For a few months leading up to Apple’s announcement of iPhone X we read how the $1,000 price barrier would mean iPhone sales would falter, fall, and mark a watershed moment in smartphones as Apple faded away into an aging footnote of technology history.
Apple announced a $999 iPhone X with a $1,149 256GB option and suddenly nobody cared about price or the luscious camera in iPhone 8 or iPhone 8 Plus. Absolutely everyone I have talked to in recent weeks wants and iPhone X, iPhone 8 Plus be damned. The rest of the technology gadget industry should thank Apple.
What Goes Up
Apple is proud of what it designs and builds and it’s a trivial pursuit to say the company’s products are overpriced. After all, most smartphones run many of the same applications but vary in price from $200 to the previously mentioned $1,149 with many hundreds of brands and models in between.
Why should the industry thank Apple? Apple sets the ceiling which allows them to exist. These days, at the premium end of the smartphone arena we see Google’s new Pixel 2 and Pixel 2 XL, Samsung’s Galaxy S8 and Note 8, and, well, that’s about it. The Essential phone by Android’s creator is going nowhere in the marketplace, but each of these devices has one thing in common.
Each one is less expensive than Apple’s premium iPhone X, and each differentiates itself from the others. Samsung is about the screen. Pixel 2 is about artificial intelligence. iPhone is about security and the Apple ecosystem. All have the new edge-to-edge micro-bezel design which provides more screen in less space.
Wait. What? Check out Google’s Pixel 2 and 2 XL and tell me they don’t look like iPhone 8 and iPhone 8 Plus. Fat, thick side bezels, ugly chin, massive forehead. It’s déjà vu all over again, folks. Google has gone with a blast from the past.
Doing new stuff is hard. That’s why Samsung does not have an R&D department and simply copies Apple or one-ups Apple in the feature race. Don’t get too excited about Pixel 2 phones, though. There’s no headphone jack and it comes with the same IP67 waterproof standards as the iPhone but not as good as the IP68 of Galaxy S8 models (we’re talking about Samsung, so take such a feature with a grain of salt; the same company lied about benchmarks).
No smartphone on planet earth sells like iPhones. The command the highest prices relative to the largest number sold and that results in a high ceiling price which then results in high gross margins and my Economics 101 class told me that’s where the profits are.
Who knows? Google’s new Pixel models, which look much like the original iPhone with a single camera on the back and a multi-colored back case, might sell very well. Maybe thousands to tens of thousands. Maybe even enough to make a profit. Just remember this. Any profit that any smartphone company makes is thanks to Apple. The iPhone sets the ceiling, the umbrella under which other smartphones must price their wares. That guarantees Apple to have the largest gross profits, the most revenue, and the most profit.
The same works for iPad vs. tablets, Macs. vs. Windows-based PCs, but interestingly, Apple Watch, AirPod, and Beats headphones compete in a different arena which higher priced competitors. Yet, Apple sells the most and rakes in the most profits.
Go figure, right?