Tim Cook on iPhone Prices: 'We Want to Serve Everyone'

[kodos]

One also has to remember that Huawei and others are basically just "piggybacking" on Apple. Apple spends vast sums of R&D money to converge on their design and solutions and then companies like this spend very little with their photocopiers. Not to mention how much Apple spends on iOS development. It is not just the physical parts cost. And plus, they cannot even get the bezels right. At least Samsung has some shred of decency these days - they spend their own R&D money in creating their designs.

The iPhone Xr is pretty similar to the Huawei P20 Lite. The iPhone has FaceID and the A12 Bionic, but the P20 Lite has a 2280x1080 screen and fingerprint reader. They both have 4GB RAM, 64GB storage, but the P20 Lite has Micro SD slot upto 256GB and a dual camera setup. Yes, the P20 Lite has copied the notch and vertical cameras from the X, but it's not a bad looking phone. The prices... iPhone Xr £749.99, Huawei P20 Lite £279.95. Is the iPhone £470 better? I honestly couldn't say so. If any family members were looking for a cheap iPhone and were contemplating the Xr, I would honestly have to recommend the Huawei.

 

[brofkand]

Tone deaf to the max. But he's right, they'll sell millions of these phones. People will pay it. It's their money, good for them.

 

[kjvmartin]

I pay for my phones outright. But I totally miss the days you paid 199.99 for a new iPhone with a two year contract.

Carriers offloaded the cost of the phone into the monthly cell plan cost? When they came up with the device payment plans they lowered their rate plans too.

 

[ruthlessjoachim]

64Gb? At this point is useless.......

 

[neuropsychguy]

Indeed it is, but still... he’s about to literally destroy millions of X units (the “most innovative phone ever”) just 1 year after launch in pursuit of profit. Gotta acknowledge that.

What's wrong with a company having profits? Isn't that one of the main points of a company? Besides will the X models be destroyed or recycled? Apple will hang on to many X models as "refurbished" replacement units but can also recycle most/all of the parts for new phones.

I could see Apple selling the X at the $850 price point but it's likely that would seriously damage profit margins because that likely represents a slim markup over cost for Apple (Apple has about a 21% net profit margin, which means, all products/services being equal, Apple's breakeven point on the iPhone X is about $800; in other words, that's the point at which they would make no profits [reality is more complex though]). After a year, the breakeven point might be $700-750 but again, that's a point with 0% profit margins. Selling the X for $850 would cannibalize Xs sales though. The Xs might have higher margins than the X did at launch (one of the benefits of an "s" model) but Apple also dumped a fair amount of new tech into the Xs (the newer processors were not cheap to develop and manufacture) so margins could also be about the same. Apple keeps about a 35-40% gross profit margin and about a 16-22% net profit margin. That's just part of their business model and has been part of their business model long before Tim Cook took the lead (here's some data to back that up: https://www.bloomberg.com/view/arti...-1-trillion-honey-i-shrunk-the-profit-margins). In fact, Apple's profit margins are lower than they've been for quite a while. This is in part because Apple is spending more money (businesses spend money to hopefully make money).

I don't work for Apple. I'm not in business (I'm in academia and research) but I do have lay interests in economics and business management (among many other things). I do happen to like Apple products though. I'm not opposed to Android or Windows; I use the products that give me the most value and productivity for my money and time. I've crunched the numbers (literally) based on what I need and Apple products always come out ahead. My calculations will not hold true for other people but even with higher upfront costs, Apple products save me money, time, and effort in the long run.

 

[Marzel]

Sounds like your speaking for most people too... :-\

IMO, 64GB is far too little. A imagine a lot of people may have their photos and music syncing to their iPhones - those two items alone can take up significant space.

YMMV.

I don't think 64GB is little for a base model that accommodates the mainstream but it is definitely little for $1000 phones. The XS should have started from 128GB only because of their price.

 

[shareef777]

"people will pay"

That's all Apple cares about anymore.

 

[Dominicanyor]

I think that once Apple sees that the iPhone X max is not selling like they thought it would the price for that phone will be dropping.

 

[medazinol]

I'm ordering the iPhone Xs Mac but those comments from Tim are thinly veiled euphemisms for "how much can we extract from people's wallets at the maximum profit to us". I'm glad Apple is making lots of money, it's a far distance where they are now compared to the 90's where everything was doom and gloom but these ever-increasing prices have me concerned

 

[FilipeTeixeira]

Mainly when the "cheapest" option still costs 550 euros in Europe. It's absurd that if we want to buy a phone from Apple, that we have to basically shell 600 euros as most of us ends up investing in a case and so on.

 

[Michael Scrip]

At the $450 price point... you can get an iPhone 7 with their A10 processor... or a Moto Z3 Play with the Snapdragon 636.

Some questions: do you want to be in the Apple ecosystem? iMessage, FaceTime, etc?

What's the software update situation? Will the Moto get the next few versions of Android?

Camera? Battery life? Case/accessory availability?

There have been many comments here talking about "two year old phones"

And yet... the iPhone 7 is still a great phone.

 

[neuropsychguy]

$749 for the 2018 entry level is NOT bad at all, considering the 2011 entry level was only $100 less and there have been massive improvements in the technology since then. And especially considering that, if you keep your phone longer than 2 years, the modern version is CHEAPER than the years-old versions!

Also, considering $650 in 2011 is about $722 after inflation adjustment today, the real markup is $27.

 

[M.PaulCezanne]

Do you really think the phones are going to be destroyed?

They are going to sell remaining inventory in the refurbished store. Why would they destroy good product?

Is that confirmed? I seriously doubt they’d sell new Xs they’ve discontinued and recalled to avoid cannibalization in the refurb store. They’ll probably recycle the parts to make Xs units but still - it’s a shame.

 

[tharitm]

By increasing all the prices of all the models? Even the Apple Watches, yeaaaahhhhh right Mr. Took.

 

[Dominicanyor]

I don't think 64GB is little for a base model that accommodates the mainstream but it is definitely little for $1000 phones. The XS should have started from 128GB only because of their price.

I agree it should have started with 128gb. But in my case 64gb is good for me..

 

[curtvaughan]

At one time, the Commodore 64 was the best computer Commodore had made... that doesn't quite work years later ;-) LOL.

True, but comparing a two-year old iPhone model to a 1982, 36-year old 8-bit computer is a bit of a stretch. I do, though, understand your philosophical drift, especially with technology.

 

[Sportcat]

I'm holding on to my 6s as long as I can. I just had the battery replaced while the $29 option is still available.

Will probably buy a SE for my kid while they are still available.

 

[brofkand]

Apple is the only place you can go for iOS. Either pay up or move to Android where there are many phones that sell for what you'd pay in sales tax for an XS Plus that include fast chargers in the box.

 

[swingerofbirch]

The official price of the iPhone 7 is still higher than what I paid for it the year it came out. I've noticed Apple's products have been more and more discounted in the retail markets. In my case, I got a deal through Verizon (in November, it was near black friday) where per month it worked out to $350 for the iPhone 7 256 GB with no contract (it was actually supposed to be the 128 GB model but they were out of stock and gave me the 256 GB for the same price).

I have a suspicion Apple is able to keep their average sale price numbers to investors up despite carrier discounts because on the Verizon bill I am paying full price per month for the phone but with a discount added from Verizon—even though I have no contract. It's not a subsidy for finishing out a contract (although if I stopped service the per month discount would end, but there'd be no penalty). So accounting wise, it looks like I'm paying full price, but somehow Verizon is very heavily discounting the price (maybe through a deal with Apple).

In the old days with Apple, I would have never told people to wait for a deal, but it's changed so much. BH Photo has had the iMac Pro for thousands off (I think—wasn't it $3,000 at some point?), and the Apple Watches seem to always be on sale. Last year it seemed like they were on sale not long after the new series came out.

 

[scrapesleon]

Somehow people still gonna buy anyway afterall Apple fans are rich

 

[neuropsychguy]

Apple is slowly (or rapidly) increasing the prices. I feel like this is the highest I can and want to afford.

Two years ago, the iPhone 7 started at 699€ here in Germany. That was their best phone (unless you liked the Plus size model). Now you get the BUDGET XR version starting at 849€. That is a freaking increase of 20% in two years.

Listen, if they want to increase prices - that is their business. But this BS PR speech of tim feels like they are even making fun of their customers.

That's not a fair comparison. Yes, the Xr is one of the new phones (it isn't a "budget" model; it's only less expensive than the Xs) but it's not the same class of phone as the iPhone 7. It's competing with the Plus models. Now, you can criticize Apple for not releasing an 8s (you can say whatever you want) but the Xr is a whole different class of phone than the 7 and 8.

 

[Blackstick]

One also has to remember that Huawei and others are basically just "piggybacking" on Apple. Apple spends vast sums of R&D money to converge on their design and solutions and then companies like this spend very little with their photocopiers. Not to mention how much Apple spends on iOS development. It is not just the physical parts cost. And plus, they cannot even get the bezels right. At least Samsung has some shred of decency these days - they spend their own R&D money in creating their designs.

This. It has never been about the hardware, it's about the entire experience. Amazon Kindle tablets are $50... the experience is garbage compared to a $299 iPad.

 

[iapplelove]

Carriers offloaded the cost of the phone into the monthly cell plan cost? When they came up with the device payment plans they lowered their rate plans too.

I’ve been on an AT&T employee discount for years so I didn’t even notice.

Then again, sometimes I upgraded every year and paid in full.

 

[MacWorld78]

One day iPhone and apple care will reach together more then 2k.

 

[RichP]

I seriously wonder what some of you want. I don't think I've ever seen this much complaining before.

I see a variety of different products at a wide variety of price points. They're even still selling the iPhone 7 and 8, so those of us who aren't ready to make the jump to FaceID and the notch have options still. They brought out the Xr, which is a nice price drop for a FaceID phone.

While the Xr is still an expensive phone.. it does sort of say that apple is "trickling down" a lot of the original X to a cheaper price point. I would think for every customer that will step up to an Xr from a 7 or 8, there is going to be a customer that would have bought an Xs but instead will get an Xr because the two critical changes aren't worth the extra cost (the camera and the OLED screen, neither of which are huge upgrades) And, as a plus, the Xr does have a larger screen than the Xs.

Hm.. makes me wonder if I should just get an Xr now...