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Why $1500 iPhone would be a gift to Wireless Carriers

$1,500 Anniversary edition iPhone could actually be a gift to Wireless Carriers…

The post aims to look past the rumored technical specifications and into key impacts an ‘Anniversary Special Edition’ iPhone 8 would have on these types of Carriers


Tis’ that time again… Again!

Like clockwork, the iPhone rumor mills are in full throttle this year too, albeit with an extra dose of zing! I am of course referring specifically to the (rumored) special edition iPhone model to celebrate the iconic device’s 10th Anniversary

The ‘Anniversary Edition or iPhone X’ as dubbed by some will become the ‘Royal model’ released alongside it’s now ‘commoner’ iPhone 7s/8 brethren

The features of this mystical device is anyone’s guess… but generally expected to sport (Apple’s version) latest bells & whistles… we’ll have to wait until the customary September reveal for the ‘real details’

Whatever the features, 3 distinct characteristics will help iPhone X stand apart –

#1. Halo SKU: Distinguished by Model-specific Features, Colors, form-factor

Think: OLED near border-less screen, AR-capable, astrophysics-defying cameras so powerful they can take clear portrait photos of Jupiter’s moon in broad daylight (just couldn’t resist)… General rule of thumb: faster everything, better everything!

#2. Limited Supply:  If regular iPhone’s history of short supply (@ launch) is anything to go by… expect iPhone X supply constraints to become the topic of countless supply chain optimization thesis from Universities & Consulting firms alike in the coming decade…

Translation: Rare Special Edition status… Translation: “I’ve begun plans to camp outside the store starting next week!” status #campingoutsidestore

#3. Exorbitant Price Tag
The one rumor that sticks out the most is the Anniversary iPhone’s price tag – pegged anywhere around the US $1,500… and whilst everyone debates the logic of that price tag in a saturated smartphone market… we know that if anyone can pull it off… it is Apple!


$1,500 iPhone will be a gift to many Wireless Carriers

For the purposes of this post, I’ll be referring to Carriers in emerged markets; specifically those who are in their mature phase of offering Equipment Installment Program (EIP) and Buy Back Trade-In & Upgrade (BBTIU) programs (e.g. U.S)

#1. It will attract horde of upgraders… for real!

An iPhone is as essential to a Carriers’ smartphone range as Oxygen is to humans!

This has been evident since it’s launch a decade ago & particularly took off since the larger iPhone 6/Plus were tied to EIP programs making it relatively easier for subscribers to acquire their aspirational device

Pop quiz: What incentives do initial iPhone 6 subscribers paying full device price really have to upgrade every year to a newer SKU with little / no (perceived) innovation?

Answer: Not much… they hold on to their devices for longer

EIP programs largely did their job… attracting millions of iPhone subscribers to Carriers……but since then

BBTIU programs designed to encourage perpetual upgrades may not have worked as effectively as it was meant to… evident in the upgrade rates & commentary from key Carriers in recent times

$1,500 iPhone could change that for the Carriers as it’s Halo status should give existing iPhone users as well as switchers enough incentive to upgrade from their existing device

#2. It will attract high spenders

In an increasingly saturated market such as U.S, it is becoming increasingly harder to attract new smartphone subscribers… so instead of volume alone the focus has now shifted to extracting maximum value from existing base

The (rare) $1,500 iPhone could do just that: Though customers will end up paying the full price of the device anyways (most likely through re-engineered EIP / BBTIU plans)… Carriers could if they wish to, raise the ‘entry requirements’ for iPhone X – i.e. place it at higher plan bands than today’s to grow their ARPU & CLVthink: “Unlimited 2X Plan (with 44GB cap) tailored specifically for iPhone X’s AR data needs”

This makes perfect economical sense in not only ensuring ‘high-spend’ upgrades, but also port-ins & new-adds as well

#3. Higher Ancillary / Attach / In-store Spend

A special edition $1,500 iPhone will need that ‘extra special’ insurance, superb protection plan & not to mention… a tailor fitted leather case, Bluetooth speaker, AR viewer, etc.

Higher In-Store Conversion: Most customers (bar savvy e-shopper type) wouldn’t want to leave the store with a $1,500 investment & no protection plan… after all drop the ‘commoner’ iPhone 8 and you could get a replacement soon… drop the super special iPhone X and you could be sulking until supply constraints are lifted!

And then there is the opportunity of bundling in iPhone X specific accessories that could also command higher prices than the regular iPhone ones

As mentioned, the special edition iPhone presents Carriers with an apt opportunity to tweak their propositions to include ancillary services & accessories with a common goal to boost spend @ POS and grow the overall ARPU & CLV (with virtually zero impact to subsidies)

And then there are those periphery opportunities that iPhone X could present to certain Carriers such as AR content add-ons, increased store foot-traffic, X-sell & Up-sell opportunities, family bundling (think: 1 Phone X + 3 iPhone 8 for special bundled into a special 30 month payment plan with zero rated content & subsidized protection plan)


So…

We are yet to see what a $1,500 iPhone X looks like & does… Most importantly; whether the forthcoming hyped device can actually manage to keep consumers engaged (10 years on)… all key factors that will contribute to Carrier impacts outlined above

But, should iPhone X truly turn out to be Jony Ive’s best, most desired creation… rest assured, the happiest of the bunch will be Wireless Carriers in emerged markets who are increasingly facing the challenge of growing subscriber revenues & lowering churn in the face of saturated market with little / no (perceived) smartphone innovation

In such an event, Carriers would need to rethink & remodel their propositions that leverage iPhone X in maximizing their ARPU, CLV & smartphone portfolio profitability curve whilst minimizing / eliminating subsidies

And No, #IWillNotBeCamping 😊