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Apple’s greatest magic trick: A $749 iPhone is now ‘cheap’

September 13th, 2018 at 5:53 PM
iPhone XS vs iPhone XR

Yesterday, as all the leaks foretold, Apple released three new iPhones. The iPhone XS and iPhone XS Max were the most obvious of the new devices: the XS is just a like-for-like upgrade of last year’s iPhone X, and the XS Max is the oversized, overpriced version for people who need the biggest and best of everything.

But the iPhone XR stands out as being something a little different. It has most of the features — all-screen display, Face ID — that made the iPhone X popular, but it comes in at $749, $250 cheaper than what the iPhone X launched at last year.

This has led to the iPhone XR being variously described as “cheap,” “entry-level,” or the “budget” iPhone for this year. Technically speaking, those headlines might be correct, but what Apple has managed to pull off in the space of one year is increase the price of its normal iPhone, and have everyone suddenly describe it as cheap.

Here’s the thing: Were it not for the iPhone X last year, people would probably be talking about how the iPhone XR is the most expensive “regular” iPhone ever. The iPhone 7 launched for$649 two years ago, and the iPhone 8 cost $699 12 months ago. Traditionally, Apple hasn’t raised the price of its standard iPhone by $50 every single year, so this kind of price increase is the kind of thing that would normally (and should) be getting attention.

But instead, Apple used a sleight-of-hand to redefine what a smartphone “should” cost, and what it can get away with charging. The iPhone X was so popular last year that it became the new flagship of Apple’s lineup, and when Apple announced the price of the iPhone XS this year, no one was surprised. $999 is what the iPhone X cost last year and no one really expected it to be any different this year. If anything, analysts have been disappointed that the iPhone XR is so “cheap” because they’re worried it might cannibalize iPhone XS sales.

None of this actually had to happen. The fundamental parts that make smartphones — screens, cameras, logic boards — have not suddenly become more expensive. What’s really happening is that smartphone manufacturers, worried by slowing sales, are shoving increasingly expensive hardware in phones in an effort to make them interesting and keep the sales machine churning on.

That’s fine. People are buying the new, more expensive smartphones, so clearly there’s a demand for them. But Apple’s resetting of the new normal — $1,000 average, $1,250 for luxury, and $750 for “entry-level” — is incredible for the company because it’s completely flown under the radar. No matter what else Apple announced on stage yesterday, that’s the company’s greatest achievement this year.

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