The new Apple Inc. (NASDAQ: AAPL) iPhone 5S has barely been on the market for two months, and the speculation about the features and price of the iPhone 6 has already begun. As if anyone outside Apple knows exactly what the plans are. But analysts cannot help themselves.
Among the features the iPhone 6 may have are curved glass, a portable version of Apple TV, an iWatch attachment and a version of Siri that can babysit a child. Or, it may just be a modest advance in Apple technology that can keep it in competition with the Samsung Galaxy line and other Google Inc. (NASDAQ: GOOG) Android-powered phones.
Susquehanna Financial Group analyst Chris Caso recently forecast that the new iPhone 6 should launch in mid-2014 and fetch a higher price with consumers. In his note to investors, according to IBD, he wrote:
We see the potential for the iPhone 6 price point to move higher, to avoid the (profit) margin erosion that occurred when iPhone 5 launched. When iPhone 5 was launched, Apple’s phone margins declined because the new features (most notably the display) added cost to the bill of materials, yet the price point of the phone remained unchanged. Since we’re expecting a host of new features in the iPhone 6 (including a larger screen), we expect the bill of materials cost of the phone to increase as well.
In other words, Apple’s management does not like the margin erosion brought on by the iPhone 5, so it can force consumers to pay more money to improve that margin — whether the new iPhone 6 has strong competition or not, and regardless whether its features are deemed better by potential buyers.
The guessing games about Apple’s plans are no better than that. Apple may bring out its own version of Google Glass. It may make a set-top box to replace those used by the cable companies for decades, or license enough video content to compete with Netflix or Hulu.
For the time being, the iPhone 6 may be price above its predecessors — or not.
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