Life Tech Apple’s new iPhone 7 could be even more expensive

Apple’s new iPhone 7 could be even more expensive

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Strong hints that Apple will release three versions of the upcoming iPhone 7 may bring no price relief for cash-strapped consumers – as renowned investor Warren Buffett signals he expects profits per share to rise.

A tech expert predicted that, if reports of an iPhone 7, iPhone 7 Pro and iPhone 7 Premium are correct, Australian buyers cannot expect the cheapest model to get any cheaper – and can probably expect to get slugged more for the ‘Premium’.

“If Apple did come out with three models at the end of the year, then … the cheapest will never be terribly cheap. It’s not the Apple way,” tech expert Angus Kidman told The New Daily.

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Mr Kidman was responding to Tuesday’s exclusive report by MobiPicker that the tech giant has begun Chinese manufacture of three variants of the iPhone 7 (expected to go on sale in September 2016).

The iPhone 7 could be more pricey than the iPhone 6s. Photo: Getty

Consumers shouldn’t be surprised if the top-tier model is even more expensive than Apple’s priciest flagship phone, the iPhone 6s Plus, which currently retails for $A1079, according to the tech expert.

“I would never underestimate Apple’s ambition to make things expensive because they have a dedicated, healthy audience of Apple buyers who want to buy the device,” Mr Kidman said.

“It’s classic decoy pricing. They want to sell the highest-end device that they can. It’s a good business model for them.

“Apple is a premium brand, it’s got premium pricing, and that is going to stay the case whether they announce one, two or three types of phones when the iPhone 7 eventually comes out.”

If history repeats itself, Australian consumers will swallow the highest price point.

“Every time an iPhone comes out, the biggest storage size is always the first to sell out. It always goes in that direction.”

Buffett bets on Apple profits

As news broke of a potential wider iPhone 7 range, it was revealed that the world’s greatest investor Warren Buffett had sunk $US1.07 billion into the company, buying 9.8 million Apple shares after four years ago swearing off the company.

warren buffett
Business magnate Warren Buffett has taken a $1bn share in Apple. Photo: Getty

Mr Buffett, known as the ‘Oracle of Omaha’, is a renowned value investor famous for buying undervalued companies. His Apple investment came after the tech giant saw its shares fall 30 per cent since February 2015.

The Buffett buy-in has so far been something of a self-fulfilling prophecy with the price jumping 3.7 per cent to $US93.88 after the market got wind of his move. That is enough to keep Apple’s crown as the world’s most valuable company, which last week it almost lost to Alphabet, the owner of Google.

There is no word yet from Mr Buffett on why he sees value in Apple. But it is unlikely to be the blue sky of new products that has rocketed it into the stratosphere since 2000 – the iPod, iPhone and iPad.

Making those kind of bets is not his style. He’s a pragmatist who buys undervalued assets that aren’t all that sexy – things like insurance companies, railroads, even investment banks in the middle of the financial crisis.

The strategy has been a huge success. Mr Buffett was named the world’s third-richest person with a $US66 billion fortune by Forbes magazine earlier this year.

Of course, if Apple’s investments in the Apple car and virtual reality come off, Mr Buffett will happily reap the rewards. But he’s much more likely to be looking at the company’s earnings per share which have grown 40 per cent in 2015 and the prospects to continue building its position in the mobile phone market.

– Rod Myer and Jackson Stiles

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