Apple Tests Consumer Loyalty and Pockets with $1,000 iPhone 8

People wait in front of the Apple store in Munich, before the 2015 worldwide launch of the iPhone 6s. (AP)
People wait in front of the Apple store in Munich, before the 2015 worldwide launch of the iPhone 6s. (AP)
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Apple Tests Consumer Loyalty and Pockets with $1,000 iPhone 8

People wait in front of the Apple store in Munich, before the 2015 worldwide launch of the iPhone 6s. (AP)
People wait in front of the Apple store in Munich, before the 2015 worldwide launch of the iPhone 6s. (AP)

Apple is expected to unveil on Tuesday the iPhone 8 ten years after co-founder Steve Jobs released the first version. A decade later, the new phone is likely to sell for $1,000, making it the company’s most expensive yet.

Crossing into a new financial frontier, this will test how much consumers are willing to pay for a device that's become an indispensable part of modern life.

The unveiling of a dramatically redesigned iPhone will likely be the marquee moment Tuesday when Apple hosts its first product event at its new spaceship-like headquarters in Cupertino, California. True to its secretive ways, Apple won't confirm that it will be introducing a new iPhone, though a financial forecast issued last month telegraphed something significant is in the pipeline.

In addition to several new features, a souped-up "anniversary" iPhone could also debut at an attention-getting $999 price tag, twice what the original iPhone cost. It would set a new price threshold for any smartphone intended to appeal to a mass market.

What a thousand bucks will buy

Various leaks have indicated the new phone will feature a sharper display, a so-called OLED screen that will extend from edge to edge of the device, thus eliminating the exterior gap, or "bezel," that currently surrounds most phone screens.

It may also boast facial recognition technology for unlocking the phone and wireless charging. A better camera is a safe bet, too.

All those features have been available on other smartphones that sold for less than $1,000, but Apple's sense of design and marketing flair has a way of making them seem irresistible — and worth the extra expense.

"Apple always seems to take what others have done and do it even better," said Carolina Milanesi, an analyst with Creative Strategies.

Why phones cost more, not less

Apple isn't the only company driving up smartphone prices. Market leader Samsung Electronics just rolled out its Galaxy Note 8 with a starting price of $930.

The trend reflects the increasing sophistication of smartphones, which have been evolving into status symbols akin to automobiles. In both cases, many consumers appear willing to pay a premium price for luxury models that take them where they want to go in style.

"Calling it a smartphone doesn't come close to how people use it, view it and embrace it in their lives," said Debby Ruth, senior vice president of the consumer research firm Magid. "It's an extension of themselves, it's their entry into the world, it's their connection to their friends."

From that perspective, it's easy to understand why some smartphones now cost more than many kinds of laptop computers, said technology analyst Patrick Moorhead.

"People now value their phones more than any other device and, in some cases, even more than food and sex," Moorhead said.

The luxury-good challenge

Longtime Apple expert Gene Munster, now managing partner at research and venture capital firm Loup Ventures, predicts 20 percent of the iPhones sold during the next year will be the new $1,000 model.
Wireless carriers eager to connect with Apple's generally affluent clientele are likely to either sell the iPhone at a discount or offer appealing subsidies that spread the cost of the device over two to three years to minimize the sticker shock, said analyst Jan Dawson of Jackdaw Research.

Even Munster's sales forecast holds true, it still shows most people either can't afford or aren't interested in paying that much for a smartphone.

That's one reason Apple also is expected to announce minor upgrades to the iPhone 7 and iPhone 7. That will make it easier for Apple to create several different pricing tiers, with the oldest model possibly becoming available for free with a wireless contract.

But the deluxe model virtually assures that the average price of the iPhone — now at $606 versus $561 three years ago — will keep climbing. That runs counter to the usual tech trajectory in which the price of electronics, whether televisions or computers, falls over time.

"The iPhone has always had a way of defying the law of physics," Munster said, "and I think it will do it in spades with this higher priced one."

Eyes on China

Apple Inc also hopes the number’s auspicious connotations in China will help turn around fortunes in the world’s biggest smartphone market after six quarters of falling sales.

Chinese shoppers, however, are already counting the cost, with the latest model’s $1,000 price tag sitting at roughly double the average Chinese monthly salary.

The success of Apple’s next iPhone in China is crucial for the Cupertino-based firm, which has seen its once-coveted phone slip into fifth position in China behind offerings from local rivals Huawei Technologies Co Ltd, Oppo, Vivo and Xiaomi Inc.

Greater China, which for Apple includes Taiwan and Hong Kong, accounted for roughly 18 percent of iPhone sales in the quarter ended in July, making it the company’s top market after the United States and Europe. Yet those sales have been declining steadily and are down 10 percent from a year earlier, in contrast with growth in all other regions.

While the iPhone 6 took China by storm in 2014, models since have received a more muted response.

“I’ll wait for a drop in price, it’s too expensive,” said Angie Chen, 23, a project manager in Nanjing and iPhone 6 owner.

Chen said she might even wait for the new phone’s successor, when prices will fall. “It’s a nice number to hear, but there’s no rush.”

Eight is the luckiest number in China because it sounds similar to the phrase meaning “to get rich”.

Mentions of “iPhone 8” on popular Chinese social media platform Weibo - an indicator of consumer interest - were running slightly ahead of the similar period before the iPhone 7 launch, but were far more muted than with the iPhone 6.



Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.