iPhone 9 could cost more than you expect [Updated]

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Here's what the advertising for the iPhone 9 might look like.
Many people are hoping the iPhone 9 will cost less than its predecessor, but it could be priced higher.
Screenshot: Lee Gungho

The main reason the iPhone 9 is hotly anticipated is because it’s rumored to boast a large display but a relatively low price tag. However, some analysts are predicting that this 6.1-inch model will instead cost more than the iPhone 8.

They say Apple can do this because the one feature that consumers want more than anything else: larger screens. And we’re willing to pay more for them.

Update: A separate report coming from Europe indicates that the 6.1-inch LCD iPhone will cost exactly the same as the iPhone 8.

KeyBanc Capital Markets sent a note to investors explaining their reasoning:

“Over the last six years, screen size is the lone feature that we believe has demonstrated a consistent ability to drive both volume and pricing power. This was evident in the iPhone 6 cycle, where a step-up in screen size drove both pricing and volume, and in the iPhone X cycle, where a larger screen in a similar-sized form factor drove strong pricing power.”

2015 was the first full-year a "Plus"-size iPhone was available. 2018 saw the larger iPhone X.
2015 was the first full-year a “Plus”-size iPhone was available. 2018 saw the larger iPhone X.
Photo: KeyBanc Capital Markets

No budget iPhone 9

Ming-Chi Kuo, who has a long history of being generally correct about Apple’s plans, predicted that the 6.1-inch LCD iPhone in Apple’s 2018 lineup will cost between $600 and $700.

However, the KeyBanc analysts just told investors “We expect the new LCD iPhone to price at a premium to the blended ASP for the iPhone 8/8+.” Translating from analyst jargon, they’re predicting  that the iPhone 9 will cost more than the average selling price of the iPhone 8 and 8 Plus combined. As these are $699 and $799 respectively, the prediction is that the iPhone 9 will be at least $750 and probably more.

An $1,100 iPhone XS Plus?

The analysts from KeyBanc are also thinking the 6.5-inch iPhone XS Plus will cost more than Apple’s current flagship model. As they put it, they expect “for the new larger OLED iPhone to price at a premium to the current iPhone X.”

That’s also not Kuo’s prediction; he says Apple has worked hard to lower its 2018 prices, so the larger iPhone XS Plus will come at the same cost $999 cost as the iPhone X, or possibly below that.

KeyBanc seems to be indicating it sees the iPhone 9 costing about $800, the iPhone XS costing $1000, and the iPhone XS Plus costing $1,100. That’s the price points they’d have to hit in order to sell at a premium over the 2017 models, anyway.

Trouble ahead for Apple

As the KeyBanc Capital Markets analysts pointed out, for several years now, every significant improvement in iPhone revenue has come from increasing the size of the display. That doesn’t bode well for 2019 and beyond.

As they put it:

“Apple’s coming iPhone lineup is likely to maximize the available screen real estate within form factors that will still fit in pants pockets, which suggests we have reached a limit of screen size as an incremental driver of demand. Further, we do not anticipate a new hardware feature that will replicate the pricing power of screen size for the foreseeable future.”

Although the analysts from KeyBanc don’t see it, one possibility is a folding iPhone. This would enable a screen larger than the 6.5-inch OLED in the rumored iPhone XS to fit in a pocketable device. There have been predictions Apple could release a foldable phone in 2020 or possibly 2021.

Source: Barrons