Why I take Issue with the iPhone X being labeled as Luxury

At least not in the derogatory sense that many are using to label a phone that costs $1000.

I started a conversation on Twitter last week trying to separate what is expensive and what is a luxury. And as the comments continued, I realized that explaining the nuances of what luxury means in tech would take longer than 140 characters so here I am. Please don’t think I am neglecting to understand the privileged position from which I am discussing what a luxury is and what it is not. The focus here is on establishing what the true value of the iPhone X is. What I am not discussing is the much broader and critical impact that the higher cost of technology has on society.

Expensive and luxury are very much intertwined, and they are labels that change slightly depending on what item you are referring to. If you look up the definition of luxury in the Webster dictionary you find that Luxury is:

  • something adding to pleasure or comfort but not absolutely necessary
  • an indulgence in something that provides pleasure, satisfaction, or ease

When you look up expensive you find:

  • involving high cost or sacrifice
  • commanding a high price and especially one that is not based on intrinsic worth or is beyond a prospective buyer’s means
  • characterized by high prices

I look at these definitions, and I seem to be doing a good job at gathering evidence against my point. After all, when I think of the iPhone X I do believe it is adding to my pleasure, and it is not necessary – the iPhone 8/8Plus could do the trick. Well, my current iPhone 7Plus does a darn good job at being a smartphone. The iPhone X is also characterized by a high-price, and it is beyond many buyers’ means fitting both the luxury and expensive definition.

Luxury Phones are Mostly Bling

When I think of luxury phone there is one brand that comes to mind first: Vertu. Vertu had a somewhat troubled life that ended this past July when the current owner, Turkish businessman Murat Hakan shut it down after failing to pay creditors. Vertu opened in 1998 as part of the Finnish phone maker Nokia. At that point, the phones were running on Symbian and were handmade with luxury materials from gold to rubber from F1 tires. Starting price: $5,000. Vertu was sold in 2012 to private equity company EQT when the phones started to run Android and were still hand-made in the UK. In 2015, the company was sold to Chinese company Godin Holdings and finally to Mr. Hazan in 2016.

In its glory days, Vertu was the mother of all luxury phones not only it was hand-made like an haute-couture dress and used the most expensive metals and materials, but it also came with a concierge service that will help you do whatever you needed to do from booking a taxi to shopping online.

In a less extreme sense, luxury phones have been about designer brands and bling. A quick search brings up a top ten charts with names from the fashion and car industry or unknown brands that took mainstream phones and covered them in gems.

So what happens when the Price goes up cause the Tech is better?

None of the phones you see associated with a luxury tag brings cutting-edge technology to the plate. Their price is merely defined by the materials used and the power of the brand name on them. And this very point is why I do not think the iPhone X deserves to be lumped into the luxury phone bucket.

Now, I would not go to the extent of saying that the iPhone X has a “value price” like Apple CEO Tim Cook did on Good Morning America. But I do agree with his underlying point which is that the iPhone X has a lot of tech packed into it.

Let’s pretend there was no iPhone X and that the iPhone 8Plus was the flagship product. Although starting at $799, $50 more than the launch price of last year’s iPhone 7Plus, nobody, as far as I am aware, called it a luxury phone. For some reason, there is something about getting to the $1000 price point that gets people to think differently. But let’s compare the features and see what the iPhone X has over the iPhone 8 Plus:

  • 8-inch OLED Super Retina HD display
  • HDR Display
  • depth sensor that powers Face ID and supports Portrait Mode and Portrait Lighting for selfies and Animojis
  • Dual optical image stabilization

If we are ok with $799 for the iPhone 8Plus and we add all this technology do we honestly think that the price should not increase? Some people argue that this is all Apple tax, but while of course, the Apple brand commands a premium it does so across devices. This means that the Apple premium equally impacts other iPhone models too.

Is a $1000 too much for a Phone?

A genuine question to ask is whether a $1000 for a phone is just too much even when that phone is an iPhone, and the answer is once again not a straightforward one. Not so much because most consumers don’t pay $1000 straight up but because the value they get from a phone as well as the tolerance they have for tech is different from user to user.

The return of investment that most people get from their smartphone is way bigger than what they ever got from a PC (outside of work), and this is more so with iPhones. There is also a much stronger emotional bond with a phone than any other gadget we own. Lastly, software updates delivered to these phones lengthen their life although the draw of the latest upgrade will try and make what you own feel inadequate.

So who is the iPhone X for? If you want the best product there is in the lineup – not just the most expensive, but the best tech – then the iPhone X is for you. If you want to indulge in tech that is adding pleasure but that is not necessary the iPhone X is also for you. But if you see smartphones as a utility device or are overwhelmed by how much technology these little rectangles have packed in then you better look elsewhere.

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Carolina Milanesi

Carolina is a Principal Analyst at Creative Strategies, Inc, a market intelligence and strategy consulting firm based in Silicon Valley and recognized as one of the premier sources of quantitative and qualitative research and insights in tech. At Creative Strategies, Carolina focuses on consumer tech across the board. From hardware to services, she analyzes today to help predict and shape tomorrow. In her prior role as Chief of Research at Kantar Worldpanel ComTech, she drove thought leadership research by marrying her deep understanding of global market dynamics with the wealth of data coming from ComTech’s longitudinal studies on smartphones and tablets. Prior to her ComTech role, Carolina spent 14 years at Gartner, most recently as their Consumer Devices Research VP and Agenda Manager. In this role, she led the forecast and market share teams on smartphones, tablets, and PCs. She spent most of her time advising clients from VC firms, to technology providers, to traditional enterprise clients. Carolina is often quoted as an industry expert and commentator in publications such as The Financial Times, Bloomberg, The New York Times and The Wall Street Journal. She regularly appears on BBC, Bloomberg TV, Fox, NBC News and other networks. Her Twitter account was recently listed in the “101 accounts to follow to make Twitter more interesting” by Wired Italy.

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