Monday, October 27, 2008

Impact of a $99 iPhone

Over at On Apple , I posted a short blurt on Apple lowering the price from $199 to $99.  I think we'll see $149 before that happens.

But $99 is exactly the price that an analyst, Charlie Wolf of Needham Research, believes Apple can lower the price of the iPhone to and still walk away with a health margin.

Let's say that happens.  Apple is really serious about giving competitors no room to move.  Would Apple do such a thing as to lower the iPhone to $99 next year?  We only have to look at the impacts of such an entry price on the marketplace.

  • They're playing catch up.  I'm talking about Apple's competitors.  Most still don't know what hit them even if the iPhone's impact has not hit their balance sheet.  However, RIM, as far as we know, is the only one feeling it so far.
  • Apple looks far far ahead.  Multi-year.  They maybe ready to rumble not just on price but features as well.  Most others are still trying to get touch, UI, and weight down right.  Take my G1.  
  • May lower the monthly rates if ATT does not have to pay out as hefty a subsidy to Apple.  We have to assume that Apple and ATT are pass along the cost to consumers.  We may see rates lowered by $10 a month.  Maybe even $15.
  • HTC's new high-end phones are priced higher than the iPhone.  RIM's Bold will come out with ATT for $299.  Who  knows how much Storm will cost.  Bottomline:  It'll hurt handset makers and carriers who are competing with Apple and ATT.
  • We may finally see multiple models of the iPhone.  The current 3G model will go down to $99 at 8GB (not one else with a touch interface even comes close with this kind of memory capacity).  And we'll see high-end models with added features and storage capacity.  16GB and up.
  • The iPhone speaks volumes on its jazziness and cool factor at any price.  Kids and students will eat this up.
  • The iPhone will continue to stay with ATT.  Both will improve stability with network, the iPhone sytem, and 3G connectivity.  No news is good news for Apple and ATT.
In all this, don't be surprise to see Apple pull a fast one and lower the iPhone prices to $149 in November just to welcome Verizon's Storm debut if the Storm is priced anywhere near the iPhone.  

Regardless of when it happen, the effect is already being felt.  Instinct at $129 and Bold at $299.  The iPhone already $199 and possibly lower.  The Storm taking a long to be priced and I think it has to do with the iPhone.  A decent Blackberry is $249 and up.  But don't take my word for it.  Go to Verizon and Sprint's PDA/Smartphone sections and compare their smartphones with comparable features to the iPhone.  

Dave the Mobile Warrior wins.  You win.  And I will in this kind of free competition.  Whether you end up getting an iPhone or not, like Nokia's chief said, be thank Apple for bringing real change.

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