Apple wants to increase price of iPhone 6 by $100

Carriers have fought back any price increases but Apple is confident the extra $100 won't affect its customers citing its immunity to pricing pressures faced by its competitors.
By Ananth Baliga   |   April 14, 2014 at 12:15 PM
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CUPERTINO, Calif., April 14 (UPI) -- Apple is reportedly in talks with carriers about the price customers will pay for the iPhone 6, with the possibility of a $100 increase.

Jefferies analyst Peter Misek released a note Monday saying that the carriers have pushed back at the price increase, but Apple could convince them as there are no other major phone releases expected this year.

“Our checks indicate Apple has started negotiating with carriers on a $100 iPhone 6 price increase. The initial response has been no, but there seems to be an admission that there is no other game-changing device this year,” said Misek.

According to the note the extra cost will be split between the customer and carrier, with each asked to pay $50. The iPhone 5S is currently sold at a subsidized rate of $200 with a standard two-year contract. If the price increase were to take place, customers would have to pay $250 for the new phone.

Mike McCormack and Jerry Dellis, also Jefferies analysts, agree with Misek and say carriers aren't in the strongest position to resist a higher-prices phone.

But this could backfire. Apple has seen its business slow down to single digit growth partly due to a lack of creativity when it comes to new devices. At the same time, an increasing number of customers are opting for monthly smartphone installment plans to avoid getting locked into long-term contracts, which means that they bear the full cost of the phone upfront, potentially channeling them towards cheaper smart phone options.

Apple internal research found that people want cheaper phones with bigger screens. Apple has experimented with a cheaper version of its flagship iPhone, the iPhone 5C, but feels that it is largely immune to pricing pressures faced by Android devices.

[CNET] [Slate]

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