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The iphone X is very overpriced when viewed as a utility object, because it doesn’t provide 4x the utility of a $250 phone. But it is very reasonable when viewe

by Joeri 9y ago

The iphone X is very overpriced when viewed as a utility object, because it doesn’t provide 4x the utility of a $250 phone. But it is very reasonable when viewed as a fashion accessory. A $1000 phone to go inside a $2000 purse is not crazy at all. People keep looking at apple as a tech company and struggling to understand them, but if you view them as a luxury/fashion company who happens to specialize in technology they make a lot of sense. Nobody complains ferraris are overpriced for the mileage they get and the amount of trunk space, because utility is not the point of a ferrari. I expect the iphone X to sell really well, to the crowd that buys luxury. The question is whether that is a big enough market to sustain the volume.

scarface74 9y ago
Sustain the volume at what level? All indications are that Apple makes less profit on the iPhone X than the other phones. Apple would be quite happy if someone bought any iPhone that they sell from the 6s to the 8s Plus 256GB. I'm purposefully excluding the SE. I think that probably has a lower profit margin. And how is it overpriced? There is no such thing as an overpriced item in a free market as long as the quantity that Apple can make in a given time period matches the quantity people are willing to buy.
- EpicEng 9y ago
  >There is no such thing as an overpriced item in a free market as long as the quantity that Apple can make in a given time period matches the quantity people are willing to buy. That's the market perspective, but there's a value perspective as well. For example, my kid loves blind bags (no more youtube I think...) These companies want to sell him $0.05 plastic dolls for $5 and they prey on his gambling response to do so. These things are not worth anywhere near $5 except from the perspective that commercials can make my kid want them.
  - scarface74 9y ago
    In the aggregate, "the value perspective", is how many people value the product enough to pay Apple's asking price. If the value perspective isn't enough to sell the number of phones Apple can make, then Apple would lower the price.
    - TheOtherHobbes 9y ago
      Or increase ad spend and arrange for PR-managed celebtrity sponsorships as “social proof.” Or repackage most of the tech in a new version with some allegedly extra premium feature, like a useable battery life. Or release some other products and rely on a halo effect. The point being that perceptions of practical utility, Veblen value, and other price-defining factors are all malleable and brand-dependent, and essentially about social psychology, not some mythical “objective” market value.
      - scarface74 9y ago
        The market value is not "mythical" and it is "objective". Everything you stated - advertising,Veblen value, and other "malleable" attributes are things that increase its value in the eyes of the target market. Just because you may not find a value in a pair of $200 Jordan's doesn't mean that it's not the value that the market has placed on them. How the company influenced that value is irrelevant. The fact that someone spent $200 on a pair of shoes when they weren't under duress to do so, by definition means they valued those Jordan's at $200.
  - stcredzero 9y ago
    That's the market perspective, but there's a value perspective as well. Entire libraries have been written about and many, many careers have been based upon the notion of "the value of something." It's actually a very, very complex idea. The minuscule mass-energy of the electrons and photons oscillating in various wires and fiber optic cables to bring these words to you have virtually zero market value as individual particles. However, the same quantity of mass-energy could just as well be worth $1000 or $10000 as a different arrangement of mass-energy forming a digital transfer of money. (Not blockchain, as that's a bit heavyweight, but one of many different forms of value transfer.) "Why are things worth what they're worth?" is the same order of complexity as "Why do things fall?" Your layman's dismissal of value is something like a medieval peasant dismissing the question of why an apple falls from a tree as an idiot's question. It's not. It's Issac Newton's question. If you ask such a question and you look underneath the surface, there's an entire world of complexity unto itself there.
    - EpicEng 9y ago
      >"Why are things worth what they're worth?" is the same order of complexity as "Why do things fall?" Your layman's dismissal of value is something like a medieval peasant dismissing the question of why an apple falls from a tree as an idiot's question. I don't think anything you just said is relevant to what I said here. All that I said is that there is a notion of value which is not simply "what the market will bear". Value means different things to different people at different times. As you said; it's complex. There are items with inherent value, like gold. It's value is inherent because of how we use it (electronics, jewelry), but that doesn't change the fact that there is real value in gold. That's not the same as someone wanting to make a fashion statement, and I think your electron comparison is so simplistic and absurd as to not be useful in any way. Yes, everything in the universe is comprised of the fundamental building blocks of matter. Great insight here, how about we discuss this in a practical way?
      - stcredzero 9y ago
        There are items with inherent value, like gold. It's value is inherent because of how we use it (electronics, jewelry), but that doesn't change the fact that there is real value in gold. Context. There are contexts where even gold has greatly reduced value. If you're on a sinking ditched airplane in rough seas, are you really going to try and stash that 1kg bar of gold bullion on your person? In that context, it arguably has quite a bit of negative value. I'd account the "getting you dead" property as conferring negative value. In the same context, liter of salt water is worthless. In a different context, it would be worth many times what the gold would be worth.
reaperducer 9y ago
Watching TV last night, I saw three ads for phones. One for the $1k iPhone, the other two for competitors, each of which in the fine print listed starting prices of $949. There's a market. Don't hate Apple because it went there first.
- evilduck 9y ago
  The Note 8 was released a few months ahead of the iPhone X for $930 too.
jrs95 9y ago
It doesn't necessarily need to be a fashion accessory to justify that price. You're not just getting aesthetics for the money, you're getting performance, battery life, display quality, etc. I'm using my phone a lot on a daily basis, so it's worth paying a bit more to get the best available. There's nothing functionally different about a $2000 purse. Besides, comparing iPhones to purses is basically the same sort of cringe-y argument some Android users have been making for a long time. "iPhones are for basic white girls". What's next, are we going to say the iPhone is the Pumpkin Spice Latte of smartphones?
- user5994461 9y ago
  A purse can last a lifetime, if not lost or stolen. An iPhone will be unusable within 5 years no matter what.
  - logicallee 9y ago
    >An iPhone will be unusable within 5 years no matter what. your comment makes a lot more sense if you substitute "50 years". This is what a 50 year old LV suitcase looks like: https://i.pinimg.com/236x/1d/cf/2e/1dcf2e4b6dc46d851095f477b19eefc2--louis-vuitton-suitcase-authentic-louis-vuitton.jpg https://i.pinimg.com/236x/1d/cf/2e/1dcf2e4b6dc46d851095f477b... This is what a 2012 iPhone looks like: https://en.m.wikipedia.org/wiki/IPhone_5 https://en.m.wikipedia.org/wiki/IPhone_5 they're about equally useable today (2017/early 2018). After 50 years, though, the iPhone would be a joke. (unusable.) I think the iPhone 5 isn't even close to "unusable" after 5 years.
    - HugoDaniel 9y ago
      quite the pedantic answer. lets interpret "within 5 years" as < 6 years (give or take): Now pick an IPhone 4 and good luck with installing/updating anything in ios 7.
      - logicallee 9y ago
        The millions of people using iPhone 4's and the price of same on used market show they're far from "unusable." For a non-durable consumer good, the difference between 5 and 8 years (i.e. 1.6x useable lifetime) is hardly "pedantic". Would you say there isn't much difference between a 15 and 24 year mortgage in terms of length of commitment? A phone might be the second largest personal investment many lower-income people make in any object, and it matters at what point it becomes literally unusable.
user5994461 9y ago
>>> it doesn’t provide 4x the utility of a $250 phone That is not correct. Try taking a photo of a text document with a $250 phone, the text is not readable because the camera and the software is terrible. A better phone would allow you to not have a dedicated scanner.
- hrktb 9y ago
  Motorola G Plus[0] is 184$ with a 12Mp back camera. You won’t catch a cat jumping in pixel perfect beauty, but that’s plenty enough to scan a text document. Same for your mail, maps, browsing, messaging, light gaming. It won’t be blazingly fast under the latest OS, but will do any important task with decent performance. [0] https://www.amazon.com/gp/aw/d/B01N6NTIRH/ref=mp_s_a_1_3?ie=UTF8&qid=1514329936&sr=8-3&pi=AC_SX236_SY340_QL65&keywords=motorola+phone&dpPl=1&dpID=51DjUO0f4PL&ref=plSrch https://www.amazon.com/gp/aw/d/B01N6NTIRH/ref=mp_s_a_1_3?ie=...
  - user5994461 9y ago
    The number of pixels has zero relevance to the quality of a photo. The world is filled with cheap phones that will make a blurry picture if there isn't perfect lighting or if you move by a single millimeter when you press the button.
    - hrktb 9y ago
      Of course. I found it interesting that scanning a document is the exact best case scenario: exposure can be adjusted with the flash, and the document hopefully doesn’t move (I had the previous Motorola G, hand shaking would need to be pretty bad to make it blur when using the flash)
      - user5994461 9y ago
        On the contrary I take it as an example of bad case scenario. Texts and annotations can be very small, a tad of blurriness and it's unreadable. The blurriness might not be apparent on the phone screen but it's very noticeable on a computer or TV. I speak from experience with a cheap phone, having to take 6 photos not moving by a iota hoping one will be good enough. Same shit next month when I will have to take a newer proof of address.
noncoml 9y ago
It is not a fashion statement. When was the last time you saw a phone without a case, that makes it indistinguishable from the rest? It is just an object of desire.
rahimnathwani 9y ago
Imagine your annual income is $200k, and you expect your iPhone X to last 2 years. Imagine you're very busy with work and parenting, and it's very valuable to you to be able to take high quality pictures of your baby and share them with family and friends. A smartphone is the most convenient way to do that. A smartphone that costs ~$1000 takes much better pictures, and faster shutter response, than a smartphone that costs $250. Is the iPhone X worth an extra $375 per year for the person described above? Of course. Does it need to provide 4x the utility to be worth 4x the price? No. The marginal utility just needs to be cost-effective, vs. the other ways to 'buy' utility with the same amount of money.
- Certhas 9y ago
  What's the marginal utility over a 500$ Galaxy S8?
  - rahimnathwani 9y ago
    Let's assume the cameras (hardware and software) are equally good. If the person I described already uses iOS (and has done for the last few years), then I expect they'd find switching to Samsung-flavoured Android would cause at least a few hours of inconvenience up-front to get most things they need set up, and then little annoyances here and there for a long period afterwards. At least that was my experience switching my primary mobile device from iOS to Android. And I'd have the same amount of inconvenience if I were to switch from Android to iOS. Some people value their time highly, and don't find it enjoyable to find solutions to technical or usability problems. So switching to/from iOS has significant disutility.
    - Certhas 9y ago
      Sure, so you pay for having locked yourself into a particular ecosystem. Even then, the relative utility of an X over an 8 is not utility.
      - rahimnathwani 9y ago
mc32 9y ago
There was a luxury Nokia studded with gems -Vertu. I don't think it did all that well. So it's not only about fashion. There has to be something else which creates desire and demand.
tobbyb 9y ago
This is not limited to Apple. Top phone prices including Galaxy, Pixel etc have been steadily creeping upwards yearly starting from $500 and are now at $800-1000. Next year it could well be $1200 and in 3 years $1500. Has the fundamental tech in the phones dramatically increased to justify this, not really. The same applies to ultrabooks with low performance heavily throttled dual core chips, going from $700-800 to now $1500 plus. This applies to macbooks, dell xps, surface, hp and even lower cost alternatives like Asus. There is a trend of sorts and it may well be rising income disparities means those at the top are not price sensitive and will pay $500 or $1500 with little qualms, and marketers are responding to the market.

by Joeri 9y ago

scarface74 9y ago

Sustain the volume at what level? All indications are that Apple makes less profit on the iPhone X than the other phones. Apple would be quite happy if someone bought any iPhone that they sell from the 6s to the 8s Plus 256GB. I'm purposefully excluding the SE. I think that probably has a lower profit margin. And how is it overpriced? There is no such thing as an overpriced item in a free market as long as the quantity that Apple can make in a given time period matches the quantity people are willing to buy.

EpicEng 9y ago
>There is no such thing as an overpriced item in a free market as long as the quantity that Apple can make in a given time period matches the quantity people are willing to buy. That's the market perspective, but there's a value perspective as well. For example, my kid loves blind bags (no more youtube I think...) These companies want to sell him $0.05 plastic dolls for $5 and they prey on his gambling response to do so. These things are not worth anywhere near $5 except from the perspective that commercials can make my kid want them.
- scarface74 9y ago
  In the aggregate, "the value perspective", is how many people value the product enough to pay Apple's asking price. If the value perspective isn't enough to sell the number of phones Apple can make, then Apple would lower the price.
  - TheOtherHobbes 9y ago
    Or increase ad spend and arrange for PR-managed celebtrity sponsorships as “social proof.” Or repackage most of the tech in a new version with some allegedly extra premium feature, like a useable battery life. Or release some other products and rely on a halo effect. The point being that perceptions of practical utility, Veblen value, and other price-defining factors are all malleable and brand-dependent, and essentially about social psychology, not some mythical “objective” market value.
    - scarface74 9y ago
      The market value is not "mythical" and it is "objective". Everything you stated - advertising,Veblen value, and other "malleable" attributes are things that increase its value in the eyes of the target market. Just because you may not find a value in a pair of $200 Jordan's doesn't mean that it's not the value that the market has placed on them. How the company influenced that value is irrelevant. The fact that someone spent $200 on a pair of shoes when they weren't under duress to do so, by definition means they valued those Jordan's at $200.
- stcredzero 9y ago
  That's the market perspective, but there's a value perspective as well. Entire libraries have been written about and many, many careers have been based upon the notion of "the value of something." It's actually a very, very complex idea. The minuscule mass-energy of the electrons and photons oscillating in various wires and fiber optic cables to bring these words to you have virtually zero market value as individual particles. However, the same quantity of mass-energy could just as well be worth $1000 or $10000 as a different arrangement of mass-energy forming a digital transfer of money. (Not blockchain, as that's a bit heavyweight, but one of many different forms of value transfer.) "Why are things worth what they're worth?" is the same order of complexity as "Why do things fall?" Your layman's dismissal of value is something like a medieval peasant dismissing the question of why an apple falls from a tree as an idiot's question. It's not. It's Issac Newton's question. If you ask such a question and you look underneath the surface, there's an entire world of complexity unto itself there.
  - EpicEng 9y ago
    >"Why are things worth what they're worth?" is the same order of complexity as "Why do things fall?" Your layman's dismissal of value is something like a medieval peasant dismissing the question of why an apple falls from a tree as an idiot's question. I don't think anything you just said is relevant to what I said here. All that I said is that there is a notion of value which is not simply "what the market will bear". Value means different things to different people at different times. As you said; it's complex. There are items with inherent value, like gold. It's value is inherent because of how we use it (electronics, jewelry), but that doesn't change the fact that there is real value in gold. That's not the same as someone wanting to make a fashion statement, and I think your electron comparison is so simplistic and absurd as to not be useful in any way. Yes, everything in the universe is comprised of the fundamental building blocks of matter. Great insight here, how about we discuss this in a practical way?
    - stcredzero 9y ago
      There are items with inherent value, like gold. It's value is inherent because of how we use it (electronics, jewelry), but that doesn't change the fact that there is real value in gold. Context. There are contexts where even gold has greatly reduced value. If you're on a sinking ditched airplane in rough seas, are you really going to try and stash that 1kg bar of gold bullion on your person? In that context, it arguably has quite a bit of negative value. I'd account the "getting you dead" property as conferring negative value. In the same context, liter of salt water is worthless. In a different context, it would be worth many times what the gold would be worth.

reaperducer 9y ago

Watching TV last night, I saw three ads for phones. One for the $1k iPhone, the other two for competitors, each of which in the fine print listed starting prices of $949. There's a market. Don't hate Apple because it went there first.

evilduck 9y ago
The Note 8 was released a few months ahead of the iPhone X for $930 too.

jrs95 9y ago

It doesn't necessarily need to be a fashion accessory to justify that price. You're not just getting aesthetics for the money, you're getting performance, battery life, display quality, etc. I'm using my phone a lot on a daily basis, so it's worth paying a bit more to get the best available. There's nothing functionally different about a $2000 purse. Besides, comparing iPhones to purses is basically the same sort of cringe-y argument some Android users have been making for a long time. "iPhones are for basic white girls". What's next, are we going to say the iPhone is the Pumpkin Spice Latte of smartphones?

user5994461 9y ago
A purse can last a lifetime, if not lost or stolen. An iPhone will be unusable within 5 years no matter what.
- logicallee 9y ago
  >An iPhone will be unusable within 5 years no matter what. your comment makes a lot more sense if you substitute "50 years". This is what a 50 year old LV suitcase looks like: https://i.pinimg.com/236x/1d/cf/2e/1dcf2e4b6dc46d851095f477b19eefc2--louis-vuitton-suitcase-authentic-louis-vuitton.jpg https://i.pinimg.com/236x/1d/cf/2e/1dcf2e4b6dc46d851095f477b... This is what a 2012 iPhone looks like: https://en.m.wikipedia.org/wiki/IPhone_5 https://en.m.wikipedia.org/wiki/IPhone_5 they're about equally useable today (2017/early 2018). After 50 years, though, the iPhone would be a joke. (unusable.) I think the iPhone 5 isn't even close to "unusable" after 5 years.
  - HugoDaniel 9y ago
    quite the pedantic answer. lets interpret "within 5 years" as < 6 years (give or take): Now pick an IPhone 4 and good luck with installing/updating anything in ios 7.
    - logicallee 9y ago
      The millions of people using iPhone 4's and the price of same on used market show they're far from "unusable." For a non-durable consumer good, the difference between 5 and 8 years (i.e. 1.6x useable lifetime) is hardly "pedantic". Would you say there isn't much difference between a 15 and 24 year mortgage in terms of length of commitment? A phone might be the second largest personal investment many lower-income people make in any object, and it matters at what point it becomes literally unusable.

user5994461 9y ago

>>> it doesn’t provide 4x the utility of a $250 phone That is not correct. Try taking a photo of a text document with a $250 phone, the text is not readable because the camera and the software is terrible. A better phone would allow you to not have a dedicated scanner.

hrktb 9y ago
Motorola G Plus[0] is 184$ with a 12Mp back camera. You won’t catch a cat jumping in pixel perfect beauty, but that’s plenty enough to scan a text document. Same for your mail, maps, browsing, messaging, light gaming. It won’t be blazingly fast under the latest OS, but will do any important task with decent performance. [0] https://www.amazon.com/gp/aw/d/B01N6NTIRH/ref=mp_s_a_1_3?ie=UTF8&qid=1514329936&sr=8-3&pi=AC_SX236_SY340_QL65&keywords=motorola+phone&dpPl=1&dpID=51DjUO0f4PL&ref=plSrch https://www.amazon.com/gp/aw/d/B01N6NTIRH/ref=mp_s_a_1_3?ie=...
- user5994461 9y ago
  The number of pixels has zero relevance to the quality of a photo. The world is filled with cheap phones that will make a blurry picture if there isn't perfect lighting or if you move by a single millimeter when you press the button.
  - hrktb 9y ago
    Of course. I found it interesting that scanning a document is the exact best case scenario: exposure can be adjusted with the flash, and the document hopefully doesn’t move (I had the previous Motorola G, hand shaking would need to be pretty bad to make it blur when using the flash)
    - user5994461 9y ago
      On the contrary I take it as an example of bad case scenario. Texts and annotations can be very small, a tad of blurriness and it's unreadable. The blurriness might not be apparent on the phone screen but it's very noticeable on a computer or TV. I speak from experience with a cheap phone, having to take 6 photos not moving by a iota hoping one will be good enough. Same shit next month when I will have to take a newer proof of address.

noncoml 9y ago

It is not a fashion statement. When was the last time you saw a phone without a case, that makes it indistinguishable from the rest? It is just an object of desire.

rahimnathwani 9y ago

Imagine your annual income is $200k, and you expect your iPhone X to last 2 years. Imagine you're very busy with work and parenting, and it's very valuable to you to be able to take high quality pictures of your baby and share them with family and friends. A smartphone is the most convenient way to do that. A smartphone that costs ~$1000 takes much better pictures, and faster shutter response, than a smartphone that costs $250. Is the iPhone X worth an extra $375 per year for the person described above? Of course. Does it need to provide 4x the utility to be worth 4x the price? No. The marginal utility just needs to be cost-effective, vs. the other ways to 'buy' utility with the same amount of money.

Certhas 9y ago
What's the marginal utility over a 500$ Galaxy S8?
- rahimnathwani 9y ago
  Let's assume the cameras (hardware and software) are equally good. If the person I described already uses iOS (and has done for the last few years), then I expect they'd find switching to Samsung-flavoured Android would cause at least a few hours of inconvenience up-front to get most things they need set up, and then little annoyances here and there for a long period afterwards. At least that was my experience switching my primary mobile device from iOS to Android. And I'd have the same amount of inconvenience if I were to switch from Android to iOS. Some people value their time highly, and don't find it enjoyable to find solutions to technical or usability problems. So switching to/from iOS has significant disutility.
  - Certhas 9y ago
    Sure, so you pay for having locked yourself into a particular ecosystem. Even then, the relative utility of an X over an 8 is not utility.
    - rahimnathwani 9y ago

mc32 9y ago

There was a luxury Nokia studded with gems -Vertu. I don't think it did all that well. So it's not only about fashion. There has to be something else which creates desire and demand.

tobbyb 9y ago

This is not limited to Apple. Top phone prices including Galaxy, Pixel etc have been steadily creeping upwards yearly starting from $500 and are now at $800-1000. Next year it could well be $1200 and in 3 years $1500. Has the fundamental tech in the phones dramatically increased to justify this, not really. The same applies to ultrabooks with low performance heavily throttled dual core chips, going from $700-800 to now $1500 plus. This applies to macbooks, dell xps, surface, hp and even lower cost alternatives like Asus. There is a trend of sorts and it may well be rising income disparities means those at the top are not price sensitive and will pay $500 or $1500 with little qualms, and marketers are responding to the market.