Tuesday, April 29, 2008 -- 5:05 p.m. -- at my desk
Not sure how accurate it is, but Fortune has a good article about potential pricing on the next iPhone -- and the number to look at here is $199 -- as in $199 for an iPhone for people who sign a 2-year-contract.
You can read the whole thing here.
The best thing Apple and AT&T can do, my friends, is charge less for the next iPhone. Here's why ...
1. Apple will not only be trying to sell to new customers but also to people who already own iPhones. Asking people to spend $499 for a new phone when they just paid $399 or $499 could be a bitter pill.
2. The monthly cost to use the 3G iPhone, unless AT&T revamps its plans, will be more than what it costs now. I don't know if I'd use the term significantly more, but any increase in cost in this day and age is something that's going to make customers pause and think. Lowering the price of the phone might make it more tolerable to pay more in contract fees.
3. People have seen Apple lower the price of other things (Apple TV, etc.) I think that when people are paying monthly fees that they want to be given a little bit of a break up front and that they come to expect that break.
So we'll see what happens, but it's very exciting.
Feel free to discuss in the comments as always.
Thanks for calling.
10 Comments
Eleanor said:
....ooops-Guess I missed Apple's announcement!! Then again, CNN is so very trustworthy {roll eyes}.
It would be a sweet deal though and I'm not so sure the plan would cost more either. ATT has lots of 3G phones and their media net plans are $15. It depends how the phone is classified. If the cost of the plan is more, I will definitely think twice before getting one., especially with a contract extension. If not, 3G, here I come!
However, for further thought, here is a blurb from the article on Gizmodo.com re: the author of the article:
Update: It looks like Scott Moritz is the same guy who made predictions before that didn't come true. He comes from thestreet.com, who, via Jim Cramer, made the prediction that the iPhone would get 1.5 years of free service. The rumor sounds less credible to us now.
http://gizmodo.com/385429/atts-3g-iphone-is-199-this-summer
SCOTT'S REPLY: But you know what, Gizmodo? If we based everything we reported on one event, well, that's tough. I can think of lots of times where someone was wrong once and later right. I think that it's all rumor until it happens, but it's a difference angle, you know?
Matt said:
omg, best rumor ever! Honestly, for $199, I think I would need new underwear. LETS HOPE I HAVE TO GO UNDERWEAR SHOPPING!
SCOTT'S REPLY: Underwear and a bluetooth headset, Matt. Think big, my friend.
Ricky B said:
its a fake
the article says the iphone came out on june 27, but it came out on the 29th of june.
there are too many false rumors everywhere
which ones do u think are genuine?
SCOTT'S REPLY: Well, I don't think that makes it a fake if you get the date wrong, although it is bad editing. It's hard to say. I don't think any rumor is really genuine ... but some are more trustworthy than others.
Steve said:
I wonder what Apple would be thinking here. The iPhone is a premium product and selling it for $199 would, in my view, devalue the brand. The iPhone and Apple products in general have a high quality perception and I wonder why Apple would fool with that formula, but we'll see.
Steve
SCOTT'S REPLY: I can see that point of view. I don't know that $199 devalues it, though. $99, maybe, but remember ... if the goal is getting more iPhones in more hands, $199 is the better choice than $399.
Michael Moon said:
Okay, let's say for sake of argument that Apple introduces the iPhone 3G at $199. Then what happens to the Touch? Reduce the price of that to, say, $125? Then how about the other iPod models? See where I'm going with this? I just don't see it happening, my friends. Sorry.
SCOTT'S REPLY: True, true ... but remember ... at the end of the day, whatever you pay for the phone, you still need to pay for the contract. So, for example, if the touch and iPhone were both $199, each serves its own purpose. One is truly $199. One is $199 and may cost $100 a month for a plan. Or whatever the cost is. So it could serve as a way to get people to consider switching cell phones or give people the option to buy at that same price and thus sell more units.
Glenn said:
Could be that economies of scale are coming into play here. The early adoptors (myself included) bought the G1 iPhone which paid for most of the research & development costs on the platform itself, and now that production has ramped up to more of a commodity state it's time for prices to come down a bit more. That and the fact that 3G phone service still won't be widely available at all in the US if this new phone comes out in July.
SCOTT'S REPLY: I think that makes much sense, Glenn. And yes, prices will always come down - I think Apple has to also keep in mind the state of the worldwide economy when setting prices, even though it knows that folks will do what they have to in order to get their hands on a new iPhone.
Jeff said:
" if the goal is getting more iPhones in more hands, $199 is the better choice than $399."
How about $237.47?
Seriously though, lowering the price of the phone will attract many more users even if the rates go up. People are more concerned about $200 now than $10 per month later.
SCOTT'S REPLY: I think it's true. ... the amount of the contract is just an afterthought to most people when making the purchase and moreso I believe with an iPhone.
mellowjohn said:
i've got a motorola L7 up for upgrade in early june, so $199 for a G3 definitely sounds good.
sounds kinda like the old business model for gilette razors: make the initial purchase (the actual razor handle) relatively inexpensive, and make your real money off the blades.
SCOTT'S REPLY: And we have our first comparison between the iPhone and shaving. Excellent!!
Michael Moon said:
Okay, now I see that this is actually an AT&T subsidy. Makes much more sense from Apple's perspective in that light. In fact the iPhone has been the exception for not being offered with such a subsidy, presumably because of AT&T's exclusivity in the US. I'd also like to see some form of educational discounts, which have also been singularly absent for the iPhone.
SCOTT'S REPLY: I"m very intrigued by what this could mean if it's true.
mellowjohn said:
well, using wireless (w/ iphones or not) has become more common as shaving. i mean, i use my phone way more often than i shave.
SCOTT'S REPLY: Same here, my friend. Same here.
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