iPhones have been usually expensive when compared to the most expensive android smartphones of the time. But never has an iPhone been so expensive as to hit the $1,000 price mark, and we have expectations that iPhone may easily surpass it.
While this news brews a lot of heated arguments between blind fans and considerate customers, a lot of evidence suggests that Apple is actually being conservative with the price, especially when no previous iPhone has cost this much to manufacture in the first place.
Rumors surfaced earlier this year that the iPhone 8 – iPhone’s Tenth Anniversary celebration edition – will cost more than $1,000. The news spread like wildfire, and the situation only got real when expert analysts from KGI Securities, Goldman Sachs, Fast Company, and Nikkei came up with the same conclusion.
It is now an established fact that Apple will putting a price tag on iPhone 8 that will surpass the $1,000 mark, and here are some reasons that we know so far.
Increased costs of parts:
Economic Daily News revealed recently that TPK Holdings – a longtime supplier of parts for Apple – has quoted a 2.5x price for the development and integration of 3D Touch sensors in the OLED Panels.
Instead of $7-9 price of the process in previous generations of iPhone, the integration of 3D Touch sensors in iPhone 8’s OLED display will cost $18-22. The reason is that integrating the 3D sensors on LTPS TFT-LCD display panels was direct and simple.
But due to the fragility of OLED displays, glass covers will need to be bonded on both sides of the panel. Many sources suggest that Apple has committed to these prices.
That’s not all. The 3D sensing technology will add $20 to the manufacturing cost, and upgraded memory will account for $16-29 increase in the manufacturing cost of the device.
The OLED screen itself is a completely different matter, we will discuss that later. Then we have the integrated Touch ID sensor that is a completely new technology and is definitely going to increase the manufacturing cost by a huge margin.
Now that we have seen increases in manufacturing cost in component costs like 3D Touch integration and upgraded memory, let’s not forget the wireless charging and fast charging feature that iPhone 8 will also highly increase the cost of manufacturing the device.
Despite all the increase in the production cost, Goldman Sachs has stated that Apple shouldhave committed to the production costs by now because Apple must have locked the final design of the iPhone 8 in order to stay within the schedule.
How OLED panels are causing an increase in manufacturing cost?
So here is the problem with OLED panels: there aren’t any manufacturers who can manufacture in massive number at a reliable scale. Samsung currently is the only manufacturer of OLED display panels that has the resources and facilities to produce OLED panels for Apple in massive figures reliably and timely.
This monopoly of OLED panels allows Samsung to charge high prices from its customers. Ming-Chi Kuo – famed analyst at KGI Securities – concluded that the supply of OLED panels for iPhone 8 will be solely in Samsung’s hands, and that Samsung is charging Apple $120-130 per OLED panel. This price of OLED panels is about $75 more than the price of 5.5-inch LCD panels, which stands at $45-55.
While Apple has no other option than to commit with Samsung for now, Apple is frantically looking for another company that can manufacture a reliable amount of OLED panels for Apple. Apple is making that effort by reportedly investing billions in LG’s OLED smartphone production in hopes that LG will be able to sustainably supply 45,000 OLED panels for iPhone per month.
After all of the above evidence, when you look at the fact that iPhone 7 Plus was priced at $969, account-in the huge arsenal of new features that will be arriving in iPhone 8, a flat $1,000 price tag on iPhone 8 actually seems like Apple being conservative with the pricing.
And we know that Apple has never been afraid of raising the prices. One instance of this fact is visible in the pricing of MacBook Pros. Apple raised the price of the MacBook Pro laptops quite surprisingly, and the sales and brand loyalty of the laptop hasn’t budged even a little, despite the huge reaction that was caused by the news.