Phone prices have exploded this year. We’ve seen price increases on nearly every phone released this year, including several from last year. For example, the iPhone 17 went up $100 after the iPhone 18 Pro was announced. That’s never happened before.
We all know why these prices are rising: component costs. Namely RAM, which has risen 400% since January. Qualcomm has also raised prices on its processors, and we’ll likely see more increases in the Bill of Materials (BoM) this year. T-Mobile says this has led to heavier phone subsidies.
T-Mobile’s CFO, Peter Osvaldik, admitted that without a base iPhone model this year, the company needs to see how customers react to the OEM price increases. The cheapest “new” iPhone this year now starts at $1,199.
The company’s CEO, Srini Gopalan, says he expects Q4 to be more competitive and less predictable than usual because of a staggered iPhone launch, higher device prices, and limited stock of some variants, namely the iPhone Duo. He also defended the 36-month financing, saying that “36 is the right duration”, while T-Mobile does still offer 24-month plans, Verizon has gone as far as to add a 48-month option. Longer financing keeps monthly payments down as phones get more expensive. It also ties the customer to the carrier longer.
Higher prices led to higher equipment revenue this quarter
Unsurprisingly, higher prices across the board led to higher equipment revenue this quarter. That’s the revenue from selling hardware like phones, tablets, smartwatches, etc. Equipment revenue rose about 13.4% this quarter to $3.93 billion, consistent with higher prices for these devices.
This is likely to keep increasing over the next few quarters, as memory pricing is expected to rise over the next couple of years. All thanks to everyone’s increased use of AI, which is driving data centers across the country.
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