The biggest mystery surrounding the iPhone 8 has nothing to do with its features.
It’s not the screen size. It’s not the colours it will come in. It’s not how good the camera will be or how long the battery lasts.
It’s the reported cost of the phone, which analysts and Apple experts think will cost at least $US1,000, and how Apple will justify the high price for a device that by all accounts won’t offer many new features we haven’t seen in a high-end smartphone before.
According to numerous reports, especially from the accurate Apple analyst from KGI securities Ming Chi Kuo, Apple plans to release three new iPhone models this year. The first two models will be iterations on the current iPhone 7 and 7 Plus, with similar designs but improvements to things like the camera and processor.
The third model will be the star, with a new screen using OLED technology that produces better colours and maximizes power efficiency. It’s also said to have wireless charging, a “3D” camera for facial recognition and augmented reality, and minimized bezels around the display.
Here’s the real kicker: The so-called iPhone 8 will open up a new “luxury” tier in the iPhone lineup thanks to its sky-high price. Some Apple watchers, like the plugged-in Apple pundit John Gruber, think the iPhone 8 could start as high as $US1,200. That’s $US550 more than the iPhone 7’s starting price. While the new versions of the iPhone 7 (the 7s and 7s Plus) will likely keep the same pricing structure we have now, the iPhone 8 will be in a realm of its own.
But unless Apple is cooking up some magical trick we haven’t heard about yet for the iPhone 8, the prices being thrown around don’t match up to what the phone will be able to do, meaning Apple’s biggest challenge won’t be convincing people to buy the phone, but making a good argument that it’s worth the monumental cost.
I’ll get this out of the way now, so people don’t misconstrue what I’m really saying: The iPhone 8 will be a massive success at any price. Apple will sell millions of them, likely every one it makes through the end of the year and into next year. This will be the tenth anniversary iPhone, and there’ll be no stopping fans and brand loyalist from being swept up in the hype.
What I am asking is whether or not the iPhone 8 will actually be worth that ~$US1,200 or so, and what kind of risks to the iPhone lineup a new luxury tier opens up to the future of the iPhone business.
“I think what’s really driving this is the search for something that will distinguish the company or product,” IDC analyst Will Stofega told me about the price bump. “There’s a sense they have to do something to pull out ahead and really restart things in much the same way the iPhone restarted the whole idea of the smartphone.”
I’m sure Apple will be able to make the iPhone 8 feel like something new and revolutionary at the unveiling in a few months. It’s been 10 years since the product turned the entire industry on its head and created a platform that spawned new companies and industries that wouldn’t have existed without it. A look back at how the iPhone changed the world and a new, pricey edition celebrating all that will be enough to drive the hype.
But unless there’s something incredible about the iPhone 8 that hasn’t leaked yet, I don’t see how it will be worth the price, at least on paper.
Let’s look at the competition: Samsung’s Galaxy S8 already has a lot of the features expected in the iPhone 8. There’s a large OLED screen (Samsung is making OLED screens for the iPhone 8, by the way), wireless charging, and minimized bezels to maximise the screen real estate on the front. I think it’s the best-looking phone you can buy today.
The cost? $US725.
Even beyond that hype, there’s an argument to be made that the upgrades in the iPhone 8 won’t be significant enough to attract enough buyers with deep wallets to kick off a mega upgrade cycle this year. In a research note this week, Barclays analysts said that OLED display won’t be a “must have” for many.
“While battery life could improve with OLED, our conversations with industry participants suggest that most consumers will not notice any major ‘must have’ experience changes because of new OLED displays versus LCD,” the note says. “We think that this dynamic, if sustained, could limit the upside potential related to new OLED-based devices that likely sell for a premium…”
The only out I see is for Apple to play up the anniversary angle and leverage the hype to justify the high price. The 7s will be the phone for the masses. The 8 will come with bragging rights that you were part of a major event.
“You have a base that certainly has a lot more money and seems to be willing to spend a lot more. Why not give it a shot?” Stofega said.
And if that doesn’t work, the key features in the iPhone 8 can trickle down to the cheaper models next year. The iPhone 8 could be a one-off ultra edition of the iPhone to celebrate its tenth anniversary. After that, every iPhone will feel like an anniversary edition.
There are also risks abroad, especially in emerging markets like India, where Apple is betting it can find a new iPhone user base. But the smartphone market is completely different in these places. Very few can afford a $US1,000 iPhone, let alone the standard $US650 iPhone.
This is the latest chapter in the story of smartphone innovation in recent years. Innovation has largely plateaued, and each model feels like a minor iteration over the last. Those minor iterations add up over the years, but it’d be shocking to see something truly revolutionary in the iPhone 8 that justifies the massive cost.
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