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iPhone 6: Apple to Charge More to go Bigger?

Would AAPL risk boosting the price of a bigger iPhone 6?

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Yes. Apple has demonstrated both its insistence on maintaining a premium pricing model and the power of its brand over the past several months.

The iPhone 5S has sold better than expected, despite the release of the less-expensive iPhone 5C, proving that Apple customers are willing to pay the extra for a flagship phone bearing that white logo. And when the iPad Mini replacement was revealed in October, instead of lowering the price of its cheaper iPad, as was widely expected (given that it already cost $100 more than most 7-inch Android competitors), Apple instead raised the price to $399 — a 21% increase.

A bigger iPhone 6 is as close to a sure bet as you can get with Apple. Whether the display is 4.8-inches or 5-inches, curved or not, the company simply needs a bigger option to be competitive in a market where consumers are demanding smartphones with larger displays than anything it currently offers.

Yes, Apple has pretty much stuck to its guns to this point (the half-inch bump of the iPhone 5 was a minor concession), but it had the same firm stance (in reverse) on big tablet screens being the only way to go, before caving to consumer demand and releasing the iPad Mini.

The other sure bet with the company is its addiction to fat profit margins. The only way Apple can sell a bigger iPhone 6 at the current $649 price is to find a bigger display that’s dramatically cheaper than Samsung’s, figure out another way to shave component costs, or relent on margins. The first will be tough to pull off without sacrificing quality, and the second is probably wishful thinking.

I think Apple will sell a boatload of the bigger, more expensive iPhone 6’s. There are plenty of current Apple customers still clutching an aging iPhone 4S and casting envious looks at the iPhone 5S, but refusing to make the jump until Apple offers something bigger. A good chunk of iPhone 5S owners are likely to see the display side increase as a worthy upgrade. And on a device that’s already expensive, tacking an extra $100 isn’t likely to cool upgrade demand.

But expect Apple to keep selling a cheaper iPhone option like the iPhone 5C next year, just in case.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media,

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