Why the iPhone X means Apple is now a luxury brand

03 November 2017

Qing Wang, Professor of Marketing & Innovation and Co-Director of the Warwick Luxury & Innovation Hub, believes Apple's new £1,000 phone is its second attempt at moving into the 'new luxury' market and is likely to work this time.

The iPhone X represents Apple’s second attempt at the ‘new luxury’ market after the failure of its gold Apple Watch.

And it seems a better bet than the 18-karat gold Apple Watch Edition that was quickly taken off the market. That’s because it knows all about the smartphone market, unlike the luxury watch sector, which it miscalculated in spectacular fashion.

Plus, it is a brand that seems an ideal fit for the new luxury trend, where experience and digital technology are valued rather than prestige and history.

The iPhone X has drawn gasps around the world with a starting price of $1,000, which goes up to as much as $50,000  for custom made versions decorated with diamond or gold.

Related course: MSc Marketing & Strategy

It sounds expensive for a phone, but Apple is still a trendsetter in terms of design and aesthetics for technology officiandos, so its chances of success are much greater than its step into the luxury watch market, which saw its gold watch pulled less than a year after its launch.

The gold version of the Apple Watch was priced at $17,000, a level comparable to Rolex or Omega’s cheapest models, whereas other Apple Watch ranges are at a much more affordable price of less than $400.

But the clientele of the luxury market were not impressed by a piece of high technology equipment, which can perform multiple functions. Regardless of how ‘cool’ it might be at the time of the launch, by definition, as a piece of technology, it will be obsolete in six to 12 months and replaced by a newer version – that is not how luxury watches work.

A truly luxury watch is not only a piece of history, heritage and craftsmanship, which brings culture and artistic pleasure, but also a long-term investment proposition for the rich clientele.

Will Apple crack the luxury market with the iPhone X?

The competition was too fierce in the luxury watch sector for Apple, even joining forces with the goddess of the personal luxury brand, Hermes, didn’t work.

Interestingly, this time round, Apple has decided to attack the luxury market head on, ie in the market it has the strongest foothold - the highly successful mobile phone market.

The only truly luxury mobile phone brand has been Vertu, which had a price tag of $10,000 due to a combination of precious materials, such as diamond and gold, plus the craftsmanship and the exclusive butler services it provided.

Owning a Vertu phone provided a client with a ticket to enter an exclusive club, with the stars like Model Rosie Huntington-Whiteley owning one. It opened the door to many exclusive services until it ran into financial difficulties and collapsed in July 2017. 

Apple is not aiming so high in the luxury sector and is pinning its hopes on the idea that there is a gap in the mobile market between the traditional luxury and the fast fashion products.

This gap in the market is termed the ‘new luxury’, which is an emerging luxury category that the US companies seem particularly good at – Michael Kors, Coach and Tesla, to name but a few.

To date, Apple products seem closer to fashion goods than luxury goods. But with its latest attempt with the iPhone X and its high price tag, in my view it is moving away from a technology brand to a new luxury brand, and this time it looks like it might pull it off.

Qing Wang teaches Global Branding and the Marketing of Luxury Products and Servies on the MSc Marketing & Strategy. She also lectures on Consumer Behaviour on the Undergraduate programme.