Apple Inc. (AAPL) - Get Apple Inc. (AAPL) Report could be releasing a $1000-plus iPhone at its big launch event tomorrow, but the tech giant's CEO Tim Cook maintains that its products aren't just for rich people.
The company has historically priced its products at a premium to other tech firms and, to Apple's credit, vast numbers of consumers are willing to shell out extra cash just for the brand recognition. In a new interview with Fortune, Cook pointed to that fact, saying that Apple's installed base of more than a billion consumers shows it doesn't only cater to the rich.
Cook also rejected the idea that Apple makes high-margin products; instead it prices items based on the value of the product. He noted that the company offers affordable iPhones and iPads, while calling out the 9.7-inch iPad, which starts at $329. There's an iPhone in "that same kind of ballpark," he added, seemingly referring to the iPhone SE that carries a starting price of $399.
"So these are not for the rich," Cook explained. "We obviously wouldn't have over a billion products that are in our active installed base if we were making them for the rich because that's a sizable number no matter who's looking at the numbers."
The comments come as Apple is set to release a line of next generation iPhones on Tuesday. The company is expected to release three new models: the iPhone 8, 8 Plus and a third, 10th-anniversary edition, likely called the "X." The iPhone X could carry a price tag of more than $1,000, while the 8th generation versions will be similar to that of the iPhone 7, JPMorgan analyst Rod Hall said in a note to clients on Monday. The iPhone 7 starts at $649, while the 7 Plus starts at $769.
Analysts and investors have been sidelined over whether consumers will be turned off by the iPhone X's expected $1,000 price tag. Some argue that buyers might be unwilling to pony up for the phone, while others argue that Apple isn't the first to charge that much. Samsung (SSNLF) released the $930 Note 8 in August and the high-end smartphone seems to be selling well so far among consumers.
Hall maintains that the hefty price tag is unlikely to be much of a concern for Apple's core user demographic.
"The pricing of the iPhone X is also a question but we have maintained a view that price elasticity is low in the luxury market that this device is targeting," Hall said.
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