>So how else can they differentiate? Making a small phone won't really fly - while I'd love an SE-sized XS, the Chinese market they need to win back wants its phones big.
Do you remember, back in the day, when the smallest IBM thinkpads were way more expensive than the less-small IBM thinkpads?
I understand big phones are king if you only have one device. If I wasn't carrying like five devices all the time, I'd also want a giant phone-tablet, and I guess these days, most people don't have computers, and if I didn't have a computer, I'd want a really giant phone. But I am carrying five devices all the time, and I do have desktops everywhere I spend significant time, so I want my phone to be small and easy to operate with one hand.
As far as I can tell, there's a pretty big correlation between having a good income and having multiple devices. What I'm saying is that giant phones can be seen as... kind of the low end of the market.
And it's not like apple needs to stop making giant phones; they just need to make a small phone for the high end. That, or they need to upgrade functionality on the watch to the point where I can just use the watch for everything, but as far as I can tell, app developers are moving in the other direction (Last time I dropped off my phone for repair, I found that lyft had disabled it's watch app, and the uber watch app doesn't work reliably without the phone nearby. I mean, I got the uber watch app working once I got my phone back, but it's just not designed to function as the backup for your transportation app that I wanted. It was kind of annoying; I ended up calling a friend on the watch, 'cause txt messages weren't working, either. Walking around shouting into my watch like I thought i was dick tracy)
Personally, I'm actually pretty happy paying apple prices for a new phone every two years or so, but you've gotta give me a reason. I mean, if you came out with a really nice small phone, I'd even be willing to pay big phone prices for it; I'm not really that price sensitive when it comes to things like my cellphone, but I really don't have a lot of desire to buy the new phones, just 'cause they are all so big, and as far as I can tell, they don't do anything I want any better than my iphone 7. (I don't hate face ID, but as far as I am concerned, it's not any better than the fingerprint)
If Apple came out with a 3d-touch capable iphone SE sized phone with lots of memory and really good cell reception/networking features? Yeah, I could see me paying a grand for it.