The iPhone X sells to two of the markets I identified above:
Customers who want the best possible phone Customers who want the prestige of owning the highest-status phone on the market
Note that both of these markets are relatively price-insensitive; to that end, $999 (or, more realistically, $1149 for the 256 GB model), isn’t really an obstacle. For the latter market, it’s arguably a positive.
Thompson is giving irrational reasons for people to buy this phone, and maybe those will be sufficient. But no review that I have seen has made a use case for it, and for many people $1000 is real money. If consumers behaved rationally, then the iPhone X would join New Coke in the annals of product rollouts.
It seems to me that Apple is not going to convince Android users to switch to this new phone. So basically their goal is to gouge their existing customers when they need to replace their phones. They figure that people are afraid of losing important information if they switch from iPhone to Android, so they are picking a price point for the 8 that they think their existing users will suck up and pay. And they are hoping that these replacers will say to themselves, “Shucks, as long as we’re paying that much money, why not throw in a few hundred bucks more and get the X?” We’ll see.
If my hypothesis about gouging existing customers is correct, then one would predict that Apple will deliberately deprecate old phones in order to coerce users into upgrading. You can expect to see “we no longer support. . .” whenever they think they can get away with it. Upgrade your iPhone 7 to the latest version of IOS? No can do. Data backup? Sorry, does not work on old phones any more. etc.