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Will Apple really get away with charging $800 for a 5.5-inch iPhone 6?

August 13th, 2014 at 2:45 PM
iPhone 6 Price

Mobile handset industry blogger demigod Horace Dediu has just made two fascinating points about the upcoming iPhone 6 phablet, referred to by some as the “iPhone Air.” First, he thinks the 5.5-inch iPhone will cost $800. Second, he does not think this will have any impact on the overall average sales price (ASP) of the iPhone range.

The jumbo iPhone will be a fascinating model, because it is indeed likely that its pricing will break the long tradition of high-end iPhones carrying a $650-700 unsubsidized price tag. Every iPhone since 2007 has debuted in this bracket apart from the modestly more affordable iPhone 5c, which had an early ASP close to $550.

If the phablet really launches with a starting price close to $800 price point, wouldn’t it boost the overall iPhone ASP notably?

Horace does not believe it will — and it’s true that the combination of iPhone 5c and iPhone 5s did indeed produce a blended ASP very close to what the iPhone 5 had generated one year earlier. The thinking here is that the number of people who opt for the expensive phablet version will be balanced by the increased number of consumers who will buy one of the cheaper iPhones.

The 5.5-inch iPhone 6 may carry a much higher minimum price than the iPhones of previous years, but there has always been a number of consumers who have paid extra for an iPhone with an unusual amount of memory. The 64 GB iPhone 5s costs $850 right now on off contract. Some of those consumers who used to pay the 64 GB memory premium may now opt to buy an iPhone phablet with less memory.

The budget version of the iPhone 6 may come in well below $600 and tempt some iPhone fans to opt for a cheaper version this time around. The possible shifts in consumer behavior will be myriad — and the general consumer sentiment in main Apple markets in North America, Europe and Japan during the next quarter could have an impact on what price points turn out to be the most popular.

In 2014, Apple may be presenting consumers the most complex set of smartphone buying options ever. If the company indeed launches three models at three price points as now seems possible, Apple’s handset ASP number for the Christmas quarter is going to be the most difficult to predict since the 2008.

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