Barclays conducted a survey showing that people’s purchasing intent for the new iPhone 8 dropped in half when the price went from $800-something to $1,000 or above. With a nominal value of $156 for the proposed bundled Apple services, buyers of the $1,000 iPhone wouldn’t be paying all that money just for a device.
For a good illustration of how well this scheme can work for Apple iPhone 8, just look to Google and its Pixel phones launched last year. Google decided to allow unlimited storage of photos and videos shot with the Pixel and Pixel XL — at full resolution and maximum quality — inside its Google Photos app. At a time when every other cameraphone backup solution was either paid or limited in some fashion, only the Pixel + Photos combo from Google gave users unlimited, anxiety-free image storage. This was a powerful enough draw to even pull me in, after I’d previously dismissed Photos for being overbearing and practically demanding that I upload every shot I take to Google’s servers.
Web services aren’t quite as instrumental for Apple as they are for Google, but they’re still the Cupertino company’s fastest-growing business segment. Bundling the usually paid-for Apple Music and the expanded iCloud storage in with the new pricey iPhone 8 is likely to have a similar effect to the one I experienced with Google Photos and the Pixel. It will nudge people toward using services which they might not otherwise have done. After a year’s time, they might feel much more at ease with paying for the full thing. Or, even better for Apple, they might end up reliant on all that extra storage and easy music access and find themselves needing to pay for them.
I know it can sound silly to suggest that a subscription price might be a hurdle to someone paying $1,000 for a phone, but our scales of value tend to shift dramatically when we move between hardware and software. I don’t doubt that Apple will sell out its limited supply of super-premium new iPhones (much as it struggled to keep up with demand for the jet black iPhone 7 Plus), but bundling in some desirable freebies along the way could make people feel even better about their purchase and also get them to try some new services.