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A Foolish Take: 80% of Americans Won't Pay Over $500 for a New Phone

By Leo Sun – Sep 23, 2019 at 12:00PM

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But it's not necessarily bad news for Apple.

Apple (AAPL 0.66%) recently launched three new iPhones: the iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max, which start at $699, $999, and $1,099, respectively. However, a recent WalletHub survey revealed that 80% of Americans wouldn't pay over $500 for a new phone -- seemingly bad news for Apple.

Chart showing the most amount of money Americans would pay up front for a new phone

Data source: WalletHub. Chart by author.

That may explain why the iPhone XR, last year's cheaper companion to the iPhone XS and XS Max, is reportedly the best-selling iPhone in the U.S. Research firm CIRP estimates that the XR, which started at $749, accounted for 48% of all iPhone sales in the second quarter.

The XR's popularity could be why Apple launched the new iPhone 11 at a lower price than the iPhone XR. But the tech titan didn't change the prices of its two higher-end phones, indicating that there's still solid demand for its $1,000-plus devices.

WalletHub's survey might sound like bad news for Apple, but it isn't. The market for pricier devices in America may be small, but the Mac maker dominates that niche and isn't exposed to the fragmented market for low- to mid-range devices, which is currently saturated by Chinese companies like Huawei, Oppo, and Xiaomi.

Leo Sun owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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