We know that Apple will almost definitely be releasing a larger version of its iPhone this year but we still don’t know exactly how big the device will be or what Apple will charge for it. Business Insider directs our attention to a new research note from Pacific Crest analyst Andy Hargreaves, who says that Apple stands to make some serious cash from its larger iPhone, especially if it charges an on-contract price of $300 for the device.
“But wait!” you say. “Wouldn’t charging $100 more for larger iPhones mean that Apple would sell fewer of them?”
In most standard Economics 101 textbooks the answer would be yes. However, Hargreaves notes that Apple seems to operate according to different rules of economics than other companies. As the flop of the iPhone 5c has shown, Apple fans aren’t all that interested in having low-cost products — instead they’re willing to pay top dollar for what they think is the best of the best. The popularity of an iPhone with a bigger display combined with a higher selling price would help push the iPhone’s average selling price (ASP) up from $605 to $641, Hargreaves projects.
“While many observers have chided Apple for a ‘lack of innovation’ over the last two years, we do not expect a linear path to commercially successful new product categories,” Hargreaves writes. “Instead, Apple is likely to choose its opportunities and timing extraordinarily carefully and release new products or services only when it feels it has the best chance to succeed, which does not mean it is not innovative, just that it is not dumb.”