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iPhone X’s leap forward may signify a new tiered pricing approach

Apple is breaking new ground with the iPhone X, the most radical redesign of the normally conservative iPhone to date. So far, the vast majority of coverage has focused on the X (pronounced ‘Ten’). Priced at $1,000, the X will be available in November – later than normal.

The new pricing threshold is a big step up for Apple, although not inherently an indication of future minimum pricing levels. It is thought that the iPhone X’s screen has driven the cost of the phone up substantially, and the rumored low manufacturing volumes may also keep the per-unit cost of the phone higher than Apple’s already relatively expensive handsets for the foreseeable future.

The upcoming iPhone 8S (or maybe Apple will jump straight to 9 – it’s unclear), will likely come in at the $700 mark, broadly in line with other Android flagships, but still around three times the price of some impressive mid-priced Android devices. As a luxury status symbol, the X is going to sell like hot cakes, but it’s hard to believe that Apple is just testing the waters before driving up the price of its core offering.

Apple’s SE and C ranges have shown that it was open to tiered pricing – in their case, creating an ‘affordable’ tier of iPhones, reinforced by its habit of keeping the previous couple of generations around in its stores to give buyers with smaller budgets the option to enter the Apple platform. What the X might represent is the beginning of an upper tier, in which more bleeding-edge designs can be debuted and tested before the features trickle down the ecosystem.

The new product lacks a home button – which has vanished to make room for a screen that nearly takes up the entire front of the phone. This 5.8-inch ‘Super Retina’ screen’s 456ppi pixel density is the highest of any iPhone, and supports both Dolby Vision and HDR10 for HDR video. It is the first OLED screen used in an iPhone – and Samsung’s stranglehold on the supply of this component has apparently driven the price of the phone up.

As for hardware specs, the base model has 64GB of storage ($1000), with the only other configuration having 256GB ($1150). Powered by the new A11 Bionic processor, a custom design that Apple says has been optimized to better support Augmented Reality (AR) and Machine-Learning (ML).

The A11 houses a ‘neural engine’ (not to be confused with Qualcomm’s Neural Processing Engine or Huawei’s new Neural Processing Unit in its Kirin 970 system-on-chip). Apple’s engine is for handling the algorithms that power its facial recognition features. These will power the Face ID unlocking and identity system, as well as the Animoji, which will apparently be matched to the emotion conveyed by the user’s face and allow a user to record facial expressions. The neural engine is not going to be opened up to other application developers, however.

The six-core CPU claims to be 25% faster in performance mode, and 70% faster in its four-core efficiency mode (it uses the ARM big:Little design). It is built in a 10nm FinFET process, much like Qualcomm’s flagship Snapdragon 835.

Notably, Apple says it has designed the graphics processing unit (GPU) inside the A11 – a three-core design that it says is up to 30% better than the previous generation. This appears to be the end of Imagination Technologies’ involvement in the iPhone SoC – Apple said earlier this year that it was planning on designing its GPU inhouse, triggering a fall in Imagination’s stock price and a bid to break up or sell the company.

The biggest new software features are Face ID, and the latest release of the operating system, iOS 11. This launch means the death of Touch ID, the fingerprint technology that was first seen in the iPhone 5S. Apple says that Touch ID can be fooled far more often than Face ID – around one in 50,000 attempts succeeds, compared to one in a million for the facial recognition approach. Privacy advocates have reacted poorly to the feature, arguing that it normalizes facial scanning, and is certain to be abused by law enforcement agencies.

There was a notably on-stage gaffe, when Apple tried to demo Face ID. The device decided that it wasn’t going to play ball, and demanded a thumbed passcode instead. Apple later said that this was due to the phone being handled backstage, with the inspections of multiple staffers shifting the phone into a safe mode – the iPhone X essentially getting the jitters, and demanding additional authentication.

Face ID’s required hardware is housed inside the rather prominent ‘notch’ on the front of the phone, which the top-most part of the screen flows around (which has led to some rather awkward looking UI placement in certain apps). The infrared camera and dot projector that are used to scan a face in the dark are at the far-most edges of the notch, which also holds the regular front-facing camera, speaker, microphone, and proximity sensor.

ARKit is the other major software addition. This lets application developers pull on data from the cameras and on-board sensors to display 3D objects on the phone’s screen that interact with the environment. It is Apple’s response to Google’s ARCore, the new AR system for Android that seems to have replaced Tango.

It seems that the iPhone 7S won’t be appearing this time round, with the iPhone 8 taking its place. However, the iPhone 8 still does what most of the S models have done in the past – introduce a new feature inside the familiar form factor (iPhone 7 cases will still fit the iPhone 8 fine), laying a foundation for a new design on the next go-around. Face ID also remains confined to the iPhone X, so the iPhone 8 will stick with Touch ID.

In this instance, the iPhone 8 introduced wireless charging – with Apple resoundingly killing off the AirFuel Alliance through its choice of using the Qi charging standard – a monumental win for the Wireless Power Consortium (WPC).

The wireless charging is also found in the iPhone X, and in terms of price, the iPhone 8 starts at the expected $700 for the 64GB model, and $850 for the 256GB version – both of which are powered by the same A11 Bionic as the iPhone X. The iPhone 8 Plus variants are $100 dearer. All three new iPhones are IP67 water and dust proof, and only have the two storage variants. The iPhone 8 lacks the dual-rear-camera of the Plus and the X.

As usual, Apple’s choice of spectrum bands is important for operators. T-Mobile USA has often found itself unable to support the latest iPhone – in the past because it had an unusual 3G band (now refarmed for 4G); now because it has the first major US deployments in the recently auctioned 600 MHz spectrum, Band 71, but this is not supported by the iPhone X. So far, the only Band 71 handset is the new LG V30.

Band 14, which includes the FirstNet spectrum in which AT&T is deploying an emergency services network, is also missing, as is LTE-Unlicensed/LAA in 5 GHz.

The iPhone X does support Dish Network’s Band 66, which combines the company’s AWS-4, AWS-1 and AWS-3 holdings; and Band 42, in 3.5 GHz (but not the US-specific 3.5 GHz spectrum, CBRS or Band 48. Analyst Walter Piecyk of BTIG wrote in a client note: “Apple did not include support for Band 48, the US CBRS Band, in the latest iPhones, but it did include Band 42, which operates on the 3.5 GHz Band (3,400-3,600). This band is currently being put to use in Japan where the government licensed it to the three major operators. Apple produced separate SKUs for the Japanese models. We view Apple’s decision to include at least a subset of the CBRS band in an iPhone as a nice milestone for development of the CBRS ecosystem.”

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