Morgan Stanley: Apple breaks law of economics as high price of iPhone X means higher sales

Morgan Stanley: Apple breaks law of economics as high price of iPhone X means higher sales
Common sense would have you believe that the high retail pricing of the Apple iPhone X will hold back sales of the tenth anniversary model. After all, the phone with 64GB of native storage is priced at $999. The 256GB model will cost you $1,149. Surprisingly, brokerage firm Morgan Stanley says that the higher prices will actually raise demand for the unit. According to the firm's Apple analyst Katy Huberty, "Innovation-led price increases historically boost, rather than hinder, Apple demand."

According to Huberty, Apple's MO is to sell high quality, innovative products at premium prices. She says that demand for iPhone models is based on the average selling price of the phone; the higher the price, the higher the demand and vice versa. Apple apparently figured this out a while back which is why the company doesn't appear to be worried about selling the iPhone X for such a high price.


The Morgan Stanley analyst also credits Apple's loyal fans. In Morgan Stanley's AlphaWise US Smartphone survey conducted in April, 92% of iPhone users who plan on upgrading their phone over the next year, said that they will purchase a new iPhone. That bodes well for a strong 2017-2018 for Apple. As a result, Morgan Stanley raised its 12-to-18 month target on Apple's shares to $194 from $182. The stock closed today at $158.73.

source: CNBC

Related phones

iPhone X
  • Display 5.8" 1125 x 2436 pixels
  • Camera 12 MP / 7 MP front
  • Processor Apple A11 Bionic, Hexa-core, 2390 MHz
  • Storage 256 GB
  • Battery 2716 mAh(21h 3G talk time)

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43 Comments

1. Lumbergh

Posts: 463; Member since: Feb 14, 2016

Steve never would have approved that stupid notch.

4. kiko007

Posts: 7493; Member since: Feb 17, 2016

I wouldn't be so sure. If it's one thing Steve Jobs is known for, it's being relatively unpredictable. Well that, and kind of a turtleneck wearing psychopath with control issues. (Sorry Steve... hope heaven is nice!)

22. Klinton

Posts: 1409; Member since: Oct 24, 2016

BTW Note 8 already broke this 'law of economics' , Right? But Samsung is not US company like Apple is, to have free advertising like this. Notch X is pathetic and stupid anyway, the ifans too though.

24. Klinton

Posts: 1409; Member since: Oct 24, 2016

Hope, Steve is in heaven,,,

29. wando77

Posts: 1168; Member since: Aug 23, 2012

Doubt it

5. cmdacos

Posts: 4220; Member since: Nov 01, 2016

There's no chance in that. One of the most mind numbing design choices ever in a smartphone. Only the truest of apologists will look past it as it impedes the viewing area.

9. bucky

Posts: 3785; Member since: Sep 30, 2009

Can’t be worse than having gigantic black bars on every video you watch, can it?

20. BuffaloSouce unregistered

Im not a fan of the design either but i think it looks alot better than the cyclops design of the Essential Phone

25. Klinton

Posts: 1409; Member since: Oct 24, 2016

The notch is there, not good for the users, but Apple to make body-to-screen ratio to look better on paper, even if useless and disturbing. In reality, still bezel phone.

2. jove39

Posts: 2146; Member since: Oct 18, 2011

That just confirms, there is no shortage of people with $1000 to throw around.

7. fyahking

Posts: 1146; Member since: Jan 28, 2015

Most people do that payment plan.lol

16. razmahtaz001

Posts: 501; Member since: May 11, 2013

many people that have the funds to buy the phone outright still use the payment plan.

11. submar

Posts: 713; Member since: Sep 19, 2014

The power of sheeple. No, I mean power of people.

3. jeroome86

Posts: 2314; Member since: Apr 12, 2012

Don’t think he would either. Then they don’t really want to hide it either with software. Not really liking the swipe up for home. Wish we could have a virtual home button.

6. PhoneInQuestion

Posts: 496; Member since: Aug 20, 2017

Do what you want with your money, as long as it isn't my money.

26. Klinton

Posts: 1409; Member since: Oct 24, 2016

Yup...but... Bezelless ,,,my a$$ ,

8. kiko007

Posts: 7493; Member since: Feb 17, 2016

I've always thought that aspect of economic conditioning was, somewhat flawed. Like, people aren't confined to a single will when it comes to spending. Circumstances dictate that you pay within reason, but not all reason applies to all people. From what I understand, the iPhone has what is considered inelastic demand, so as long as the price is within feasible means, it'll sell well. This iPhone is no exception to that rule, and neither will foreseeable iPhones either. Kinda like gas, only without the necessity of it as the iPhone is by no means a mandatory item or utility. But in a way, that makes it even more special, considering it is one of the few items to earn a distinction like that. Quick disclaimer: I know jacks**t about any of this stuff. I'm just going off what I remember from a few Economy courses I took maybe 5 years ago, so forgive me if I completely screwed something up.

32. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Yea, no that's not how it works. Basically, the iPhone only sells well based on the subsidies offered for it. If you look at the developed nations where it actually does sell, those all offer huge discounts on Apple devices, a loss the carrier's absorb. This year it seems that even the US carrier's are stepping away from subsidizing Apple devices. Pre orders have been low because unlike last year, there are no free iPhone deals or BOGO deals. This analysis that Apple isn't affected by price changes is pure BS to keep investor sentiment up and to stop a catastrophic price collapse. All other flagships that sell also sell largely because of major subsidies. Yet this time the carrier's are finally taking a chance and going to push prices on to consumers. So it remains to be seen how many people actually buy these devices without a second thought now. Its easy to tell once you look at Apple's other product sales. No one is buying iPads, very few are buying MacBooks, even fewer are buying iMacs, etc. That is because there are no subsidies on those items. Apple has a 40% share of the US market in smartphone sales. But it usually doesn't move past that for too long and even during the iPhone 6 it was pretty much around that. That was with amazing "innovation" and low prices. We shall see what happens this time.

33. toukale

Posts: 632; Member since: Jun 10, 2015

Lol @ no one is buying iPads. They sold over 11 million last quarter, over 9 million the quarter before that. Stop writing about things you know nothing about. Folks have been talking about iPads not growing from it's glory days of moving over 20 millions a quarter to about 10-12 million now, but don't get it wrong, Apple have been selling about 45-50 million iPads per year during the so call bad years. As far as iPhones, the carriers stopped subsidising them a few years ago and Apple sold even more. Now people just lease them on a monthly payment. All your other examples are simply non sense. Why do folks always feel the urge to talk crap about things they obviously know nothing about?

34. toukale

Posts: 632; Member since: Jun 10, 2015

I am reminded of this quote reading your comment. "It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt."

10. slannmage

Posts: 289; Member since: Mar 26, 2013

Well the iPhone 8+ 256GB for my current Data Plan is £83 a month, so the + will be at leas £93 and probably more... so thats £2232 over 2 years. What that made me do is keep my 6s for a third year and switch to Sim Only. So no they've lost my sale.

12. poptart574

Posts: 223; Member since: Feb 29, 2016

People love this brand. It's a reliable phone.

15. sumphatsmack

Posts: 29; Member since: Aug 10, 2017

lol reliable.. not if you buy it when it first comes out

18. ibend2

Posts: 159; Member since: Mar 16, 2016

21. MrShazam

Posts: 987; Member since: Jun 22, 2017

Hahaha, very good find. Unsurprisingly, iphonearena hasn't reported this...

28. poptart574

Posts: 223; Member since: Feb 29, 2016

Personally, having an iPhone in my pocket is like going back to carrying a flip phone. The way I use my smartphone, no way an iPhone will allow me to use it the same way. Yet, regular people who do not know the true wonders of Android and its infinite customization will settle for an iPhone cause it is a reliable phone.

13. poptart574

Posts: 223; Member since: Feb 29, 2016

Imo iPhones are for the multitude of people that just want a good reliable phone and android are for those that are a little more adventurous, tinkerer types.

14. razmahtaz001

Posts: 501; Member since: May 11, 2013

theres alot of high quality premium smartphone out there that is half the cost of an iphone...some people act as if the iphone is the only high quality smartphone LOL as fro the notch on the iphone x, i saw a video clip of it playing a video...that notch is a distraction LOL

17. sumphatsmack

Posts: 29; Member since: Aug 10, 2017

THAT NOTCH IS COOL AF DON'T PLAY, HAVE YOU SEEN WHAT IT LOOKS LIKE WHEN IT IS BLACKED OUT BEHIND THE STATUS BAR? SEXY MMMMMMM

19. ibend2

Posts: 159; Member since: Mar 16, 2016

"Morgan Stanley says that the higher prices will actually raise demand for the unit" if that's the case, why didn't they sell it for $10,000 or more, since higher price = more demand

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