Originally Posted: August 5th, 2019

iPhone Excess: Are $999 Phones Normal Now?

I originally wrote this last fall, when I was feeling particularly feisty. It’s a bit harsh, but I stand by what I said. Here’s the original post from September 2018:

The iPhone Ritual

For over a decade now, I’ve paid close attention to every product Apple has announced. I obsess over electronics more than the average person, more than is needed or is healthy. It is a hobby and a career. Computers are my thing. When Apple releases products, I always pay attention.

I read the rumors and go through the yearly ritual of watching them announce new phones. This has become increasingly less worth my time as the years have marched on and upgrades have become more evolutionary than revolutionary.

Last year, we got the iPhone 8 and 8 Plus, which were slight upgrades to the 7 and 7 Plus. The 7 and 7 Plus were slight upgrades to the 6 and 6S lines. Largely the same industrial design for 4 years. Same size screens, better cameras, faster chips. The usual iterative updates that Apple does so well.

Last year we also got the iPhone X (pronounced “ten” for some dumb reason), which was the star of the show. This introduced a new industrial design, new gesture based navigation, FaceID, OLED screens and a few other good bits. It was sold as “the phone of the future” and compared to the stale design of the 8, it was easy to sell it that way. It also gave Apple the courage to charge $999 for the cheapest iPhone X. An eye watering price for a cell phone in most people’s minds, including mine.

2018 iPhones

This year, an “S” year, we expected a refined iPhone X and some other iterative changes, and that’s what we got. We now have the iPhone XS and XS Max (née Plus). They are the same formula as the iPhone X, with this years chips, some camera updates and a new coat of paint. The standard S formula with some goofy names.

We also got the iPhone XR, which is a cheaper version of the iPhone X. The screen, camera and body is slightly cheaper, but they include the speedy new chips from the XS. Apple doesn’t do cheap, only cheaper. This is similar to how they had the 5C and the 5S back in 2013. Flagship for the nerdy and rich, and a colorful, cheaper model for the more casual phone users. That is, if you can consider $749 to start cheap.

It’s obvious Apple is doing everything they can to raise the average selling price of the iPhone. Since the amount of phones they sell per quarter have peaked and unit growth has leveled off, the way they are choosing to increase revenue is to make them more expensive and create the need for expensive accessories. They know tens of millions of people will buy whatever they put out, at whatever the cost. This is how you get a $999 phone + $200 AppleCare + $159 AirPods + $399 Watch + iCloud subscription +… you get the idea. Gotta keep the shareholders happy, gotta keep the revenue growing.

A Mature Market

Since they can’t sell more phones, they are selling more expensive phones to the same amount of people. This is an important point, and shows where they are headed. This doesn’t only apply to their phones, this higher ASP mentality has taken over their other products, too.

As a customer, it feels like I’m being taken advantage of. For example, look at how you charge a phone. Last year, they advertised the new models (8, 8+ and X) as being capable of two new features -- quick charging and wireless charging. However, the charger included in the box did not deliver either of those. For Apple branded quick charging you needed to purchase a $50 power brick and a $19 cable. Same story for wireless charging, it required an expensive accessory. Thankfully, 3rd party options are cheap and easy to buy. Android has had these features for years. 3rd party availability doesn’t make it any less insulting and frustrating.

Another example of them taking a feature out of the phone to sell it back to you is the headphone situation. Since the iPhone 7 came out, no new model has included the standard 3.5 mm headphone jack. Their solution was to use an adapter or to purchase bluetooth headphones. Of course, they came out with their own Bluetooth headphones, AirPods, which cost $159. It also helped move premium priced Beats headphones, a brand they own. This year, they no longer include the adapter in the box in any of their phones, including the 7 and 8 series which previously did include that adapter in the box. We’re lucky they still include the phone.

Pay to Enter: $999 and up

All this without mentioning the cost of the flagship phones themselves. When the $999 tier came out last year, I knew that wasn’t going to go away. The iPhone X was an incredibly successful product, causing big jumps in their quarterly iPhone revenue. This year, the XS is priced the same, with an additional storage tier on top for even higher prices. The XS Max adds another $100 on top of that.

An iPhone XS Max starts at $1099 for 64 GB of storage, and getting one with 512 GB costs $1449. Before tax. Without quick or wireless charging. Without a way to plug standard 3.5mm headphones in. Without the crazy import taxes people pay in other countries. One thousand, four hundred and forty nine dollars. For a phone! Add AppleCare and that’s almost $70 per month, for just the phone. No accessories, no cell plan or data. Just the phone.

Nickel-and-diming, cost cutting on premium products… what is Apple doing? Making a metric butt-ton of money, for one. This strategy is working for them financially, for now at least. The further they go down this road, the more of their customers will be pushed away. I may soon be one of them.

What does that money get you over last year’s X? Diminishing returns. A slightly faster chip, an improved camera, a bigger screen, faster FaceID, slightly better battery life. That’s the quick overview, there are other differences and features I am glossing over here. The point is each new year brings smaller and smaller changes and higher and higher cost.

The names are dumb, too. Everyone is going to pronounce it iPhone Excess. Maybe that’s what they want.