Yes, Apple should sell a $99 iPhone
It's just a rumor at this point, but the usual anonymous tipsters have told the Boy Genius Report that Apple is planning to sell a $99 iPhone at Wal-Mart. There's been some debate about whether this would be a good idea for Apple. One financial analyst ran the numbers and believes that Apple would double or triple sales while still maintaining very healthy margins of more than 40 percent. Other onlookers have noted that Apple does not typically play the low-cost high-volume game; it certainly made fools of any suckers who believed the $800 laptop rumor.
(Credit:
CNET Networks)
I'll throw my hat into the ring and say that a $99 iPhone would be a great idea. Why?
1. The smartphone market is new(er). Laptop computers have been around for more than a decade and have practically become a commodity, as evidenced by the recent rise of sub-$500 Netbooks. The typical way to compete in a commodity market is by ruthlessly slashing expenses and competing on price. But the better way--if you can swing it--is to break out of the commodity ghetto and position your product as a luxury exception. That's exactly what Apple has done, largely by way of design. (You can argue the merits of OS X versus Windows all you want, but there's no arguing that OS X has a simpler--not necessarily "easier"--and therefore more elegant appearance.)
But smartphones are still a relatively green market. Yes, we've seen "feature phones" capable of running simple applications like games for some time, but true smartphones--with large displays, sophisticated user interfaces, and the ability to run multiple types of computer-like applications--are still rare outside the business world. If Apple can compete aggressively on price now, it could dominate the consumer smartphone market, just as it dominates the MP3 player market today. Once that happens, all sorts of interesting long-term revenue possibilities open up--App Store revenue could become significant with 50 million iPhones out there, not to mention upgrade cycles, attached devices and services, and the "halo effect" on Apple's other products.
2. The competition is behind. As today's Gartner report on smartphones makes clear, the competition is in disarray. Nokia/Symbian's market share showed an annual decline for the first time ever in the third quarter because of a lack of competitive touch-screen devices. Windows Mobile fell behind the iPhone in North America. And while Research In Motion is also growing, its entrant in the touch-screen race, the new Storm, has been met with a decided "meh" or worse.
None of these competitors is standing still. Nokia's got its Ovi Internet services online and is unveiling touch-screen devices left and right; Microsoft's busy at work on Windows Mobile 7, which will almost certainly incorporate music functionality from the Zune and design and other features from Danger. And the Storm won't be RIM's last effort at a touch-screen phone.
3. The economy. Times are hard. Apple's got a backlog of 2 million iPhones in the channel, according to that Gartner report. RIM just downgraded expectations for its third quarter. What better way to dominate than by being the low-price leader and creating the product with the most mainstream appeal? It sure seems to be working well for Nintendo.
By striking now, the iPhone could become "everybody's" first smartphone. Five years from now, it could be as synonymous with smartphone as iPod is with MP3 player.
Matt Rosoff is an analyst with Directions on Microsoft, where he covers Microsoft's consumer products and corporate news. He's written about the technology industry since 1995, and reviewed the first Rio MP3 player for CNET.com in 1998. He is a member of the CNET Blog Network. Disclosure. You can follow Matt on Twitter @mattrosoff. 
One major thing to consider with Apple, is that they want the user to have a simplified experience with their products and a very low error rate. By selling 'unlocked' phones the user has the potential to run into many problems with the hardware. This is the main reason why Apple has restrained itself from releasing Mac OS as hardware independent. By knowing exactly what the user will encounter, Apple can tailor it's software and hardware to provide the most smooth experience possible.
I would really like an 'unlocked' iPhone, but I'm not sure if I want to sacrifice the quality of the experience for it.
Mark my words, I know Wal-mart, I know phones, and I know porn.
Once again the pink elephant is back in the room, ready to drive technology sales.
I like it. Apple always finds a way to make a profit. I now agree a $99 iPhone 3G with only 4g memory and a $35/month AT&T fee could do it.
Plus I got to support Wal-Mart and people being responsible for their own well being.
And when that happens, I'll finally get jump on the bandwagon and get a 32.
The reason why is simple... AT&T still has an exclusivity contract for selling and carrying iPhones, so unless WalMart and AT&T and Apple want to get in bed together... well, why can't Apple and AT&T just do it among the Apple and AT&T stores w/o having to give Wal-Mart a vig?
I also suspect that the $99 deal may not mean a smaller phone (or an older one), but a longer contract (with the lower price being the bait).
That said, it is still possible - just not probable.
Walmart sells other AT&T branded phones, so there isn't any issue there.
So it's not only possible, it's happening.
All the PDA and music , photo , and video functionality of my 3 YEAR OLD MOTO Q works just fine even if there is no phone service activated.
Admitting you have a problem is the first step to recovery. It seems you have an irrational "hatred" for Apple... or are a MS fanboy to the extreme. Either way.. you are on the road to recovery. There is still hope that one day you will return to being a rational, objective consumer.
enough said
As for electronic prices dropping, Apple has a history of updating their products, not slashing their prices, in order to maintain consumer interest. A history that has worked quite well for them. I understand that they may choose to lower the iPhone price eventually - but would not expect it within months of the original launch. That's sooner than "a while" for any market.
Clueless.
What are the first 4 letters in analyst?
So the $99 Iphone will be as common as a parking meter that takes a nickel for 30 minutes of parking in Manhattan.
Why did Apple make the buying process so cumbersome. If you are lucky to find one for $199 or $239 or whatever you must activate with AT&T or else you can't buy it. So there is this new market where they are maked up between 200% - 1000% where despite this doom & gloom about recession, they are selling selling out usually for more than asking price at least on Craigslist or Ebay.
But for me, I'm looking at the long term monthly payments. I bought the Helio Ocean when it got to $200 because at the time, there were the only ones with unlimited internet / texting / IM. And it was $65 / month. That was with 500 daytime minutes. This was the first time I paid more than $80 for a phone, and even that was pushing it.
No, I'm not trying to convert people or be a Helio fanboy, but I'm just saying the monthly price is what made it feasible for me.
The G1 has nearly the same price, last I checked. I think there are fewer minutes, but I hardly use the phone part of my phones.
This $65/month is about as high as I want to go (well, before taxes and fees and raping my wallet).
An entry cost of $400 for just the phone would be too big of a deterrent to me. $200 is a good price for something that will provide lots of functionality for the next 2 years. $100 would be nicer, and free even better, but it still doesn't quite offset monthly fees that are too high for my liking.
- by kai6novice December 5, 2008 11:18 AM PST
- maybe they will sell the iphone for $99 with 3 or 4 years of ATT contract. I think that would work out for both party. LOL
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