A new report from the investment bank Barclays suggests that the $1,000 iPhone 8 is indeed coming. Barclays published a note on the Thursday which provides analysis on how Apple can sell this pricey smartphone to consumers.
$1,000 iPhone 8 coming
The investment bank believes that a $1,000 iPhone 8 would become an attractive proposition when bundled with the Apple Music streaming service. Barclays also suggest that increased iCloud storage space would sweeten the deal for consumers, and make the smartphone a viable purchase.
Barclays analysis suggests that including twelve months of free Apple Music alongside 200GB of iCloud storage would result in Apple earning nearly $10 billion in 2018. Clearly Apple must do something exceptional in order to justify the price tag in question, as the current iPhone units retail for around $700.
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Indeed, analysis conducted by Barclays indicates that the $1,000 iPhone 8 may not be as rabidly popular as previous smartphone releases from Apple. Buying intention apparently falls from 36 percent to 18 percent when the price of the forthcoming device is increased from $800 to $1,000.
Barclays estimates increased
But Barclays analyst Mark Moskowitz suggests that Apple could sell 64 million iPhone 8 devices next year; a significant markup from his previous estimate of 40 million. Moskowitz also believes that incremental profits of $1.3 billion will be achieved by the iPhone 8.
“Considering consumers’ sensitivity to the price gap, we explore how Apple could offer purchasers of iPhone 8 a free subscription bundle of 1-year of Apple Music and 1-year of 200GB iCloud storage,” Moskowitz wrote in a note to clients.
Even though a raft of new features have been linked with the smartphone, the $1,000 iPhone 8 may be too expensive for some consumers. So some sort of bundle would seem to make sense for Apple going forward.
Barclays believe that the cost in offering the services would be more than offset by the additional smartphone sales. “We estimate incremental profits generated from higher iPhone 8 sales could outweigh additional costs, achieving gross profit accretion of $1.3bn, despite 1.8 pts of margin percent dilution,” the Barclays note indicated.
Additionally, this would make sense from a strategic perspective, as Apple has provided services free with hardware releases previously. For example, its Beats wireless headphones where accompanied with three months of Apple Music earlier this year.
However, the consumer electronics giant has never been involved with providing iCloud storage with hardware, so this would be something of a departure from the norm. Google has provided free cloud storage with some of its Pixel releases, meaning that the idea isn’t exactly unheard of.
Yet despite the scepticism about the ability of Apple to sell the $1,000 iPhone 8, Wall Street analysts believe that the smartphone will ultimately retail at this price tag. This will certainly put pressure on Apple’s strategy for the smartphone, and will necessitate a particularly outstanding release.
Although sales of the iPhone range have receded slightly over the last 12 months, the share price of the mega-corporation has remained particularly robust. Indeed, Apple stock has risen over 40 percent in the calendar year so far, reaching a record high of virtually $164 in trading on Thursday.
Apple has always been successful in selling iPhone units, even if the smartphone sphere is slowing down slightly. Any problems with consumers unwilling to shell out $1,000 could also be offset by the release of two upgraded iPhone 7S units.
Moskowitz still believes, though, that offering free subscriptions would be extremely valuable for Apple, estimating that free one-year subscriptions of Music and iCloud, worth $120 and $36, will cost Apple $43 and $7 to service. “Such a move could make a $1,000+ iPhone 8 seem more within reach, with the $156 in services serving as a quasi-discount or rebate,” the analyst asserted.
Barclays also noticed that the $1,000 iPhone 8 will generate more revenue if users decide to renew subscriptions after one year. This will surely occur in the vast majority of cases, with previous reports suggesting that major carriers such as Verizon and T-Mobile will incentivize users to take out 24-month contracts.
Invitations drop for iPhone 8
Meanwhile, it seems that Apple will indeed unveil the iPhone 8 on September 12, after the company began to distribute invitations to a major event. The invitation, entitled “let’s meet at our place”, declines to go into specific details, but it seems inevitable that it represents the release of the iPhone 8.
One surprise is that the venue for the iPhone 8 unveiling event will seemingly differ from previous years. The newly opened Apple Campus headquarters in California will stage the September 12 conference. But it will be the content that will particularly interest technology fans.
Other new products
Aside from the $1,000 iPhone 8, it is believed that Apple will reveal several other new devices at the unveiling event. These should include a third-generation Apple Watch smartwatch and a 4K Apple TV set-top box. More details are also anticipated regarding the upcoming HomePod speaker, as Apple moves into a niche that is becoming increasingly prominent.
The event will be held at 10am Pacific time in the Steve Jobs Theater; a newly constructed auditorium for Apple events in the grounds of its new headquarters. There will also be live streaming of the event on the Internet, an aspect of device reveals that Apple has attempted to make more flexible and convenient in recent years.
While Apple has obviously declined to confirm the release date of the iPhone 8, educated estimations suggest that it will be 10 days later on September 22. Supply chain rumors previously suggested that the high-end OLED iPhone 8 could be delayed, but this now seems unlikely. However, it could be that only a relatively small number of units are available at first.
Regardless of this, it seems that the $1,000 iPhone 8 will hit the stores in due course.