The Tricky Economics Of The iPhone XS And The iPhone XR

The Tricky Economics Of The iPhone XS And The iPhone XR

The iPhone XR hits stores on Friday, and everybody is flipping out about it being the most affordable new iPhone. Starting at $1,229, however, the XR isn’t actually that much cheaper in the grander scheme of things.

And yet, to the casual observer, the device also looks a heck of a lot like the undeniably expensive iPhone XS, which starts at $1,629. But deciding between the two new iPhone models isn’t quite the $400 proposition it seems to be.

For a lot of people, the decision will be obvious. The iPhone XR is bigger, cheaper, and basically does all the same stuff as the iPhone XS. For others, the full-featured iPhone XS will be an investment, a gadget they’ll own and love for years to come. And then, a clever group of people will realise that you can still buy the iPhone X — which is seemingly identical to the iPhone XS – for $1,479 ), which is just $250 more than the XR. But still, a lot of people will decide the iPhone XR is good enough.

Before we get deeper into the details of the new phones, let’s agree on one thing: buying a new iPhone is a lot more complicated than it used to be. It used to be there was one iPhone and you could pay extra for more storage. Now, Apple has made the iPhone lineup so crowded that the difference between the cheapest and most expensive models is $1,620.

The most thrifty choice is a 32GB iPhone 7 at $749. The speediest is an iPhone XS Max with 512GB of storage for $2,369. The spread gets even more extreme when you consider the fact that you can still buy earlier iPhone models through resellers.

Photo: Raul Marrero, Gizmodo

To make things a little more complicated, there are several payment plan options. Some people certainly prefer to pay the full price for their new iPhone upfront, but the payment plans offered by telcos can also be appealing.

All major Australian telcos both offer relatively straightforward plans where you lease or pay for a new handset and usage that you pay off over the course of 12 or 24 months. 36 is also an option for Vodafone, but it does not have the leasing option. You often also have the option to upgrade to a new model after one year.

Even though there’s a $400 difference in the price of the phones themselves, you’re generally looking at a difference of about $15 a month if you go with a telco plan – before you factor in which data package you want.

This is not to say that paying with installments is the best path forward for your financial health. However, you’re not paying any interest in doing so, and you will own the phone after you’ve made all the payments on non-leasing plans.

The iPhone XS is the more expensive device, but you’re also getting more for your money. While the XR has a lower-contrast LCD display, the XS comes with a fancy OLED display. You can see the difference when you hold the two phones side-by-side. The other major difference is in the camera systems. The XR only has one camera so it lacks optical zoom and comes with a watered-down Portrait Mode. The XR also sports a lighter, cheaper-feeling aluminium case, while the XS is made of stainless steel. Perhaps because of this, the XR felt a little bit top-heavy in our tests, as if the camera unit were weighing down one end of the device.

Photo: Alex Cranz, Gizmodo

Still, both the XR and the XS feature Face ID. Both use Apple’s newest and most powerful A12 Bionic chip. Both look like new iPhones and might impress your friends at upcoming holiday parties. Do the differences and similarities stack up to $400 worth of value? Or $15-ish a month if you want to measure it that way?

It’s hard to say. The next few years will really decide whether the iPhone XR or the iPhone XS is the better value. As different (or similar) as the specs may be, it will take time to see how well the devices hold up to daily use. One might expect, for instance, that the flimsy-seeming aluminium case on the iPhone XR might suffer the same problem with nicks and scratches as the aluminium case on the iPhone 5. We did predict that the iPhone XS would be the first Apple phone that you could happily use for five years. The iPhone XR just doesn’t feel as tough or sturdy.

The other thing that’s hard to know is resale value. Demand will eventually decide how well these devices fare on the resale market, but we do know that the iPhone X has held its value to a respectable degree. Even after the new phones were announced, the resale site Gazelle predicted that a 64GB iPhone would sell for $US800 ($1,131) to $US820 ($1,159). That’s pretty remarkable considering the fact that a new iPhone X retails for $US900 ($1,479 in Australia), and it also suggests that the iPhone XS will also hold its value.

At the end of the day, any buying decision is a personal one. You know your own budget, and you know your preferences. And while they do look similar on paper, the iPhone XR and the iPhone XS are different enough that it’s worth going to a store and holding them both to see which one feels right. Also, don’t forget that you’ve never had so much choice when it comes to buying an iPhone. If you don’t want Face ID or a big screen, you can still buy a brand new iPhone 7 or an iPhone 8. Some of them are super cheap, too! But if you really need that iPhone X experience, good luck deciding. And if all else fails, switch to Android.