MG Siegler on The $1,500 iPhone, the next (last?) stop on the march towards 'Apple Prime':
It just makes sense. I do believe this year may be an aforementioned test of Apple’s customers willingness to pay insanely high prices for a phone. I can’t see the trend continuing with the $2,000 iPhone. But actually, I can! It will just be obfuscated by monthly payments. Just as it used to be in the days of carrier subsidies! But this time, such payments will be going directly to Apple.
Again, this is already happening for those of us on the iPhone Upgrade Program. And it means there is no $1,500 iPhone, it’s more like a $60/month iPhone. And you can easily talk yourself into it because thanks to being eligible for a yearly upgrade to the latest iPhone, you’re never paying full price for a device. Instead, if you do the math (which most won’t), you’re paying roughly half the cost for the top-of-the-line model over that year.
Of course, you’re also paying Apple in perpetuity! And this monthly bill is only going to go up as they bake in AppleCare (which they do), theft protection (new this year!), and eventually all sorts of other goodies: iCloud storage, Apple Music, Apple Television (the service, not the box), etc.
This is how Apple truly becomes a services business. And it’s happening in front of our very eyes.
This is exactly what makes Amazon Prime so successful — start with a killer service, charge a monthly fee, constantly add new value and perks to make it impossible for subscribers to leave, and slowly raise the price.
I can absolutely see Apple working towards this.
I’m not sure when Apple realized and started executing upon this gradual price increase strategy. My best guess is just after 2011, when the top-of-the-line price started inching upwards again. Perhaps (almost certainly?) not coincidentally, this was the same year they let carriers subsidize old models down to $0. Apple let the lowest iPhone hit the bottom in order to set the top-of-the-line on a trajectory towards the stratosphere.
And it worked, rather beautifully. Now, I believe, the $1,500 iPhone offers a glimpse into Apple’s next phase. The $99/month, forever, iPhone.