Analyst: Apple wants $100 iPhone Price Increase

| Apple Stock Watch

Apple is reportedly pushing carriers for a US$100 increase in the price it plans to charge for the iPhone 6. Carriers have been resistent to raising the iPhone's price, but will likely succumb and pass on the cost to their customers, according to Jeffries analyst Peter Misek.

Jeffries analyst Peter Misek says Apple is going to charge $100 more for the iPhone 6Jeffries analyst Peter Misek says Apple is going to charge $100 more for the iPhone 6

Mr. Misek said the lack of differentiation among other smartphones is an achilles heel Apple can exploit, and that carriers will feel they have to offer the iPhone or risk losing customers. According to Street Insider he said,

We think this general lack of differentiation could be the reason why Apple may be able to get a price increase. Carriers realize that the iPhone 6 will likely be the only headline-worthy high-end phone launched this year and that they will lose subs if they do not offer it.

There are concerns that higher prices could drive consumers to cheaper handsets, although carriers aren't in a strong position to push back against Apple's reported plan. Carriers will likely fall in line, according to Mike McCormack, another Jeffries analys who specializes in the U.S. telecom industry, because they don't have any other option if they want to offer the iPhone.

The next iPhone, commonly referred to as the iPhone 6, is expected to sport a larger display, faster processor, improved camera, and better battery life. There is also speculation that the new model will adopt design features from the iPad Air and iPad mini.

Mr. Misek's speculation that Apple wants to raise iPhone prices doesn't, however, mean that's what will happen. The company has been actively working to draw in more users, and if pushing up handset prices will drive away more customers than it will bring in, it isn't likely we'll be spending more on their next iPhone.

Mr. Misek is maintaining his "Buy" rating at $625 target price for Apple's stock. Apple closed today at $521.68, up 2.07 (0.40%) and is currently trading after-hours at $521.15, down 0.53 (0.10%).

Comments

Lee Dronick

Are not carriers wanting to do away with subsidized phones?

http://www.macobserver.com/tmo/article/att-ceo-say-goodbye-to-smartphone-subsidies

Paul Goodwin

I don’t believe any of that. How would that guy have price negotiation insider info? It’s all speculation by ANALysts. Apple is making more profit on phones than all other manufacturers combined. Why would they raise their price and chase away customers? The formula Apple has been using is good. Unless the parts and assembly cost of this theoretical new phone is vastly more than prior new part releases, there’s no need for them to change. If it had some “gotta-have” new technology, maybe, but for just the next gen iPhone, I don’t believe anything they’re saying holds water. If anything, Apple has to maintain prices or reduce them if they want to be successful globally. For that reason alone, I say their whole premise is flawed.

gnasher729

If I was in Apple’s place, I’d actually try to sell a larger iPhone at a price lower than the 5s, possible as a bigger 5c. That would have several advantages: First, it would be a kick in the teeth for all the companies trying to sell you the idea that “bigger is better” in a phone. Second, if these phones have great sales, Apple can claim that it is because of the lower price. Third, people do comparisons, but Android and iPhone are not really comparable. So they might go for the one with bigger screen. But once you have a 5c style phone with large screen, people wanting a larger screen look at that phone, then they obviously compare it to the 5s, and many will buy the 5s.

diverreb

If true, it shows how out of touch Apple is with the real world….  They’ve done nothing innovative to their product lines to help drive sales and profits and if they need to resort to major price increases to drive up the bottom line it’s going to backfire….  Being an “Apple Guy” from day one their lack of a larger screened phone finally drove me to a Note 2 nine months ago…  Let me tell you something I discovered…  There is life after Apple.  It’s a great phone and Apple is going to have to a lot to win me back….  I suspect if Apple keeps driving their prices up that a lot of other folks will discover the same thing I did….

Lee Dronick

  If true, it shows how out of touch Apple is with the real world

This is just one analyst’s prediction, it is not an Apple press release. It may happen, it may not.

Pashtun Wally

Fox analytics?

Taking a context-free data point & putting it under the myopiscope typically turns out this way…may I try a TINY bit of thinking, while I’m here?

It is REPORTED (but unsourced) that Apple wants ATT to implement a “US$100 increase in the price it plans to charge for the iPhone 6”.  Not very interesting to speculate on ‘Apple’s insane greed’, based on the speculation that follows, so let’s consider the data context:

iPhone exists as THREE for-sale models:  5s, 5c, 4s.  Since Apple has a demonstrated preference for simple, elegant, easy-to-comprehend and no surprises, the non-Lightning and 1/4-speed 4s is the odd one out.  Add the 6, and then what?

The sheer press of tech progress and market custom make it inevitable
(!?) that the 6 increase the form-factor, and most of the smart bets are on 4.7” screens, but there’s plenty talk about a larger 5.5”.  These introductions would make the line-up 3.5”, 4”, 4.7”, 5.5”.

Given (risky, I know) Apple’s penchant for 3-beat marketing, it’s reasonable to assume that there’s an attempt in store to rebalance the phone line-up, especially in light of lessons learned via 5c.  An insanely greedy company might just grab all the money, but a company like Apple is more likely to see that the sweet spot with the 5 is NOT s vs c:  It’s just a LESS expensive 5.  (If I seem to be making too much up, I suggest a review of the emails released so far to the court in Apple vs Samsung)

In light of all this, it seems much more likely that Apple wants that $100 for the LARGER option…which would be the 5.5” (which I don’t necessarily believe is coming), rather than burdening the consumer space with extra money for the flagship.  That would INDEED be out of character for the company, but they are not at all above asking a premium for offerings that go beyond (if not actually ‘above’).

How would we go about untangling it?  the real complication is the number of people who feel that the 4x is the PERFECT phone in size:  will these users be accommodated endlessly, or must they yield?  I say they must yield:  Apple must jettison the separate line required by the superceded 30-pin connector, thus moving the 5, in effect, into the bottom slot.  Unless of course, Apple decides that the 4s is their Windows XP…in which this move is endlessly delayed for…what?

So with the 4” screen on the 5 as the new minimum - perhaps w/ the c (ie, previously-last-year’s) free and the S (last year’s) @ $99 (plus the contract, of course) - the 6, @ 4.7” will fall quite naturally into the flagship slot @ $199 - but if you want the Beefy Boy, well, that’s another hundred. 

I think it will make it even more appealing to Apple that each of their three offerings will be VISIBLY DISTINCT from each other;  i’d not be surprised to learn that given the dangers of market fragmentation, Apple might have chosen to hold off on different screen sizes UNTIL IT BECAME FEASIBLE for them to the three tiers with visually distinct offerings. The little-black-dress approach has worked terrifically so far.  Now that SIZES are possible (if not truly imminent), it seems almost inevitable.

Nothing’s inevitable, of course, except the clock running out, but it all makes sense to me as a very long-time Apple watcher/user/investor/employee (ex).

As always, we’ll see.

craigf

This guy has zero credibility. He’s a human DigiTimes.

http://m.cultofmac.com/cultofmac/#!/entry/a-history-of-horrible-apple-predictions-from-peter-misek,511bec52d7fc7b56702ac352/1

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