An iPhone 15 Ultra for $1299? Why the Apple Tax has gone out of control

This article may contain personal views and opinion from the author.
An iPhone 15 Ultra for $1299? Why the Apple Tax has gone out of control
I hope I will be forgiven for stating the obvious, but the price of high-end smartphones has truly gone out of control in recent years. Admittedly, even in the past, top-of-the-line specs were reserved solely for ‘flagship’ smartphones and they used to come at a hefty premium. 

Currently, however, even entry-level configurations of premium (but not exactly ‘flagship’ per se) handsets can easily cost more than $1000. And Apple is the worst offender. According to some estimates, the price of the average iPhone is almost triple that of an Android smartphone.

To an extent, that is to be expected, given the way the Cupertino company has structured its smartphone portfolio. Nevertheless, in light of the vast clout Apple has over the tech world, a certain degree of scrutiny is required. 

In the following paragraphs, I will take a look at the state of Apple’s pricing strategy and where it is heading. More broadly, we will look at the implications this has for the smartphone market as a whole.

How Apple Normalised the $1000+

First and foremost, I would like to assert a number of key points that should be kept in mind. Namely, so long as users are willing to splurge on the latest iPhone 14 Pro Max, the latter’s price tag will always be at least somewhat justified. In a capitalist world, demand will always be a key determinant of value. 

Also, while relatively few buyers buy their iPhones directly from Apple and spend $1000+ all at once, this does not change the total final price and should not impact the way we view it. 

Full disclaimer — I do not think there is anything inherently wrong in spending $1000+ on an iPhone, or any smartphone for that matter. The average lifespan of smartphones has gone up significantly and, nowadays, a device can last you a good couple of years. Still, there is something mildly disconcerting in the state of iPhone prices and in the way Apple makes you spend that much money. 

A couple of years ago, with the iPhone X, Apple normalized the $1000 smartphone. It managed to get away with it, because of some incredibly eye-catching features - users would be getting much more premium materials, a new design and a lovely OLED panel. Naturally, millions were quick to give their money to Apple. 

The problem is that Apple, while giving the iPhone a much needed revamp  in its 10th iteration, introduced a disproportionately steep price increase. Do not get me wrong - the iPhone X was an awesome smartphone, one that I used for years. But the precedent Apple set was dangerous. No need to mention how, subsequently, the upper pricing limit was further expanded with the Pro Max series, while the charger was removed. This forever altered the way we perceive smartphone prices and not, necessarily, for the better.

The End of Entry Level iPhone 

Another major reason why Apple has succeeded in vastly increasing the average price of its smartphones, is the gradual, but steady marginalization of entry-level iPhones. One need look no further than the iPhone SE (2022). 

On the inside, the SE is actually a rather capable device. However, its design is so painfully outdated that it almost feels like Apple does not want you to look past its exterior. This is hardly a new strategy - manufacturers have always sought to make budget devices decidedly less premium and appealing. 

Nevertheless, the iPhone SE is stuck with a look that is, by now, ancient. A 65% screen-to-body ratio in 2023 is something that cannot be forgiven, even on an entry-level device (which is actually pretty costly for a ‘budget’ option). 

To add insult to injury, it seemed Apple would finally give the SE a passable design in 2024 with the adoption of the notched design of past high-end iPhones. But, based on most reports, it will be a while until that actually happens. Perhaps in 2027, Apple would be okay with giving the iPhone SE a ten-year-old design. 

Lastly, another rather predatory pricing strategy was the substitution of the iPhone mini with the iPhone Plus in the lineup. There are many reasons why I think that was a poor decision - the mini featured some unique selling points that no other device on the market had. Even sales estimates seem to indicate that the iPhone 14 Plus was not a particularly sound decision.

More importantly, however, that move further pushed the entry-level price of the standard iPhone lineup upwards and, by extension, increased the average iPhone price even more. In a nutshell, Apple is either outright eliminating its more affordable iPhones or intentionally handicapping them in order to limit their appeal. Which brings me to my next point.

Making the vanilla iPhones more commercially successful

It is hardly a secret that Apple’s lower-end iPhones do not sell well. According to one source, the Company is ‘seriously concerned’ about the sales of the vanilla iPhone 14 and the iPhone 14 Plus. But is that really all that surprising?

The non-Pro iPhone models this year are possibly in the most pitiful state they have ever been. A year-old chipset, the notched design of the past, an inferior camera module - do I really need to go on?

Users are expected to pay $799 (or $899 for the Plus), for a device that is basically an iPhone 13 on the inside. Also, the fact that a device could cost this much and come with a 60Hz screen is baffling to me. No wonder most buyers prefer to spend an extra $200-$300 and get an iPhone 14 Pro or an iPhone 14 Pro Max. 

So what will Apple do about this? Instead of making the vanilla iPhones more appealing by introducing some long overdue updates, they will likely simply increase the price of the premium ones. So where are we heading?

Premium, More Premium, The Most Premium

Even last year there were rumors that the new premium iPhones would be more expensive. In the end, Apple decided against this. However, in all likelihood, a price hike is imminent. After all, a more substantial difference is the only way the vanilla iPhones will sell more and the odds of Apple cutting the price of the latter are almost non-existent. 

Thus, in 2023, it is entirely possible to have an iPhone 15 lineup that starts at $799, but goes up to $1199 (assuming the price hike of $100 that analysts previously predicted for the Pro models takes place this time around). In summary, the average starting price of the iPhone, which was $899 in 2021, will once again increase from $949 to $999.

The kicker is that Apple might not even stop at that. According to Bloomberg’s Mark Gurman, the Cupertino company might end up introducing an ultra-premium iPhone 15 Ultra (pun intended). While previously, Gurman assumed that the Ultra would be a rebranded iPhone Pro Max, he now seems to think it could actually be a new device altogether - if not this year, than possibly in 2024. 

A new iPhone that will likely have to be at least $100 more expensive than the current top-of-the-line model. With some simple calculations we can deduce that this adds up to $1299. An iPhone with the price tag of a MacBook Pro - not too shabby.

The biggest problem is that Apple, while never being exactly known for its more affordable devices, still has some excellent entry-level options in other product categories. The MacBook Air (2022) is a gorgeous piece of technology, while the vanilla iPad (2022) just received its biggest design revamp in a decade.

If Apple is content with having decent entry-level MacBooks, iPads and accessories, why does the same logic not apply to the iPhone? In truth, you do not need affordable products to be downright bad in order for premium ones to sell.

Still, regardless of what I think, it seems the current strategy is working - Apple is making an absurd amount of money and commands a ridiculously big market share in the premium and ultra-premium smartphone segment.

Conclusions: Apple is not the Only Offender 

Finally, I would like to once again reiterate that I have no problem with Apple making this much money and charging $1000+ for an iPhone. Even if I had, that would hardly make a difference. What I am opposed to, however, is the manner in which they have gotten away with such a pricing strategy, Not least because, given their status as leader in the world of smartphone technology, their strategy has been replicated by many other manufacturers. 

The recent launch of the Samsung Galaxy S23 lineup is a good example. The latter starts at $799, but if you want to get the latest and greatest you will have to be prepared to spend $1199 on the Samsung Galaxy S23 Ultra. This is why I personally am not looking forward to the iPhone Ultra.

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