Apple's big $1,000+ iPhone gamble

The days of Apple being able to push hardware out of the door with crazy price tags on it are at an end, and that makes the $1,000+ iPhone a massive gamble. Will it pay off, or will it be a flop?
Written by Adrian Kingsley-Hughes, Senior Contributing Editor

The days of Apple being able to push hardware out of the door with crazy price tags on it are at an end, and that makes the $1,000+ iPhone a massive gamble. Will it pay off, or will it be a flop?

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All the current evidence -- ranging from the more reliable supply chain chatter and analyst prognostications to the far flimsier pundit wild dreams -- suggests that Apple is planning some sort of special edition 10th-anniversary iPhone that will cost upwards of $1,000. Apple already sells an iPhone for a shade under $1,000: The 256GB iPhone 7 Plus is a cool $969, so the expectation is that the iPhone 8 or iPhone 10 or iPhone Edition or whatever it ends up being called will be priced deep in the $1,000 territory.

OK, so why is a super-expensive iPhone a gamble for Apple? Surely it's a license to print money? After all, can't Apple just slap whatever price tag it wants to on new tech and people will buy it?

The first and most obvious risk is that an iPhone with a four-figure price tag is simply too expensive to be anything other than a niche item. Apple does dabble with high-end stuff -- remember the solid-gold Apple Watch Edition? But at a time when iPhone sales are showing signs of going soggy, and Apple is having to slash the price of the iPad in order to resuscitate sales, adding pricing friction to the iPhone buying process might not be such a clever idea.

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Now, you might counter this argument by suggesting that the 10th-anniversary iPhone will end up being little more than a publicity stunt, much like the solid-gold Apple Watch Edition. A case of make something crazy expensive, watch it being talked about incessantly for a few weeks, and then watch the sales of regular iPhones go through the roof.

The problem with this argument is that the solid-gold Apple Watch Edition was essentially a regular Apple Watch in a crazy-expensive case. It seems a bit reckless for Apple to pour huge amounts of R&D money into a product that's not designed to sell or to act as a lure to sell cheaper iPhones.

Now, you could further argue that Apple wouldn't be wasting R&D money because the special edition 10th-anniversary iPhone will act as a basis for future iPhones.

Well, OK, yes, maybe, but...

The first problem with that argument is that tech moves forward at such a pace that the R&D will have a limited shelf life. Something that's cutting-edge this year won't be that next year, so Apple will still have to spend on R&D.

Another problem, and one that's likely more problematic -- after all, it's not like Apple doesn't have money to waste -- is that a really awesome but wildly expensive iPhone could actually put people off upgrading to the cheaper models being offered at sensible prices to mere mortals. After all, everyone knows that tech that's expensive today will be cheaper next year, and as such, they may very well hold off upgrading for a year or so and wait for whatever awesomeness that's baked into the special edition iPhone to trickle down to the regular lineup.

And Apple is relying on an upgrade wave to boost sales.

At the other end of the spectrum is the potential that whatever secret sauce Apple packs into the 10th-anniversary iPhone draws a collective yawn from potential buyers. New innovations such as the Touch Bar on the MacBook Pro haven't really been the huge hits that Apple expected them to be. It's getting harder to excite buyers.

So, yes, it's all a pretty big gamble for Apple. If it pays off, then Apple will have -- temporarily -- put a halt to the "iPhone is dying" chatter. If things don't work out, then it's a sign that Apple could be in for a rough ride.

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