Is a massive iPhone price drop incoming?

A $1,000+ iPhone 8 could give Apple wriggle room for a big price cut for the other iPhones.


(Image: CNET/CBS Interactive)

We've been talking a lot lately about the iPhone 8, and how it could come with a hefty $1,000+ price tag. But people willing to pay the big bucks could be subsidizing an iPhone price cut for everyone else.

See also: It turns out the iPad was just too expensive after all

In a note to Above Avalon newsletter subscribers, analyst Neil Cybart pondered the following:

"Call me crazy, but we still don't have enough evidence to completely rule out Apple cutting pricing for the new 4.7-inch and 5.5-inch LCD models by $100 next month. If a $999+ OLED iPhone ends up representing half of iPhone sales, iPhone ASP (average selling price) will still go up even if the new LCD models see a $100 price reduction."

This isn't the first time that Cybart has mulled about this price cut, and I have to admit that it's an interesting idea.

And it's also one that has precedent. After all, the iPad saw a hefty price cut following the introduction of the iPad Pro, and that price cut seems to have given sales a much-needed kick.

A price cut for the iPhone 7s and iPhone 7s Plus could allow it to do away with keeping the iPhone 7 and iPhone 7 Plus on in the store, essentially simplifying the lineup. And there's evidence suggesting this, in the form of Apple dramatically cutting iPhone channel inventory last month.

But Apple would need to be more cautious when it comes to slashing the price of the iPhone. iPad sales were already in the dirt and slashing the price will have been a last ditch move from Apple. While iPhone growth is weak, a $100 price cut for the iPhone 7s and iPhone 7s Plus could have a deleterious effect on the ASP if Apple couldn't sell enough iPhone 8 handsets (either because of lackluster interest, or, more likely, shortages).

After all, the effect on iPad ASP has been profound -- it's now at $435, while a year ago it stood at $490.

Previous and related coverage

Apple is banking on gimmicks and old technology to sell the iPhone 8

Can AR, face unlocking, wireless charging, and an OLED display really get people to part with over $1,000 for a smartphone? [August 9, 2017]

Ten Apple products you shouldn't buy (and three that you can't buy anymore)

Here's a list of Apple products that you shouldn't buy, along with one that you can't buy anymore. [August 1, 2017]

See also: