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The only detail about the iPhone X that has received more attention than Face ID is the price. Many pixels have already been darkened over the issue. But it is usually just a reactionary scree over how outrageously the new iPhone is priced. The response is an aggressive defense of the price. We can do better:

Race for the top

10 years ago, the iPhone came out of the gate as the high-end option for discerning smartphone buyers. But we need to recall that the price of cell phones at the time was already considered too high, and getting higher with every new release.

2 years before the iPhone was announced, the Motorola Razr debuted at $600. Was that expensive? Sure. But for context, remember that the iPhone has spent the majority of its 10 year lifespan with a starting price of $650.

Android phones tried to play in that territory, but failed. In the same way that Apple owned the high-end laptop market, they owned the high-end mobile phone market. Competitors did the only thing they knew how to do: They raced to the bottom to capture the space beneath where Apple was willing to go.

It wasn’t just computers. We saw the same pattern play out with MP3 players. And tablets. In all cases, Apple occupied the top spot in profit share without regard to market share. Once they were satisfied with what they could do at the high end, Apple slowly moved down market to clean up what they left behind initially.

Once competitors start losing ground in the midrange: the only place where profitability is possible, they do the inevitable and take a few shots at the high end that they previously abandoned to Apple. This is where copying on the cheap does not help. Brand and ecosystem rule at the high end of the market. Other companies burn a lot of money trying to overcome those advantages.

In all of the markets where there was once a race to the bottom, there is now a race to the top. And Apple is already there. So to get traction in that space, competitors have to go above where Apple reigns in the same way they had to go below. Android and Windows Phones pushed past the $650 price point long before Apple decided to do so.

Apple wasn’t first to the big phone, which also happened to be a more expensive phone. When hardware is all you have for differentiation, you tend to throw a lot at the problem of breaking through the noise.

Android phones have long used expensive components to lure spec-driven buyers. They have used expensive OLED screens, whether or not they have been any good. And they have used every sensor they could jam into the chassis.

What they have been trying to do is pivot from the race to the bottom to a race to the top. The same thing is happening with PCs and tablets. As an example, the Chromebook exists to provide basic Google computing at the cheapest possible price. In a few days, Google is set to release a Chromebook that will be priced upwards of $1,500.

Google’s upcoming Pixel phone is rumored to reach $950, or more. Samsung just released a phone that will run you $960 on Verizon. The Essential phone debuted priced stratospherically as well. It is in this environment that the iPhone X has been announced with the price of $999. It is the most expensive by a few tens of dollars.

The soon to be released iPhone X is just another entry in the race to the top. Its pricing is not special, and doesn’t really stand out. It is worth repeating that this is just the world we live in. And Apple was not even the first to go there. The race to the top is upon us. And it will not stop at $1,000.

Relative value

I am not going to make an argument about what the market will bear. I find that to be a rather defeatist attitude. It does not consider the relative value of items. I am also going to refrain from arguments about intrinsic value. I don’t actually believe in intrinsic value in most situations. Value of items is a convenient fiction in which humans collectively engage. Were there no humans on the earth, gold would have no more intrinsic value than dirt.

A more practical way to determine the value of something is to calculate its value relative to something else that has a value on which we already agree. In this case, we will look at the value of the iPhone X relative to the price of the iPhone 8 plus. This assumes that the iPhone 8 plus is priced fairly to begin with. To determine that, we would have to compare that value to something else and find ourselves in an endless regression. Let’s not do that.

The iPhone 8 plus starts at $799. To justify the price of the iPhone X, one only need find $200 worth of value between the models. This shouldn’t be that difficult. This can be done with a single feature. Nonetheless, here’s 5:

The screen

It is all about that big, beautiful OLED screen. There are good reasons why it took so long for Apple to get around to it. OLED has always had some obvious advantages. But it also had a lot of less obvious disadvantages. Apple has always had the highest standards for their display technology. Until now, they could not make the display they wanted with OLED tech.

But one of the challenges with OLED that still remains is price. Good quality OLED displays are not only hard to produce at scale, but expensive. If Apple had offered an iPhone 8 Edition with the only difference being that the display was OLED, that would have accounted for the $200 price difference. And it would have been worth it.

Your experience seeing things on an OLED display will be materially different. Your photos will come to life. Movies will be even better. Text will be a joy to read. And all else being equal, batter life will improve. With no other change, a super high quality OLED display makes the iPhone a fundamentally different and better device.

The design

New designs are worth something. Often, a new design is what powers new sales. The iPhone X looks strikingly different from any iPhone that has come before it. Clearly, it is a new line of products that has very little to do with what came before it. All of the hardware is completely new inside and out. Had this been the iPhone 8 except with this new design, that would have been worth something. I would have certainly paid extra for it.

The camera

It the camera is significantly better, it is worth the upgrade. But how much better will the iPhone X camera be compared to the iPhone 8 plus? We don’t know yet. But there is reason to believe that it will be noticeably better.

For one thing, the telephoto lens is f/2.4 instead of f/2.8. The larger aperture means low-light images should be much better. The other change is that the telephoto lens joins the wide-angle lens in sporting optical image stabilization (OIS). That will not only improve low-light images, but make your zoomed images much more crisp. Video should be improved for the same reasons.

Animoji

People like me are on the trailing edge of social. We get a Facebook account once everyone else in the world has one. And after we set it up, we never quite learn how to use it. Nor do we ever quite see the point of it. I don’t understand Snapchat, or Instagram, or Pinterest. I don’t even really get Twitter.

Even before the social revolution, I wasn’t particularly social. So while I do not emotionally connect with social media, I do understand it intellectually. And while not everyone will care about Animoji, for many, it will be the reason to buy an iPhone X. It is the new face of a potential social trend. Forget about those of us on the trailing edge. It is for those on the leading edge of social. And it is going to be worth it to them, if not you.

Interface

The iPhone X does not just come with a new screen, a design, and camera, and social expression. It also comes with a new interface. Right now, the iOS interface is dominated by the Home button. But with the introduction of the iPhone X, the interface will change significantly as a result of having no Home button.

To be sure, some of those features will be transferred to the Side button. But the most important things move to a gesture-based system. Getting back to the Home screen will be a matter of swiping up from the bottom. This gesture is not available on other iPhones. Multitasking will become a gesture as well. Control Center access has been moved to the top-right. Swiping down from any other part of the top gets you Notification Center.

This amounts to early access to Apple’s vision of where the operating system is going. And it is simply not available on any other device. Apple has had to rethink everything for the new phone. Early adopters get a new and improved way of doing things. That is probably worth a few dollars.

Conclusion: Side by side

In a few weeks, the iPhone X will be in Apple Stores sitting next to the iPhone 8. At that time, it will be obvious why the iPhone X is $200 more than the iPhone 8. What is not obvious is why the iPhone 8 is more expensive than its predecessor. Nothing so spectacular happened to the iPhone 8 lineup that warrants a price increase. I suspect the reason is the higher price of RAM being passed on to the consumer. Therefore, the higher price is a bitter pill to swallow.

But with the iPhone X, we can see the benefits we gain, and place a dollar value on them. It is so much easier to justify the $1,000 price point of the iPhone X than it is to justify the $800 price of the iPhone 8 plus. You know those lines we didn’t see for the 8, they will be back for the iPhone X. The line forms behind me.

David Johnson

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