Analysts are expecting the price people will pay for an iPhone to rise significantly heading into next year. Apple analyst Katy Huberty from Morgan Stanley released a report (via BusinessInsider) predicting iPhone ASP to rise to $753 in 2018, up from $695 in the holiday quarter just gone.
Much of this increase is attributed to demand for the upcoming flagship iPhone model with an all-new design, OLED display and (almost) bezel-less front face. This ‘iPhone 8’ is rumored to cost significantly more than Apple’s current lineup. Huberty also notes that more people are buying the iPhone 7 Plus than ever before, which starts at $769 and is priced at a $120 premium relative to the 4.7-inch iPhones.
The Morgan Stanley report indicates that Wall Street consensus estimates the iPhone average selling price at $675 for the coming year. Whilst $675 is a very strong number in itself, it does appear to be a pessimistic target.
Apple already reported a $695 iPhone average selling price in the 2016 holiday quarter where the product mix leaned toward the more expensive iPhone 7 Plus models.
It seems customers wanted to pay for the exclusive features the Plus model provided in this cycle, namely the dual-camera for depth-effect photos and optical zoom.
With so much pent-up demand and anticipation for the iPhone 8, it follows that Apple could see iPhone ASP push higher still. The new OLED iPhone has been rumored to cost in the region of $1000. Even if that number is too high, most people agree that the iPhone 8 will be positioned as a premium item and that it will start at higher price tags than the current iPhone lineup.
At the very least, it is very plausible for Apple to sell this new flagship iPhone at a $100 premium over the iPhone 7 Plus, just like the Plus is about $100 more expensive than the iPhone 7. This would mean all new iPhone buyers wanting the best, newest, device would spend at least $869 each.
Obviously, not all iPhone buyers opt for the most expensive model but Huberty sees that strong demand for the iPhone 7 Plus or its successor (also expected this year) will stabilize the average around the $750 mark.
Morgan Stanley raised their price target on AAPL stock to $161. Apple shares closed at $142.44 yesterday. Apple is expected to unveil the new iPhone 8 in the fall, likely at a September event although it may not ship in quantity until a couple months later.
Apple is also expected to unveil iterative updates to iPhone 7 and iPhone 7 Plus, with modest component improvements and wireless charging.