Analyst: High iPhone 6 Cost Might Deter Sales

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Apple’s new iPhones have launched at last, but there’s concern the high outright ‘luxury’ cost could deter sales, while Apple could face extreme smartwatch competition in the lead up to the Apple Watch launching in early 2015.

Australian analyst firm Telsyte, often in the news for its smartphone and tablet predictions, says Australians might delay their purchase of any iPhone 6 due to cost. 
The Company has forecast 1.5 million iPhones of all types still on sale at retail could be sold by the end of the year, equating to around 100,000 units per week “over the peak holiday season”, depending on stock availability, carrier contracts and offers. 
This means the iPhone 6 should help grow the Apple user base, with a third of Telsyte survey respondents who don’t already own an iPhone suggesting they intending buying one iPhone in the second half of 2015.
Second hand and “hand me down” iPhones are expected to also grow the overall user base, which is said to be “an important trend for publishers and app developers alike.”
 
The Company predicts phablets, which it classes as smartphones with screens 5.5 inches or larger, will make up as much as 20 per cent of the overall Australian smartphone market by the end of 2016, with the iPhone 6 Plus an important catalyst.
 
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However the high outright cost of both smartphones could be the biggest challenge to iPhone 6 uptake, given the many competitors in the sub-$300 smartphone market, which could “impact demand, particularly for outright purchases (i.e. not on contract or a payments plan).”

Telsyte says Apple could be “creating a new ‘luxury’ category – or maybe ‘ultra-premium’ – given it is going against overall industry downward pricing trends.”
 
High purchase prices also increase the importance of contracts and MRO payment plans, likely to be a key strategy of the carriers to lure customers, amongst other incentives.
 
The price shock might put off some of those who intended to purchase an iPhone 6. To put it into perspective, an iPhone 6 128 GB (A$1,129) will cost more than a MacBook Air 11″ 128 GB (A$1,099).
 
Then there’s Apple’s new Watch. 
Telsyte’s prognostications indicate approximately 380,000 smartwatch users at the end of June 2014 in Australia, with mearly 80 per cent of those users were using Android smartphones. 
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This potentially indicates substantial growth with the arrival of the Apple Watch which should help Apple “retain customers given it will work with the iPhone 5 or later.”

Aside from the rumours Telsyte doesn’t mention suggesting the Apple Watch was launched now so that its details would not leak from FCC and other telco authorities before its release, Telsyte thinks the 2015 Apple Watch release is a strategic move. 
It believes this is so iPhone 6 sales during the crucial holiday season are not affected while “giving developers time to create their smartwatch apps with WatchKit.”
 
Telsyte says there is “still some doubt of the usefulness or long term utility of smartwatches, while they simply remain accessories and not a replacement for smartphones all together.”
The analysts now expect moves from competitors following the Apple Watch revelations, “including aggressive marketing of smartwatches and handsets by Samsung, Sony and others, given Apple’s Watch is not released until 2015.”
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