We’ve been hearing for months that iPhone 8 prices could go as high as $1,000 or even exceed that, and now some new surveys reveal mixed findings on whether Apple can convince enough consumers to pay more than $1,000 for it. On one hand, you have the Apple logo, which many are willing to fork over huge piles of cash for, even if the technology under it isn’t the newest or best available, while on the other, you have just, plain sticker shock.
Will the iPhone 8 prices surpass $1,000?
And then there’s the fact that Samsung has just revealed the Galaxy Note 8, which starts out with a hefty price tag of $930. Apple just might decide to try out the $1,000+ price point, especially given all the hype that has surrounded the iPhone 8.
Analysts have polled the general public repeatedly this year about iPhone 8 prices to test whether Apple might be able to get away with it, so the company has plenty of third-party data informing its decision—and it didn’t even have to pay for it! The most recent survey comes from Barclays, and the results were released this week.
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The firm found that only 18% of potential iPhone buyers are willing to pay more than $1,000 on a new iPhone. This is highly disappointing, as Barclays said investors seem to be expecting 30% to 35% of potential buyers to be willing to pay such high iPhone 8 prices. Further, Barclays analyst Mark Moskowitz is concerned that Apple will have to meet “momentous investor expectations” in the form of high iPhone unit numbers.
What do older surveys say about iPhone 8 prices?
Last month, BMO analyst Tim Long pegged iPhone 8 prices at $969 to $1,069, depending on the amount of internal storage. He doesn’t seem to expect Apple to have much trouble moving the pricey iPhones at those levels, as he expects average selling prices to rise to $695 for fiscal 2018 from $661 in fiscal 2017. He also predicted that Apple will sell 215.1 million iPhones in fiscal 2017 and 246 million in fiscal 2018.
UBS analyst Steven Milunovich estimated iPhone 8 prices at $900 for the 64GB model and $1,000 for the 256GB model, adding that the iPhone maker “typically doesn’t price too far above high-end competition.” Of course in this case, that would be the $930 Galaxy Note 8.
Credit Suisse said earlier this year that Apple could set its three tiers of new phones at $670, $770 and $900, also putting him much lower than $1,000. Analyst Kulbinder Garcha said at the time that he was convinced that Apple will be able to introduce higher prices with more features like the OLED display that’s expected on the iPhone 8. It will be interesting to see whether the $930 Galaxy Note 8 price will have any impact on analyst assumptions for iPhone pricing ahead of the big reveal, which is expected on Sept. 12.
Will Apple be able to get away with such high prices?
Moskowitz believes the results of his firm’s recent survey suggest that Samsung is poised to gain share with the Galaxy Note 8 if the iPhone 8 prices stretch past $1,000. He noted that even though the Note 8 “seems more evolutionary than revolutionary,” the device’s launch “represents the return of staunch competition into the premium segment,” which is defined as smartphones priced over $700.
On balance, another survey found that just 5% of iPhone owners would buy a Samsung phone the next time. Some believe this means that loyalty will beat the high price, but that’s quite a big difference in percentages. The big gamble Apple is facing is whether loyalty really will beat price, or whether consumers just aren’t willing to pay $1,000 for an iPhone 8.
Interestingly, Credit Suisse argued the pent-up demand thesis for the iPhone 8 last month, which would go in line with the loyalty argument because it essentially means consumers are specifically waiting to see the new phones. However, Canaccord Genuity analysts say now that they’ve seen no real basis for this argument as demand has remained strong with no pause in purchases ahead of the next cycle.