Even in the post–Steve Jobs era, Apple is thinking different.
But this time it might not be for the best.
Jefferies analyst Peter Misek says, “Our checks indicate Apple has started negotiating with carriers on a $100 iPhone 6 price increase. The initial response has been no, but there seems to be an admission that there is no other game-changing device this year.”
Because the iPhone is the only phone that matters this year, carriers may cave and give Apple the price bump it wants.
Why does Apple need to negotiate with carriers on an iPhone price raise? Misek doesn’t really explain it, but we’re guessing it has to do with long-term contracts Apple has with carriers around subsidies.
This seems like a strange move for Apple. At a time when its rivals are going down in price, Apple wants to go up.
The market for high-end phones such as the iPhone is saturated. The growth for smartphones is in the low end of the market. That’s why the iPhone business is up in only single digits.
But Apple is reportedly going to release two new phones, one with a 4.7-inch screen and one with a 5.5-inch screen. The 5.5-inch phone would be Apple’s first entry into the market of “phablets,” which sell at a high price. Samsung’s phablet, the 6-inch Galaxy Note 3 sells for $100 more than its 5-inch Galaxy S5.
There are two ways to look at this if you’re Apple.
On the one hand, an internal presentation from Apple last year showed that people around the world want cheaper phones with bigger screens. This suggests it needs to cut the price and bump screen size.
However, Apple believes it’s not really susceptible to the pricing pressure of Android phone-makers. The iPad, for example, was originally going to sell for $400, but Apple figured people would pay $100 more, and it was right.
Apple might think that $100 isn’t going to make or break the success of a bigger phone, and that the extra money would offset the increase in costs.
But really, for a company with $150 billion in cash, adding $100 to the price of its phone seems like a move that’s too focused on profits.