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Analysts suspect Apple will offer OLED 'iPhone 8' for less than $1,000, cite market forces

'iPhone 8' concept rendering by Marek Weidlich.

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Despite an expected higher construction cost, and reports suggesting that the "iPhone 8" will start at $1,000, one financial analyst believes the 10th anniversary iPhone will retail starting at $850, only a slight premium over the "iPhone 7s" and Samsung Galaxy S8 Plus.

In an investor's note supplied to AppleInsider, Steven Milunovich from UBS sees a $70 to $90 increase in iPhone construction over the iPhone 7 Plus. Milunovich also believes that a $1000 cost at retail would hamper purchase volumes, and notes that despite the mostly fallacious notion of an Apple Tax, the company prices its products "quite competitively" in markets it enters.

Possible friction against the "iPhone 8" sales are a smaller screen than the 6.2-inch screen in the Galaxy S8 Plus, and resistance to a phone starting at $1,000.

As a result of possible sticking points, which may hamper a previously predicted "super cycle," Milunovich predicts the OLED "iPhone 8" to start at a price point between $850 and $900. Accordingly, a 256GB model will be sold for between $950 and $1,000. For comparison, the 256GB iPhone 7 Plus retails for $970.

Also predicted is a decrease in price for the "iPhone 7s" and "iPhone 7s Plus" by around $100 per model, which would give consumers a wider range of prices without any significant jumps from the newly slightly refreshed iPhone SE to the "iPhone 8." This would give Apple a better toe-hold in China, which is seeing poor demand for the iPhone SE which is said to be "an older model" according to Milunovich.

As a result of this pricing, UBS believes that 45 percent of 2018 shipments will be the OLED "iPhone 8," increasing average selling price from an earlier prediction of $667 to $692 with an unchanged gross margin of 38.5 percent.

Apple's "iPhone 8" is expected to use a 5.8-inch edge-to-edge OLED panel with a 5.1-inch practical area, the rest being dedicated to virtual buttons. Other features rumored to be included in the device are a 3D facial scanner, and other sensors embedded in the front glass of the device.