Ming-Chi Kuo is back. The world’s most acclaimed Apple AAPL +1.51% insider has returned with explosive news on Apple’s pricing plans for its all-new iPhone line-up…
Having moved from KGI to TF International Securities earlier this year, Kuo was expected to step away from Apple reports. But in a major scoop, the analyst reveals Apple will perform a massive U-turn this year slashing prices of its new iPhones by as much as $300.
Budget iPhone X concept
Breaking this down, Kuo states prices for the second gen iPhone X, enlarged iPhone X Plus and exciting ‘budget iPhone X’ will start from as low as $800, $900 and $600 respectively. Given prices for the first generation iPhone X started at $1,000 last year, and Apple is also bundling an essential $100 extra with all its new iPhones this year, that’s a total saving of over $300 including tax.
Kuo does note these prices could be as much as $100 more, but it’s interesting to see the drive downwards after more conservative estimates in April.
What has motivated Apple’s big price cuts? Kuo lists three factors:
Firstly, he says internally Apple has expressed “concern over the negative impact of a higher price in a mature smartphone market on selling momentum” after the iPhone X failed to spark a widely expected sales supercycle, despite celebrating the range’s 10th anniversary with a radical new design.
Renders of budget iPhone X beside iPhone X Plus based on leaks
Secondly, Kuo says the last year has seen Apple develop an “improved cost structure, which is mainly attributed to assembly yield improvements of end product & 3D sensing and cost reduction of components” so it can afford to make the cuts without overly impacting profit margins.
Thirdly, “increasing users of Face ID” is deemed essential by the company (all three new iPhones will have it) due to it “benefiting the promotion of the Apple service and ecosystem.” With rivals currently nowhere close to matching Face ID technology, this makes a lot of sense.
Kuo says the combination of all three factors has driven Apple to adopt a “more aggressive price policy” and I suspect it could well spark the aforementioned sales supercycle one year late.
Furthermore, given the spiralling cost of iPhones in recent years, I think we can all agree this change of policy was long overdue…