A middle-of-the-road Android manufacturer will sell probably 10,000 to 100,000 units of their top of the line phone. If Apple priced their top phone at the normal tiers starting at $699, the demand would be for the usual 10 million, at least, and perhaps more. Which is great if you can make the phones.
Many of the components in top-end phones are only available in small quantities. They’re bleeding edge and so manufacturing hasn’t reached the sorts of mass quantities Apple needs. They might be able to get 100,000 or 1 million pieces, but not 10 million. This has bit them before. There’s a particular milling machine used to make certain Apple products that Apple owns like 60% of all of them in the world and the only reason they don’t own more is because they can’t get them. Apple is now so large that this is the kind of constraint that holds them back.
So Apple does the only thing it can do to save some sales. They make the iPhone X a high-end device with a high-end price tag which won’t be on sale for more than a month and then offer the iPhone 8 and 8 Plus now at the usual prices. They shunt some of the demand into products they can deliver.
And in a year, when supply catches up with demand, they move some of those features and components into the lower level iPhones. This is what car makers do, it’s what home electronics manufacturers do, it’s what lots of consumer goods companies do.
So is the iPhone X worth $1,000? Sure it is, for someone who can afford to lay out $1,000 for a prestige item. It’s worth whatever the market will bear. Certainly the features it offers are awesome and I’d love to have one. But this one isn’t for me. The next one, at a lower price, will be.
- iphonex_front_side_flat.2804c747bfbf4d64b333ccfdc47ed5c7-1: Apple | Copyright by owner. Used with permission.