Apple's New $1,000 iPhone a Sign of Confidence

Equity analysts think that customer loyalty will allow the firm to pass along iPhone X price increases without a significant decline in sales

Brian Colello, CPA 13 September, 2017 | 8:36AM
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Apple iPhone X

Apple's (AAPL) latest iPhone launch reinforces equity analysts long-term thesis that customer switching costs should enable Apple to retain most of its user base over time. The firm simply would not be able to introduce a $999-plus iPhone within the cutthroat smartphone market without a great deal of confidence in the stickiness of its customers.

The iPhone X, representing the roman numeral 10, not the letter, is Apple's long rumoured 10th anniversary iPhone at a starting price of $999, although we foresee the greater storage version being more popular at $1,149, and $1,348. Apple also introduced the iPhone 8 and 8 Plus, which we view as more traditional enhancements of last year's iPhone 7 series, but we should note a $50 boost in entry level pricing to $699 for the iPhone 8, as well as a $150 jump in pricing to higher storage models, versus $100 increases in years past. On the whole, we view Apple's iPhone pricing as a net positive, as we think that customer stickiness will allow the firm to pass along these price increases without a significant corresponding decline in unit sales.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Apple Inc148.91 USD0.14Rating

About Author

Brian Colello, CPA  is a senior stock analyst with Morningstar.