Thursday 16 August 2018

Adrian Weckler: Why whinging over the price of the iPhone X is just weird

Apple Senior Vice President of Worldwide Marketing, Phil Schiller, introduces the iPhone X during a launch event in Cupertino, California, U.S. September 12, 2017. REUTERS/Stephen Lam
Apple Senior Vice President of Worldwide Marketing, Phil Schiller, introduces the iPhone X during a launch event in Cupertino, California, U.S. September 12, 2017. REUTERS/Stephen Lam
Adrian Weckler

Adrian Weckler

Is a phone that costs €1,179 a valid source of outrage? Are we talking about medicine here? Or essential utilities?

It seems that some people are purple with vexation about the price of a smartphone announced today.

The new iPhone X is the first mainstream handset to start its pricing above €1,000.

Because of this, people are losing their sanity.

Apple Senior Vice President of Worldwide Marketing, Phil Schiller, introduces the iPhone X during a launch event in Cupertino, California, U.S. September 12, 2017. REUTERS/Stephen Lam
Apple Senior Vice President of Worldwide Marketing, Phil Schiller, introduces the iPhone X during a launch event in Cupertino, California, U.S. September 12, 2017. REUTERS/Stephen Lam

Within minutes of the price being announced, my social media feeds became punctuated with dissent.

“Absolute ripoff!”

“How can Apple get away with this?”

“This will cause thousands to move to Android.”

What seems to add insult to injury is that the euro price is considerably higher than the US price ($999 or €835 at today’s exchange rate).

In fact, the difference is closer to €100 as the US price is a pre-tax price. That’s not unusual -- prices of electronics (and many other things) are frequently 10pc to 15pc cheaper in the US than in the EU. It’s been this way for as long as I’ve been covering the sector.

But even if that wasn't the case, all of this is still an odd reason to get angry with a company selling a replaceable product in an ultra-competitive market.

Is it possible that people missed the other new iPhones that Apple launched?

The tech company announced three new iPhones on Tuesday, the iPhone X (pronounced iPhone ‘ten’), the iPhone 8 and the iPhone 8 Plus. Both the iPhone 8 models are solid upgrades on the iPhone 7, which is currently Apple’s top-end phone. Both cost under €1,000 in a similar pricing bracket to existing iPhones. (The iPhone 7 Plus has cost from €919 up to now.) And Apple will keep the iPhone 7 models, iPhone 6S and iPhone SE models on the market at prices that reach below €500.

Is it that people don’t know there are multiple iPhone models (including two brand new upgraded models) available? Or is that they simply want to have the absolutely top of the tree (the iPhone X) or nothing at all?

Some believe that the high price tag of the iPhone X model will convince existing iPhone users to switch to Android rivals such as Samsung. That seems highly unlikely. It certainly has not proven to be the case in the past.

With no disrespect to Samsung, which makes excellent, innovative smartphones, Apple iPhone users are generally the stickiest, most loyal phone users in the market. They simply aren’t interested in switching unless something disastrous happens. They seem very unlikely to leave simply because their only upgrade is an iPhone 8 instead of an iPhone X.

I’m not privy to Apple’s inner marketing plans. But from what I’ve observed of the company, and the smartphone business in general, I think it goes something like as follows...

"Phones have taken over from PCs, tablets, stereos and cameras. But there are few real luxury model out there. Let’s invest more in a super-handset with futuristic new materials and technology. We’ll charge a premium for it, maybe €200 more than the price of our current top model. At that price, we know that only a minority of our customers will buy it. So we’ll also launch two other upgraded phones with better cameras, engines and software. But they won’t be quite as premium as the new ultra-model. That way, our current customers can afford them and they’ll get a solid upgrade too."

I’m hypothesising here. But that seems to be the company’s strategy.

The customer’s response? Buy it or don’t buy it. Why moan about the high price for an elite phone? Do people know how many smartphone alternatives are out there?

If we were talking about the price of critical medicine or educational materials, there would be a point to getting angry. But a top-end smartphone?

This may go down as one of the most first-world moanfests ever.

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