The next iPhone Apple unveils may not prove as expensive as some have speculated, according to a new research note from investment firm UBS.
Early rumors for the iPhone 8 claimed it will cost upward of $1,000. However, UBS analyst Steve Milunovich says the real price tag will most likely be a lot less than that. And fans might have Samsung to thank.
“Apple’s top model will be at a display size disadvantage to Samsung’s Galaxy S8 Plus,” wrote Milunovich in a note to investors Tuesday. “We still think Apple will choose to price its top model relative to Samsung’s top model, but remain cautious on how much higher Apple could ultimately go on price given a smaller display.”
Expensive iPhone 8
UBS expects the OLED display on the iPhone 8 will raise factory costs by $70 to $90 per unit. That should put the sale price around $870, which will likely weigh down Apple’s gross margins.
Despite the price increase, UBS thinks the new iPhone 8 — with its larger, bezel-free screen — will be Apple’s biggest seller yet. The company raised the base price on the iPhone 7 Plus in 2016, but high demand could make it account for more than 40 percent of all iPhone sales in fiscal year 2017.
“Apple customers seem fine with paying more for products they feel are differentiated,” wrote Milunovich. “We think an $870 price would be accretive to EPS but dilutive to gross margin, a dynamic Apple has said it would accept.”
iPhone 8 features
The iPhone 8 is expected to pack more new features than any iPhone in recent history. Rumors have indicated that Apple may add 3D sensors, wireless charging, a new all-glass body, a bezel-free OLED display, Touch ID embedded into the screen, improved cameras, faster processor and much more. Apple is expected to unveil the device this fall.
