Entrepreneurs

Apple CEO Tim Cook on the $999 new iPhone X: ‘We're not trying to charge the highest price we could get or anything like that’

Tim Cook was the second highest-paid executive of 2016, pulling in $150,036,907
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Tim Cook was the second highest-paid executive of 2016, pulling in $150,036,907

Apple has a market capitalization of almost $900 billion. The company also has $268.9 billion in cash and cash equivalents, according to its most recent quarterly financial report released Thursday.

And as Apple sits on its growing pile of cash and continues to titillate Wall Street investors, CEO Tim Cook defends the staggering four-figure price tag on the newest smartphone.

The iPhone X, hitting stores today, starts at $999. (CNBC's tech reviewer suggests the $1,149 model with more storage if you play a lot of games and movies.)

Some believe that charging and spending a grand for a smartphone will usher ushering in a whole new era of consumer behavior.

"I think a couple years ago, nobody would've imagined selling a phone at this price and obviously, you're pretty confident that you can do it," said Steven Milunovich, managing director at UBS Securities, to Cook on the earnings call.

Cook's response was that buying an iPhone X is equivalent to buying high quality coffee.

"I think it's important to remember that a large number of people pay for the phone by month. And so if you were to go out on just the U.S., since that tends to be more of the focus of this call, you look at the U.S. carriers, I think you would find you could buy an iPhone X for $33 a month," said Cook.

"And so if you think about that, that's a few coffees a week. It's let's say less than a coffee a day at one of these nice coffee places."

The tech executive says the price is reflective of the quality of the product.

"In terms of the way we price, we price to sort of the value that we're providing. We're not trying to charge the highest price we could get or anything like that. We're just trying to price it for what we're delivering," Cook said.

"And iPhone X has a lot of great new technologies in there that are leading the industry, and it is a fabulous product and we can't wait for people to start getting it in their hands."

Cook also mentioned that the cost to consumer can be knocked down if they trade in an old iPhone.

"The other thing to keep in mind is that many people are now trading in their current iPhone on the next iPhone. And the residual value for iPhone tends to be the highest in the industry and many people pick up $300, $350 or so for their iPhone and so that even reduces the monthly payment less," Cook said. "And then obviously, some carriers also have promotional things going on. And so I do think it's important to try to place it in that context."

But even with the new iPhone's eye-popping price tag, Apple does not seem to be having any trouble getting customers on board. On Friday, the first day the new model became available at stores, there were thousands of customers lining up around the world to buy the new iPhone X.