The iPhone 8 is going to be the most expensive smartphone from Apple’s stable. Multiple reports over the last few weeks have claimed that the handset could cost users more than $1,000. By comparison, the top of the line 256GB iPhone 7 Plus has been priced at $969. The iPhone 8 is said to have a radical new design, an OLED display, wireless charging, and improved waterproofing to justify its higher price tag.
iPhone 8 to significantly boost Apple’s revenues
In a research note to investors, BMO Capital Markets analyst Tim Long said the 10th anniversary iPhone’s higher price tag is unlikely to turn off consumers. The success of the iPhone 7 Plus with dual-camera setup suggests that consumers are more likely than ever to shell out more for a device with cool features. The upcoming flagship iPhone could drive up the average selling price (ASP) of iPhones, boosting Apple’s revenues.
According to Tim Long, only 5% of iPhone buyers spent more than $900 on the device in the fiscal year 2016. The analyst expects it to jump to 7% in FY2017, and 16% in fiscal 2018. BMO Capital Markets said the full effect of the iPhone 8 supercycle would be felt only in FY2018. As a result, the iPhone ASP would jump from $645 last year to $684 in 2018.
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The iPhone ASP is traditionally high in December quarter
BMO Capital Markets has raised its price target on the Apple stock to $160. Apple is also said to launch the iPhone 7S and 7S Plus this year. But they would be only minor upgrades over the current flagship models. KGI Securities analyst Ming-Chi Kuo believes the 4.7-inch iPhone 7S would be more competitively priced to differentiate it from the two higher-end models.
During the December quarter, the iPhone ASP was $695 due to the strong sales of the iPhone 7 Plus. As Apple Insider points out, the ASP is traditionally in December quarter as it follows after Apple’s September iPhone refresh. The holiday shopping season further helps the ASP as buyers want to give a great gift to their loved ones, and end up opting for more costly options. The ASP goes down during the middle of the year.
Apple expected to sell 225 million iPhones this year
Mizuho Securities said in a research report that Apple could sell as many as 225 million iPhones in 2017, up 11% from the previous estimate of 213 million units. Mizuho has also raised its price target on the stock from $135 to $150 with a Buy rating. The research firm said the sales could even top 240 million units if the iPhone 8 experiences an “exceptionally strong” demand.
Last week, sources familiar with the matter told TrendForce that the iPhone 8 might not feature a curved screen. The curved screen’s yield rates are not as high as Apple expected. Also, the curved display did not perform well in drop-test results. So, Apple has decided to use a 2.5D glass rather than the 3D glass, said TrendForce.