPhone Prelude in Daring Fireball:

I think he’s got exactly the right idea on how Apple can position this: a future iPhone today.

Honda used to sell a car in the U.S. called the Prelude. Edmunds’s description:

Honda established itself in America with the Civic and Accord — both good, solid but basic cars. But big profits in the automotive world don’t come from basic cars that sell for commodity prices. Those profits come from cars that get consumers so excited that they’ll pay a premium price just to have one. The Prelude was Honda’s first attempt at an exciting car.

The Prelude was Honda’s technological leading edge. Features that are now expected from Honda, like the double-wishbone suspension under the Accord, fuel injection, and VTEC electronic variable valve timing system showed up first on the Prelude before migrating across the Honda line (though VTEC first showed up on the 1990 Acura NSX). The Prelude was also a test bed for some technologies that went nowhere, like four-wheel steering.

In a broad sense [writes Gruber], that’s my idea for the iPhone Pro — a premium-priced product that offers us early access to technologies and components that will be (or even just might be) in all iPhones in another year or two.

My take: These are two smart bloggers who have Apple’s ear. And vice versa.

One Comment

  1. Fred Stein said:
    A related view is the case for an iPhone Pro:
    An iPhone Pro would be, a model designed primarily for App developers. Tim Cook has talked about AR, Apps, and App developers extensively for over a year. If Apple wants the iPhone to support a new class of AR Apps, developers need AR-capable phones. Such phones may be harder make supply chain issues) and would need high-end CPU, GPU, and memory. For App developers (there are million) a few hundred bucks in price increase is a few billable hours (in the US). The App developers get a chance to create a killer App in a new category, AR, and / or have the high-demand skills for employment. iOS brings the best customer base.

    Another advantage for developers is the iOS is not fragmented. This is a bigger issue for AR which has more dependancies on screen size and Mobile OS variances.

    This AR-thing will play out for years. AR features and price will migrate down. Meanwhile, Apple can migrate the dual-lense telephoto feature to lower priced models creating a strong motivator for upgrades by budget minded customers.

    2
    July 19, 2017

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