Thanks to the 24/7 news cycle we have come to embrace, it seems no iPhone rumor today can be unhinged enough to not at least be regurgitated by a few online outlets. Over the last couple of days, this everlasting narrative has been dominated by two hot-button issues especially, since some respectable sources added their voices to the guessing game: Apple’s alleged failings to wrap up the iPhone 8’s assembly amidst design and component shortages for one, and of course the projected, steep price hike brought about by Apple’s anniversary iPhone.
While it doesn’t take a brain surgeon or marketing guru to figure out the apparent correlation of those two stories swirling about (low supply and high demand setting an inflated asking price), I would contend there’s a much more critical correlation at play, one that is very tough to redress for Apple and equally tough for customers to accept: the causation of innovation and price.
Provided all the reporting is true and the shiny new iPhone 8 will enter the market at a price point north of $1,000, critics will have a field day, a number of shoppers will be dissuaded, but for the most part Apple customers will ask the simple question why ? The guys at Let’s Talk iOS have given this question a good shake already in this week’s Podcast #195, however if you turn the table around and look at the situation from Apple’s perspective, you will find that at the heart of it lies a more abstract dilemma for the Cupertino giants, a balancing act that can and likely already has hurt us customers in more than one way.
To illustrate the predicament, let’s briefly sideline the impending iPhone 8 and talk abstract. Many smartphone customers in the market go wherever the innovation puck currently is, they clamor for new technology, unprecedented features and are quick to sneer at companies (Apple being the butt of all jokes) if a new phone feels kind of iterative rather than spanking new. Specs and tech have become the most expressive measuring stick in the industry (and rightly so), new releases are scrutinised and judged by the potentially show-stopping soft- and hardware built into the phone. Does it do facial recognition? Is it capable of Augmented Reality yet?
At the same time, the internet (and by extension customers) is prone to erupting in indignant outcries every time there is the slightest mention of an uptick in unit pricing. Apply these two (widely accepted) views to any other product in the market and the absurdity of it is flagrant. Yes sir, I would very much like to unlock my new car by simply touching the door handle and do away with the pesky car keys. What’s that? Do I want the bigger, better panoramic sunroof in place of the skimpy old one? You bet. Wait, you’re going to charge me more for that? HOW DARE YOU!
You get the picture. Customers at the best of times wish for, usually though outright demand, bleeding edge innovation in the next iPhone, while simultaneously crying foul the moment a price raise is being discussed. In other words, innovation by all means, price bumps on no account. As Apple, how can you reconcile or at least manoeuvre these two (very human) urges? Innovating weighs heavily on the bottom line, not only regarding money sunk in the Research & Development department, but sometimes it can be as simple as a new, more costly component replacing an old, superseded one. Think of the iPhone 7’s taptic engine supplanting a lightweight such as the headphone jack or the costs incurred by Apple when switching from a mono to dual camera system on their plus-sized iPhones.
Perhaps it’s not so much incumbent upon Apple to bridge the innovation versus cost gap, but up to us to wake up to the fact that our demands for revolutionary tech and stagnating prices are somewhat at odds. What’s happening at present is doubtlessly illustrative of what Apple faces every year, except this time there seems to be so much more riding on the completely redesigned iPhone 8, hence the magnifying glass effect.
By the same token, just like every year, Apple will currently analyze precisely what technology they can unleash on us – and this is the important bit – at what we deem to be an acceptable price. I don’t believe for a second that Apple does not have the tools to integrate Touch ID into the OLED screen by way of example, the question for them is going to be whether or not they can pull it off at a cost the customer will be willing to compensate them for.
The least Apple will aspire to achieve is to retain their already high product margins, however with innovative and spendy technology biting a chunk off said margin, plus the customers’ overt unwillingness to even out the differential by way of a markup in price, there is only one tenable solution: hold back the highly coveted feature for another year or two until mass production becomes cheaper. Which is where it goes full circle, as that decision will be met with snark and contempt by the the very same people that did not want to pay the balance.
In closing, this is where our price sensitivity only hurts ourselves. One can only imagine the flashy features Apple has stalling behind closed doors right now, because although mind-blowing, they fear the backlash or reputational damage the well-off company could sustain from asking for let’s say $1,500 for an utterly gamechanging flagship iPhone.
I’m not trying to make apologies for these guys, nor am I in the business of defending extortionate pricing, but if you asked me how much money I would pony up for an iPhone eschewing the dreaded rear Touch ID sensor, or to get an iPhone capable of holographic projections right now, I would probably fork out a lot more than the purported $1,000, and I suspect I’m not the only one.
So to the trigger-happy folks out there, the ones quick to lambast Apple for sobering, incremental innovation on the one hand and price advances on the other, let’s boil the tech industry down to an old saying: sometimes you can’t have your cake and eat it too.
Whatever happens in September – or October – let’s put the outrage on hold until further details emerge. And when the anniversary iPhone finally sees the light of day, keep in mind that the price tag is not necessarily proportionate to the iPhone’s advancing marketing numeral, but maybe proportional to the innovation crammed between the supposably ultra thin bezels.