The claim that Apple Inc. (NASDAQ:AAPL) has been in discussions with carriers to hike the price on the iPhone 6 by $100 dominated headlines Monday and raised plenty of eyebrows in Silicon Valley.
According to Jefferies analyst Peter Misek, Apple has been getting pushback from major carriers to the proposed price increase, but he believes that the high profile of the iPhone 6 will change their minds.
"The possibility may at first seem far-fetched in light of investor concerns regarding possible carrier subsidy and handset price cuts due to smartphone saturation and lack of differentiation," Misek said in a note Monday. "But we think this general lack of differentiation could be the reason why Apple may be able to get a price increase. Carriers realize that the iPhone 6 will likely be the only headline-worthy high-end phone launched this year and that they will lose subs if they do not offer it."
The increase would be covered in markets like the United States, where carriers tend to subsidize the price of the phone through long-term contracts, according to Jefferies. But in nonsubsidy markets, including installment payment plans from AT&T Inc. (NYSE:T) and T-Mobile, buyers would have to bear the added cost. This may drive customers away from Apple’s upcoming device.
However, the rumor has not been substantiated, and some observers doubt that it will come to pass. Cult of Mac called out Misek in February 2013 as having a “comical history of making some crazy claims about Apple’s future plans.” Some of his claims include a report about Apple’s fabled foray into the television market, which he dubbed the “iPanel.” Misek's report about the $100 price increase probably should be taken with a grain of salt. Most likely, Apple will continue selling the iPhone in a price range similar to that of the last six generations. The original 8GB iPhone sold for $599, full retail, while the latest 16GB iPhone 5s currently sells for $649.
As 9to5mac also reported, Apple may actually need to move in the opposite direction. “Whilst it is true that the iPhone has staggering market power, it is hard to believe that Apple will up prices away from the norms they have established over the past seven years. In fact, the trend recently has been that Apple needs to lower prices for iPhones, not raise them, as demonstrated by Apple’s introduction of the iPhone 5c last year,” 9to5mac stated.
Apple is expected to announce the iPhone 6 later this year and launch it in September. Consumers have recently seen a few mock images and leaked concepts of the iPhone 6, but nothing official has come out of Cupertino, Calif. The most recent rumors are that the iPhone 6 will come in two different sizes, a 4.7-inch version and a 5.5-inch version, but it's been suggested that the two designs will not launch side by side. Instead, the smaller iPhone 6 is rumored to launch first, in the third quarter, and the larger iPhone 6 will come in the fourth quarter, possibly in time for the holiday season.
Both devices are rumored to ship with 1GB of RAM, the new A8 processor, an improved Touch ID fingerprint sensor and an optical stabilized camera. The iPhone 6 will also run iOS 8, which should be announced at WWDC 2014, to be held at the Mascone Center in San Francisco June 2-6. iOS 8 is said to be more health-centric and will include a new set of features called Healthbook. The focus on fitness and health is a recent trend in the smartphone market.