Can Apple Break The Luxury Glass Ceiling With A $1,000 iPhone?

Today marks the 10th anniversary of the introduction of Apple’s first iPhone. Today’s highly anticipated release of three new phones is expected to push the envelope on both features and price, with one of the new models widely speculated to be priced upwards of $1,000. If so, this would be Apple’s first true “luxury” iPhone.

Until now Apple’s foray into the luxury market has been with its Smartwatch under licensing agreements, first with Gucci and currently with Hermès. Neither have been overwhelming successes since the point of difference for the luxury Smartwatch’s is primarily the band style, not functionality. It put style before substance.


With the new luxury Apple iPhone, speculated to be called “iPhone X,” “Anniversary iPhone,” or less likely “iPhone 8,” Apple appears to be leading with enhanced functionality, though its style will be burnished as well.


Fast Company reported the luxury version will “change the way we interact with smartphones.” It speculates the new phone will be enhanced with facial recognition to replace the mechanical home button on the face of the phone. It also anticipates the phone to support some “augmented reality” apps that allow the user to place digital imagery into real-world pictures taken on the phone.

Style-wise, the new luxury phone will be slightly larger and have a curved, edge-to-edge screen display, with a software bar at the bottom of the screen for interaction. Glass will cover both the front and back of the phone, with additional waterproofing expected.

The question is, will people will pay $1,000 for an iPhone? It certainly won’t be the most expensive phone in the market. That distinction is held by London-based Vertu, which launched in 1998 by Nokia. Historically Vertu’s selling point has largely put style before substance, offering distinctive cases with sapphire screens, ostrich leather casing and titanium frames wrapped around what many feel is less than state-of-the-art functionality. With prices starting around $10,000, the company has been troubled. In its most recent financial report in 2014, the company reported a loss of £53 million on sales of £110 million, according to The Verge.

Nokia sold Vertu in 2012 to a private equity group, which sold it again in 2015. And in March 2017 London’s Telegraph reported it was sold a third time for £50 million to Baferton Ltd, a Cyprus-registered vehicle funded by Turkish exile Hakan Uzan, who faces legal battles with the Trump organization and Nokia itself.

Steve Jobs famously said, “People don't know what they want until you show it to them." Vertu proves they don’t want just fancy cases for their phones. They want greater functionality and that will be what will ultimately sell the new Apple luxury phone.

At least initially we can expect plenty of Apple junkies to get on board, but I think the real success of Apple’s breaking the $1,000 price point barrier will be realized by sales of its under $1,000 phones. By raising the price of its cutting-edge, most advanced phone, it elevates the perceived value of all the iPhone 7 models under it.

It’s the strategy of “Luxflation.” By elevating, i.e. inflating, the luxury quotient of the top-of-the-line Apple phone, it elevates the perceived value of all the products that are priced under it. That will ultimately allow Apple to inflate the prices for all its products in the line. Last year’s iPhone 7 Plus at $769 doesn’t seem so dear by comparison, and the basic iPhone 7 at $649 is an absolute steal. Today’s updated versions of the iPhone 7 model can be expected to be modestly more expensive than last year’s models, but nowhere near that of the luxury version.

Looking back the initial 2016 iPhone 7 introduction was a disappointment as compared with 2014’s iPhone 6. Fortune reported that “Apple sold 215.4 million iPhones last year [2016], 7% fewer than in 2015.” Apple CEO Tim Cook blamed the weakness in iPhone 7 sales to rumors about the enhanced versions coming out today, according to the Express.

Others have postulated that the disappointing sales of iPhone 7 were caused by teh fact that it wasn’t as revolutionary in terms of both functionality and styling as the iPhone 6 was. We’ll see whether today’s launch can energize buyers to trade up to one of the newer models. My guess is that iPhone 7 will look a whole lot cooler after today than it did yesterday. If so, then the new luxury Apple phone at $1,000 will have been a success.