Why Is The iPhone X So Expensive?

The iPhone X was revealed with much fanfare in Apple's new Cupertino HQ last week- but it wasn't just the personalised poop emojis, the wireless charging or the new display that stole the headlines...

The all-new iPhone X was proudly revealed by Apple CEO Tim Cook as the "biggest leap forward since the original iPhone". The device, which marks the 10-year anniversary of the iconic smartphone, features an all-new bezel-less OLED display, 'Face ID'- the most advanced facial recognition technology on a smartphone- and other new updates such as wireless charging.

Not only was iPhone X arguably the biggest leap in technology since the original iPhone, but it was in fact the greatest leap in price- at $999 dollars, it became the most expensive mass-market smartphone ever, $230 up from the iPhone 7 Plus. This significant price increase, and the landmark of the iPhone X becoming the first ever thousand-dollar smartphone, remains a significant talking point of the new device- and most of the coverage around the price has been negative. So, why exactly have Apple made the iPhone X so expensive?

The most obvious contributor to the increase in sale price is the increase in the cost of production. According to GSM Arena, the X costs $412.75 to produce- compared to the $220 production cost of the iPhone 7. This drastic increase in cost is the result of a significantly larger, OLED display, a new glass material, and also a larger standard storage of 64GB for the base iPhone X.

Interestingly, the only place Apple could source the new OLED display was from its smartphone rivals Samsung- no doubt, the Korean firm will have exercised this monopoly power to try to reduce the margins of its competitor.

The new design and technologies of the iPhone X has also limited production capacity. This is rumoured to be one of the reasons why there have only two colours offered at launch, as well as why the actual sale date is in November, despite the announcement coming in early September. As basic economics dictates, a lower supply is likely to induce higher prices, as people clamour to not miss out on this latest iPhone.

While this price increase is rather drastic, people often forget that it's not the first time Apple have introduced devices at a high price. Apple believe that the iPhone X is a whole new device- an iPad Pro to the iPad that is the iPhone 8, or a MacBook Pro to the iPhone 8's MacBook. This is especially evident when you see that the prices of the iPhone 8 and 8 Plus have actually increased from the iPhone 7 and 7 Plus.

The first MacBook Air (top) was succeeded by a
more successful and affordable generation.
Source: Engadget

Historically, new Apple products as revolutionary as the iPhone X have provoked controversy due to their costs- the first generation MacBook Air, the 2015 MacBook and the Apple Watch are just three such devices. Experiences from these products have arguably given Apple the confidence to set a high price for the new iPhone. Where successful, Apple have been able to sell high volumes at high prices- and in slightly less successful cases, such as the launch of the first MacBook Air, Apple reduced prices over time as the new technology introduced became standardised in its line-up.

Apple knows that many people unwilling to pay $999 for the iPhone X will opt for the cheaper iPhone 8 instead- and this doesn't necessarily present a financial loss to Apple, given the lower production cost of the latter device.

And Apple also knows people will still buy the iPhone X. The massive marketing buzz around the product, and the sheer difference it represents from the usual iPhone lineup means that the device is undoubtedly going to sell in high volumes. It's likely, in fact, that the higher $999 price will be attractive to many customers. At a sub-conscious level, the round pricing of $999, essentially a thousand dollars, the idea of having a thousand dollar device will appeal to people who may want to own the device as a status symbol as well as a phone.

This type of product is known as a Veblen good- a product for which demand increases with price, in contrast to standard economics. At a sub-conscious level, the round pricing of $999, essentially a thousand dollars, the idea of having a thousand dollar device will appeal to people who may want to own the device as a status symbol as well as a phone.

A high pricing brings other potential smaller benefits for Apple. For example, when people spend as much as $999, the smaller purchases seem even smaller, and thus more appealing, to the buyer. For example, spending $100 on Apple's new AirPower wireless charging station seems less of an expense when you've spent $999 on an iPhone X than when you've spent $500 on a previous generation iPhone.

So while the increased production costs have introduced a necessity for Apple to raise the sale price of the iPhone for the new iPhone X, the decision to increase the price to as high as $999 is likely to prove a shrewd business decision for Apple, especially given the release of an updated iPhone 8 at a cheaper price. What remains to be seen, however, is whether Apple will eventually reduce the price of future generations of the iPhone X, as its technology becomes standardised in the iPhone range, or whether Apple is preparing the market for a shift to a new level of price for smartphones.

How Can Apple Save The iPod?

Is it time for the device that kickstarted Apple's tech kingdom to be laid to rest, or is there still some life left?

The current Apple iPod lineup (Left to right: Shuffle, Nano, Touch)

The iPod has lost the magic that it had when Steve Jobs was CEO.

In October 2001, when the first iPod was unveiled, few people had expected that in just 3 years it would capture over 70% of the music player market. And back then in 2004, it's likely that no one would have expected the iPod to be in the state it is now in 2016: the group of seemingly unwanted children of Apple, not even warranting their own link on the banner of the Californian tech giant's own website.

And while Apple's other devices, such as the iPhone and the Mac lineup, have been receiving much boasted about yearly updates, the iPod range has been neglected. Until last July, the big brother, the iPod touch, hadn't been updated for 3 years. The iPod nano has stayed the same since 2012, with no sign of any upcoming changes. And the iPod shuffle, well, the current version is 6 years old, ancient by Apple's standards.

iPod sales from 2006-2014 (Statista)

Apple doesn't just go nuts and neglect a cash cow product- all of this is due to the fact that the iPod range has been declining in popularity for some years now. Sales have fallen to the extent that perhaps Apple now considers them negligible, and doesn't bother to report iPod sales in quarterly reports any more.

So, why have iPod sales fallen?

It's interesting to note that the peak of iPod sales in 2008 coincides with the introduction of the iPhone 3G in 2008. The immense popularity of the iPhone, and more broadly all smartphones, has undoubtedly been a root cause of the iPod's demise. The iPhone 3G offered pretty much all the media functionality of an iPod, plus the incredibly useful functions of a phone, presenting an ideal combination to those Apple's customers who could afford it. After all, why would you carry around a phone and an iPod with you, when you could carry something that does the job of both?

But still, iPod sales remained relatively stable for a few years after the iPhone, because it still had some advantages. For example, the iPod shuffle and nano appealed to those who wanted music while they were exercising, because they were far lighter and more convenient to carry than the lumpy iPhone. They were far cheaper, too, making it more ideal for people on tight budgets and parents looking to buy something for their kids.

However, in recent years the iPhone has narrowed, and overcome, many of these advantages and effectively cannibalised a lot of the iPod's sales. Only a stick man would consider the current iPhone 6S to be too heavy or inconvenient to carry on a morning jog. Apple's recent strategy of selling upgraded versions of older generation iPhones as cheaper variants means that while they are still quite pricey, they are far more accessible than the iPhone of 7 or 8 years ago.

It's not just iPhones that have killed iPod sales, but smartphones in general. We have experienced a fascinating evolution as a society, becoming people who want things to be multifunctional. For example, people nowadays are not happy with a basic car that just does the job of travelling. We want massage seats, heated cupholders, umbrellas in the doors (yes, really a thing). It's this desire for multi, not uni, functional objects that have manifested in things like fridges that play music (again, this is a thing), and in the ever increasing list of things our smartphones can do.

Give a 5 year old today an iPod shuffle, and they will see virtually no appeal in it. There's no screen, just some buttons and no function other than to play music. You can't even chose which song to play, for it is eternally stuck in shuffle mode, thus rendering shuffle users eternally pressing the skip button to find the track they want.

An iPod nano has a touch screen, yes, but again, it bests today's smartphones in few areas, if any.

Both of these devices lack wi-fi, too- meaning the millions who make use of music streaming services such as Apple Music and Spotify will be left unwelcomed on these devices.

Only the iPod touch remains of some appeal to our ever more demanding tastes- but again, in a world where most people are used to carrying one device that can do everything, and phones are so important, why would an iPod touch appeal to anyone over the age of 15?

So, what should Apple do about it?

Well, the iPod shuffle would be a firm candidate for the next death of the iPod family. It no longer fits in with the rest of Apple's lineup, and due to the strengths of other devices on the market, the shuffle is now in an incredibly small niche of insect-sized people and those who are too lazy to carry a 130 gram phone. Those who may find appeal in the low price of the shuffle can, and do, easily find better iPod touch-style alternatives from competitors for the same price.

The iPod nano is not as obsolete. It is far more user-friendly than the shuffle when it comes to music, and more versatile when it comes to features. The smaller form factor remains one advantage it holds over a smartphone, but still- it's likely that even a second-hand iPod touch bought for the same £129 price will appeal more to buyers, given things like its access to the massive world of apps and camera.

If Apple wants to make something of the iPod nano, it could try to take inspiration from the Apple Watch and change the direction of the nano to be something like an Apple Watch you can keep in your pocket. This means opening the nano to the Apple Watch app environment, and adding extra hardware features such as a heartbeat sensor.

So the iPod nano could be seeing its end, but there remains some potential for Apple to evolve the product into something more up to date and coherent with the rest of its lineup.

Could the iPod touch represent the single future of the
iPod lineup?

While the iPod touch may not be currently setting the tech world on fire, it remains the best selling iPod. But what matters even more than this is the fact that it is probably the most popular gateway to the Apple lineup, especially when it comes to teens and pre-teens. The iPod touch is that present a parent might give to their kid for their 12th birthday, because it shares so many features with the iPhone, other than the massive price tag. You can play games, take photos, text (thanks to iMessage) on an iPod, which is pretty much all a kid wants these days, right?

Then, once the 12 year old becomes a 15 or 16 or 17 year old, and the iPod touch is getting old, the time comes around to get a phone. Having been integrated into the iOS ecosystem over the past years, it's likely that they will want a phone they can identify with immediately- likely to be an iPhone. This then extends into buying a Mac for college, an Apple Watch to pair with the iPhone, and so on. Apple thus arguably benefits far more from the possibilities an iPod touch opens up than the sales of the device itself, so the iPod touch should remain and continue serving this role.

If the iPod touch is chosen to be the last iPod standing, rebranding it as simply the 'iPod' may be a wise move. Being a touchscreen device is no longer worthy of note as it was almost a decade ago, and the rebranding will represent the type of streamlining, simplification that Apple is so well known for. It may even add a nostalgic touch for those who were around for the launch of the original iPod.

Something must happen with the iPod lineup- the past few years haven't been exactly disastrous, but they have lacked the kind of success that Apple is used to with all their other products. Apple must decide whether it wants to revive the iPod that we all know and love, or chop off this appendix of the Apple body. 

The Reason Why Apple Can't Open A Store In India

It may be one of the world's largest and most iconic brands, but Apple has yet been unable to persuade the Indian government to allow the building of a single Apple Retail Store.

Photo: @tim_cook

Recently, Apple CEO Tim Cook made a much-publicised visit to India, mingling with Bollywood stars, visiting a Hindu temple and generally experiencing what the second most populated country in the world has to offer. But this wasn't a holiday- following Apple's success in China, Cook has turned his sights to India, a country whose economy has boomed in a similar fashion over recent decades. No doubt, business was firmly in the Apple CEO's mind throughout the trip, as he met with key players in India's technology market as well as the nation's Prime Minister.

One of the issues believed widely to be at the forefront of discussions is that of Apple Stores in India. Looking at the massive boom in consumerism in India over recent decades, it seems unbelievable, but there remains no official Apple Store built in the country. Yes, there are 'premium resellers' located across India, local franchise-style businesses authorised to sell Apple products, but these lack typical features of Apple Stores, such as a Genius bar for technical support. There is no official, Jony Ive-designed Apple Store anywhere in India.

The situation is all due to the interesting government policies regarding the activities of foreign businesses in India. The headline policy preventing Apple here is the one requiring at least 30% of all products sold in foreign retail stores in India to be sourced locally. This is part of the 'Make in India' initiative designed to encourage foreign investment in Indian manufacturing, on top of input in the local goods market.

Currently, the large majority of Apple's products are made in China, the USA and Brazil, and even if Apple* does begin to manufacture products in India as recent talks were also rumoured to be about, it is highly unlikely that it could produce 30% of the ware it sells in its stores locally by 2017 as it hopes.

So Apple must either play the long game and ramp up production in India over the next 5-10 years to conform to the rule, or it must seek an exception. This will prove an interesting test of Modi's government's commitment to his 'Make in India' policy. Apple being such a massively influencial global company, the country could see a substantial, immediate economic boost if it lets Apple bypass the policy.

However, of course this is a sign that there is room for compromise, and it may provoke other multinational corporations to seek exceptions too. Furthermore, the government could make use of Apple's desperation to open stores in India to its advantage, if they demand that jobs and other sustainable sources of growth (such as factories) can be contributed by Apple in return.

From Apple's perspective, it is time to grab the Lurpak and begin to butter up the Indian government. Modi is highly unlikely to allow stores to be opened without any contributions made elsewhere at all, but if any company is to receive a little leeway in this matter, Apple is highly likely to be it.

* Apple does not technically manufacture its products, this is outsourced to dedicated manufacturing firms such as Foxconn.

What makes Apple so special?

This is an adaptation of a previous article on the iPhone 6 and Apple Watch.

So, just a few days ago the iPhone 6 and iPhone 6 Plus went on sale worldwide, to much fanfare, and, as with many Apple products, the traditional queuing outside Apple Stores in anticipation.

The traditional iPhone queue outside Covent Garden Apple
Store, London [Luke Westaway, CNET]

No other technology product (or any product in fact) receives this much attention. Why is it that Apple have become so desirable a brand?

Their products alone can be argued to be not that revolutionary.
The iPhone's larger displays? The Samsung Galaxy S5 currently on sale worldwide already has a 5.1 inch display, bigger than the expected 4.7 inch iPhone. The HTC One Max has a whopping 5.9 inch display, larger than the 5.5 iPhone.

NFC on the iPhone? Not a big deal. The Google Nexus 7 had that two years ago, and via Google Wallet you can already perform touch and pay payments.

Heard of this before? Don't blame you...

The Apple Watch- the first digital watch companion? Wrong again Bob- the past year has been chock full of watch announcements, from Samsung, from Motorola, and various other tech companies. They can relay notifications, they can monitor your heart rate, and they've been out for ages- heck, Samsung has already released two iterations of its Samsung Galaxy Gear.

A few weeks ago, if you didn't follow tech closely, you may not have heard of Samsung's Gear (which was first announced a year ago), or Motorola's 360 smartwatch, yet you probably would have heard of Apple's mystical 'iWatch', whose existence we were not even certain of.
Isn't this weird? Why is this?

There are numerous reasons. Many indeed. A key reason is of course the quality and consistency of Apple's product environment, and the products themselves- but Apple's business strategy also has been hugely successful.

Apple has built for itself a truly iconic brand. An Apple logo, be it on an iPod nano, an iPhone or a 27-inch iMac, carries with it connotations of high quality materials (note how commonly that silver aluminium material is used in Apple products), luxury (take a look at some of Apple's prices) and reliability (most Apple product owners would agree on this one).

A large part of this has been thanks to consistency- a key factor in a business' success, but only if it is done right- of course no company should be creating consistently poor products (*cough*Blackberry*cough*).

Apple has created consistency at every corner of its business. Take a look at the two screenshots from Apple's webpage below, and the event invite at the top of the article. The same font (Helvetica Light I am led to believe) is used consistently, the same white-grey colours, the same minimalist design in general is consistent throughout most of Apple's site.
Of course certain products are given their own display style reflective of the product's character, but in general Apple's design (be it the design of the site, the design of the advertisements or the design of the products themselves) are all cohesive. They are certainly decisively minimalist- Apple doesn't make use of any cheesy patterns or frilly designs, it just selects one or two colours and sticks with it throughout the product. And this is throughout Apple's whole product line.
The Mac line is a particularly good example of such consistency- the distinctive aluminium material used as the outer shell for the devices act as a cohesive for all Macs- it links them all together, it lets you know that an iMac is from the same family as a Mac Mini. Not only is this beneficial from a design standpoint, but it creates a subtle familiarity in product users, one that makes people more comfortable in purchasing a second or third or fourth Mac computer.

Consistency spreads further than just the design of Apple products- Apple's retail stores are among the most valuable in the world, thanks largely to their design. Apple makes use of the same materials for all the tables, the walls to give customers familiarity and comfort in their environment- while still allowing for stores to have their own individual appeal (such as the Regent Street store in London).

Consistency goes into the use of the products, too- Apple is well known for its lack of device software fragmentation (basically most Apple users are always running the same latest software on their devices, as opposed to say Android where people are spread across numerous iterations of the software, or Windows where many people are still running XP), its iCloud service allows people to access photos and videos across all of their devices without having to transfer anything manually, and features of the upcoming Mac OSX computer operating system will allow Mac users to send and receive phone calls and text messages on their computers- provided there is an iPhone connected to the same wifi network.
This feature, named Continuity, is another genius move from Apple. Creating this greater connection between the Mac and iPhone is a very effective way of attracting customers to purchase both- as items that complement each other rather than separate items completely. This could easily sway an iPhone user to purchase a Mac, and vice versa.

Through design, brand and functioning consistency Apple is successfully crafting not just a line of products but more an environment of products, all related and cooperative with one another.

We know this, perhaps unawarely, but this expectation of consistency that many people have come to associate with Apple is perhaps the greatest reason why we are so interested in the Apple Watch and the iPhone 6s, despite the competence of these products' already existent competitors.

Consistency is key in a business- and clearly for Apple, when combined with quality products, it has paid dividends, big time.

SOURCES (and recommended reads):
apple.com/iphone
http://www.techradar.com/reviews/phones/mobile-phones/samsung-galaxy-s5-1226990/review 
http://www.htc.com/uk/smartphones/htc-one-max/
http://techcrunch.com/2014/09/06/apple-iphone-6-event-predictions/
http://www.engadget.com/2014/09/05/what-to-expect-when-youre-expecting-an-iphone-6-or-iwatch/
http://www.cnet.com/how-to/how-nfc-works-and-mobile-payments/
http://www.cnet.com/uk/news/apple-iphone-6-goes-on-sale-around-the-world/

iPhone 6, Apple Watch: why today, Apple will the centre of the world's attention.

Tuesday September 9th will be a huge day for the technology industry worldwide.
One of Apple's famous presentations will be made in just a few days, in front of selected journalists and no doubt thousands of online spectators, who will be waiting with bated breath to hear what exactly the largest publicly traded corporation in the world has up its sleeve.

Apple hasn't made any major hardware announcements this year- so what can we expect after all this silence from the technology giant?
Let's explore two rumoured products.


iPhone 6
Perhaps one of Apple's less secret revelations, the iPhone 6 is a shoe-in to be announced on Tuesday. Rumours suggest Apple will not announce one but two models- both of which will sport larger displays, up from the iPhone 5S' 4-inch to 4.7 and 5.5 versions.

The new models are expected to have a new case design also, which, following previous trends, will most probably be thinner than its predecessor (at this rate what will the iPhone 16 be, a sheet of paper??).

Another key rumoured addition will be that of NFC- Near-Field Communication. This technology basically allows devices to communicate with each other within a short distance, but Apple's specific application of this that is expected to create most waves in the tech community is how it could make the iPhone 6 into a 'digital wallet'- allowing you to simply use your phones at a checkout to pay for your shopping, just as you would a credit card.
Commentators expect Apple to pioneer further the digitalisation of commerce- we've already seen online payments grow hugely, and now it could be time for digital real world payments to lift off.

iWatch
A product that has been rumoured for almost forever, but is not quite as certain to be announced as the iPhone 6. The general consensus among the tech community is that Apple may announce the legendary device in Tuesday's event, but hold sales until early 2015.
Despite the fact it has not even been announced yet, the iWatch has gained a huge following. Many expect it to be the product that launches off another technology product category, just as the iPad kicked off the tablet market in 2010, or the iPhone in 2007.
The iWatch is expected to act like a mini phone- relaying emails, messages, notifications and whatnot to your wrist- rumours suggest it may even allow you to view maps and receive navigation.
Apple is also rumoured to set fitness as a key component of the iWatch- with health applications such as Apple's Healthkit and the Nike+ app, and numerous sensors for various bodily measurements, set to be key attractions in the device.

And what's more, we could even see the aforementioned NFC make its way to the iWatch- meaning you could pay for your daily coffee with your watch!

Perhaps you've noted this article to be not quite the usual poponomics article- where is the economics, or business in this? Well, here we come to the juicy bit. Listen up.

The iPhone 6's larger displays? The Samsung Galaxy S5 currently on sale worldwide already has a 5.1 inch display, bigger than the expected 4.7 inch iPhone. The HTC One Max has a whopping 5.9 inch display, larger than the 5.5 iPhone.

NFC on the iPhone? Not a big deal. The Google Nexus 7 had that two years ago, and via Google Wallet you can already perform touch and pay payments.

Heard of this before? Don't blame you...

The iWatch- the first digital watch companion? Wrong again Bob- the past year has been chock full of watch announcements, from Samsung, from Motorola, and various other tech companies. They can relay notifications, they can monitor your heart rate, and they've been out for ages- heck, Samsung has already released two iterations of its Samsung Galaxy Gear.

But if you don't follow tech closely, you may not have heard of Samsung's Gear (which was first announced a year ago), or Motorola's 360 smartwatch, yet you've probably heard of Apple's iWatch, which we don't actually know exists yet. Isn't this weird? Why is this?

There are numerous reasons. Many indeed. A key reason is of course the quality and consistency of Apple's product environment, and the products themselves- but Apple's business strategy also has been hugely successful.

Apple has built for itself a truly iconic brand. An Apple logo, be it on an iPod nano, an iPhone or a 27-inch iMac, carries with it connotations of high quality materials (note how commonly that silver aluminium material is used in Apple products), luxury (take a look at some of Apple's prices) and reliability (most Apple product owners would agree on this one).

A large part of this has been thanks to consistency- a key factor in a business' success, but only if it is done right- of course no company should be creating consistently poor products (*cough*Blackberry*cough*).

Apple has created consistency at every corner of its business. Take a look at the two screenshots from Apple's webpage above, and the event invite at the top of the article. The same font (Helvetica Light I am led to believe) is used consistently, the same white-grey colours, the same minimalist design in general is consistent throughout most of Apple's site.
Of course certain products are given their own display style reflective of the product's character, but in general Apple's design (be it the design of the site, the design of the advertisements or the design of the products themselves) are all cohesive. They are certainly decisively minimalist- Apple doesn't make use of any cheesy patterns or frilly designs, it just selects one or two colours and sticks with it throughout the product. And this is throughout Apple's whole product line.
The Mac line is a particularly good example of such consistency- the distinctive aluminium material used as the outer shell for the devices act as a cohesive for all Macs- it links them all together, it lets you know that an iMac is from the same family as a Mac Mini. Not only is this beneficial from a design standpoint, but it creates a subtle familiarity in product users, one that makes people more comfortable in purchasing a second or third or fourth Mac computer.

Consistency spreads further than just the design of Apple products- Apple's retail stores are among the most valuable in the world, thanks largely to their design. Apple makes use of the same materials for all the tables, the walls to give customers familiarity and comfort in their environment- while still allowing for stores to have their own individual appeal (such as the Regent Street store in London).

Consistency goes into the use of the products, too- Apple is well known for its lack of device software fragmentation (basically most Apple users are always running the same latest software on their devices, as opposed to say Android where people are spread across numerous iterations of the software, or Windows where many people are still running XP), its iCloud service allows people to access photos and videos across all of their devices without having to transfer anything manually, and features of the upcoming Mac OSX computer operating system will allow Mac users to send and receive phone calls and text messages on their computers- provided there is an iPhone connected to the same wifi network.
This feature, named Continuity, is another genius move from Apple. Creating this greater connection between the Mac and iPhone is a very effective way of attracting customers to purchase both- as items that complement each other rather than separate items completely. This could easily sway an iPhone user to purchase a Mac, and vice versa.

Through design, brand and functioning consistency Apple is successfully crafting not just a line of products but more an environment of products, all related and cooperative with one another.

We know this, perhaps unawarely, but this expectation of consistency that many people have come to associate with Apple is perhaps the greatest reason why we are so interested in the rumoured iWatch and the iPhone 6, despite the apparent competence of these products' already existent competitors.

Consistency is key in a business- and clearly for Apple, when combined with quality products, it has paid dividends, big time.

SOURCES (and recommended reads):
apple.com
http://www.techradar.com/reviews/phones/mobile-phones/samsung-galaxy-s5-1226990/review 
http://www.htc.com/uk/smartphones/htc-one-max/
http://techcrunch.com/2014/09/06/apple-iphone-6-event-predictions/
http://www.engadget.com/2014/09/05/what-to-expect-when-youre-expecting-an-iphone-6-or-iwatch/
http://www.cnet.com/how-to/how-nfc-works-and-mobile-payments/