The iPhone 7 will unquestionably be the biggest smartphone release of 2016. The iPhone series has become so iconic that it has played a major role in Apple deposing Coca-Cola at the top of the authoritative Interbrand survey of the world’s most recognzsable companies. Yet although the iPhone 7 is virtually guaranteed to sell like hot cakes, one key issue remains to be confirmed ahead of the release of the smartphone…what will it cost?
Share price slump
There are numerous factors which suggest that Apple will need to produce an iPhone 7 that is competitively priced. Firstly, the Apple share price has fallen significantly over the last few months, as city investors are increasingly sceptical about the ability of the company to grow revenue.
Apple has already promised the city that it will develop new product lines, and indeed has attempted to do this by introducing the iPhone 6S phablet and Apple Watch smartwatch. But the iPhone 7 smartphone will remain incredibly important to Apple in 2016, and this suggests that the corporation may freeze or even cut the price of this iconic consumer electronics device in order to attract more consumers.
Additionally, Apple also needs to deliver some serious sales growth with the iPhone 7. Although this year’s iPhone 6S has sold reasonably well for the California-based company, there is strong evidence that the number of units shifted in Western marketplaces has significantly stagnated. This is indicative of an overall trend of mobile phones achieving diminishing returns in developed marketplaces, and there is now pressure on Apple, as the market-leader, to demonstrate that smartphones can still attract new consumers in the West.
Indeed, the importance of China for Apple is another major factor to consider in the pricing of the iPhone 7. Evidence now suggests that Apple sells more mobile phone units in the world’s most populous nation than even the American marketplace, and this revelation was publicised before Apple achieved significant sales growth in China with the iPhone 6S.
With an ever growing middle-class in China, and a phenomenal population in excess of 1.2 billion people, it seems certain that China will become the central market for Apple products in the 21st century. Yet although China is developing rapidly, it still remains a significantly different marketplace to the established Western niche to which Apple is accustomed to operating in.
Certainly there are increasing numbers of Chinese citizens with significant disposable income, but the situation is not quite the same as in the United States. Currency conversion can be another issue for Apple, and these factors collectively suggest that pricing the iPhone 7 suitably for the Chinese marketplace will be important for the success of the smartphone.
While Apple is less impacted by affordable competitors than its great rival Samsung, it is also important for the consumer electronics giant to consider these alternatives to the iPhone 7. There are an increasing number of cheap Android alternatives available on the market, and these often offer excellent specifications and functionality for the meager price point that they are floated at.
All of these factors point to the idea that Apple could produce an extremely competitively priced iPhone 7. But Apple must also consider the fact that the iPhone 7 could be significantly more expensive to manufacture than previous iterations of the series. This is particularly true when one considers the new technology and design parameters that Apple is expected to include in this next generation smartphone.
Not only will this be the most powerful iPhone unit to ever be released, but Apple is also expected to significantly redesign the iPhone 7, and even add new materials into the mix. In particular, it is predicted that the consumer behemoth will include the sapphire glass that it debuted in the Apple Watch this year in the iPhone 7, and this could have a significant impact on production costs, even though Apple has reportedly already purchased industrial quantities of this substance.
Another price cut
Nonetheless, we do have a precedent on this matter. The iPhone 7 is considered a next-generation smartphone, wwing to the fact that it has been allocated a brand new digit. Apple releases new design concepts in the iPhone range every couple of years, and thus the last next-generation smartphone it produced was the iPhone 6 last year.
When the iPhone 6 hit the stores, far from being increased in price over previous iPhone iterations, it was in fact slightly more affordable than the iPhone 5S. This is an interesting example for the iPhone 7, and one that Apple could decide to follow when it releases the next-generation smartphone. This is especially true considering the other factors that point to a cheaper price point this time round.
Thus, Apple is likely to freeze the iPhone 7 at $199 for the 16GB model, $299 for 64GB and $399 for 128GB on contract. The off-contract price may even beat the iPhone 6S, and could launch at around $600-625 for the base model.