Appleinsider-speculation iphone price could drop to $99

Discussion in 'iPhone' started by skye12, Oct 28, 2008.

  1. skye12 macrumors 65816

    skye12

    Joined:
    Nov 11, 2006
    Location:
    Austin, Tx
    #1
    and 2 to 3 times projected sales! This would knock out the cheaper iphone model scenario. How would they pacify everyone who spent $200....give
    another Apple store credit?
     
  2. thejadedmonkey macrumors 604

    thejadedmonkey

    Joined:
    May 28, 2005
    Location:
    Pa
    #2
    At $99, it's a war to the bottom. Like netbooks, nobody can win. :rolleyes:

    Apple won't do it, because even if they can make a nice profit @ $99, with the competition at $199, suddenly Apple becomes the Toyota and LG becomes the Lexus. Apple needs to stay a few dollars above the competition to retain its image.

    However, when we see LG drop to $99, I wouldn't be surprised to see Apple follow suit, or drop to $129, or introduce a 32gb model and bump everything down a few notches.
     
  3. ucfgrad93 macrumors P6

    ucfgrad93

    Joined:
    Aug 17, 2007
    Location:
    Colorado
    #3
    Sorry, I just don't see Apple ever doing this.
     
  4. Flhusky macrumors 6502a

    Flhusky

    Joined:
    Aug 28, 2007
    Location:
    Florida
    #4
    :apple: won't drop the price to $99 it would be AT&T or whom ever the carrier is. However expect some heavy back-end pricing.
    e.g. 36 month contracts or 2 month contract on the $99 unlimited + $30 data package.

    either way :apple: will have sold that iPhone to AT&T for $399/$499 weeks perhaps months before you bought it.

    *Now if it goes into Wal-Mart, its open season.
     
  5. IJ Reilly macrumors P6

    IJ Reilly

    Joined:
    Jul 16, 2002
    Location:
    Palookaville
    #5
    AT&T could start playing the rebate game with the iPhone at any time, which could drive the effective price down another $100, at least temporarily. Whether they do this all depends on how aggressive they want to be in bringing customers to their network. Personally I'd respond better to a less expensive plan, but that's me.
     
  6. rdowns macrumors Penryn

    rdowns

    Joined:
    Jul 11, 2003
    #6
    They give you the razors, never the razor blades.
     
  7. littlewaywelt macrumors regular

    Joined:
    Dec 4, 2007
    #7
    No way that will happen. ATT took a much larger loss than anticipated on the subsidy they pay apple. The device is already cheap and competitive when compared to other high end smartphones.
     
  8. me2000 macrumors 6502

    Joined:
    Sep 17, 2008
    #8
    AT&T won't lower the price anymore.. they've taken a higher loss than expected with the iPhone subsidy.

    And Apple doesn't want to compete in the sub-$100 cell phone market.. there's really no point.
     
  9. IJ Reilly macrumors P6

    IJ Reilly

    Joined:
    Jul 16, 2002
    Location:
    Palookaville
    #9
    Exactly, though in this case if they'd sell me fewer blades, I might take the razor. ;)
     
  10. kdarling macrumors demi-god

    kdarling

    Joined:
    Jun 9, 2007
    Location:
    Cabin by a lake with snow softly falling
    #10
    There was no "unexpected loss".

    ATT fully anticipated the large short term layout of subsidy money. They even outlined it last June in their press release about the new contract with Apple.

    They also said that after about eighteen months, each user will have repaid their subsidy. ATT's not losing a penny. They're in business to make money.
     
  11. kas23 macrumors 603

    kas23

    Joined:
    Oct 28, 2007
    #11
    Yes, you're right. I have no idea where people are getting this from. AT&T actually made a killing with the iPhone. Just last quarter, they signed-up 2.4 million people to 2-year, pretty expensive monthly plans. With 40% of these plan from new customers. Maybe, they didn't make as much as they could have (if they didnt have to pay the subsidy), but net money made was still huge and will continue to be for the life of these contracts.

    http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=26227

    It's hard to tell if dropping the price will bring that many more customers. You still have to pay a hefty monthly bill. In the big picture (which American customers tend to have trouble seeing), a $100 price drop is not all that significant. Now, if it come to Wal-Mart, where most customers can't financially plan past a month, it may sell a bunch more.
     
  12. littlewaywelt macrumors regular

    Joined:
    Dec 4, 2007
    #12
    Wrong. The unexpected loss is in their estimation of the payout this last quarter. They underestimated it by about 150m, somewhere around 20%. The anncmnt came out at their quarterly earnings.
     
  13. mkrishnan Moderator emeritus

    mkrishnan

    Joined:
    Jan 9, 2004
    Location:
    Grand Rapids, MI, USA
    #13
    Misanthropy aside, this presents a complex problem for Apple.

    With the iPod, Apple occupies a premium position in a fairly inexpensive and therefore accessible market -- even many lower-income Americans can afford an iPod. While the iPod is sustained by continuing spending for music (and some lower-income Americans, as well as some higher income Americans, do pay for music), that onus is relatively mild, and each user chooses how much to spend monthly.

    If Apple suddenly expanded to new retail outlets, with or without a price drop in the iPhone, I think there'd be a strong uptick in customers who either don't qualify for the postpaid monthly service plans available on the iPhone (which are significantly more expensive ona monthly basis than the average US postpaid plan or average US prepaid monthly expenditure), or who do qualify but will still find themselves unable to consistently pay the bill. If that happens, Apple and AT&T run a risk of getting a consumer backlash.

    For now, it seems like Apple can continue to take as much of the premium market from RIM, Windows Mobile devices, Nokia, and to some extent LG, as they can. And the premium market is growing fairly quickly. But even with a $100 premium, if Apple wants a presence outside the market segment that was already going for smartphones, there's a big challenge in the monthly cost.
     
  14. arubinst macrumors 6502

    Joined:
    May 26, 2008
    Location:
    Lausanne - Switzerland
    #14
    I'm sure that you're not aware of the fact that here in Switzerland, Swisscom sells the 8GB version for 99 CHF (more or less 85 US$). This price includes taxes. You have to sight a 2 year contract.

    Here's the link to the Swisscom Online Shop with the 99 CHF price...
     
  15. IJ Reilly macrumors P6

    IJ Reilly

    Joined:
    Jul 16, 2002
    Location:
    Palookaville
    #15
    An excellent summary. I believe Apple is hoping to profit from the fuzzing of the line between the "standard" and "premium" phone market, which is why I think they will do whatever is in their power to drive the entry price down. Still, the true costs of ownership are not in Apple's power -- AT&T controls that. In such a weak economy, much will depend on how aggressive AT&T decides to be. They may not have the iPhone as their exclusive weapon against their competitors forever. They may decide to strike while the iron is hot.
     
  16. kdarling macrumors demi-god

    kdarling

    Joined:
    Jun 9, 2007
    Location:
    Cabin by a lake with snow softly falling
    #16
    I'll grant you it is an unexpected extra number of short term subsidies. But it's not what anyone could call a loss. With the extra customers comes tons of extra profit, once the subsidies are paid back by the end of 2009.

    Some people write as if ATT loses money selling iPhones, or do something special for Apple. They do neither. It is Apple that loses by continuing their exclusive contract that limits access to only about 1/3 of USA cell phone owners... thereby handing companies like HTC the opportunity of a lifetime to gain customers.
     
  17. littlewaywelt macrumors regular

    Joined:
    Dec 4, 2007
    #17
    Well, it's a loss on their books this quarter, and "anyone" can see that. Of course they'll make it up.
     
  18. firewood macrumors 604

    Joined:
    Jul 29, 2003
    Location:
    Silicon Valley
    #18
    Apple has almost never dropped the prices of their products to compete in the commodity segment of any market. Even the huge price drop of the early iPhone 1G still left it in the premium price range.

    That said, the economy is different this year, and some companies may choose to pursue different strategies in order to try and maintain cash flow through these interesting financial times. How price sensitive is the cell phone market?


    .
     
  19. gkarris macrumors 604

    gkarris

    Joined:
    Dec 31, 2004
    Location:
    "No escape from Reality..."
    #19
    $149 for 8 Gig, $249 for 16, and $349 for 32.

    Maybe, just maybe, when more Android Touchscreen phones are out there. The G1 is $180 right now....
     
  20. mkrishnan Moderator emeritus

    mkrishnan

    Joined:
    Jan 9, 2004
    Location:
    Grand Rapids, MI, USA
    #20
    Possible, but I think a shuffling to the current 8GB price for the 16GB and the current 16GB price for the 32 is more realistic, when the 32 finally bows.

    Most likely with some physical thinning of the iPhone, minor screen improvement, better battery life.

    Speaking of thinning, less than no desire to own an iPod touch, but... wow. While I was not particularly impressed with the change in physical design for the 3G vs the EDGE iPhone, the touch is gorgeous.
     
  21. Eso macrumors 68000

    Eso

    Joined:
    Aug 14, 2008
    #21
    Wrong. AT&T reported earnings of 67 cents per share. That's a profit. Furthermore, their $200 subsidy pays for itself in 3 months under a contract.
     
  22. kdarling macrumors demi-god

    kdarling

    Joined:
    Jun 9, 2007
    Location:
    Cabin by a lake with snow softly falling
    #22
    Sorry, but no. It's not considered a loss on their books. It's an upfront cost that impacts their profit margin in the short term, to be made up (and then some) later on.

    ATT profits rise

    A "loss" is something you don't expect to gain back. That's not the right term (or expectation) here.

    Did Sprint have huge losses with the Instinct? Will Verizon have huge losses with the Storm. Etc. No. Wrong term. It's a built-in cost of doing subsidized phone contracts.
     
  23. joekun macrumors regular

    Joined:
    Mar 10, 2005
    #23
    Apple never should've given that credit, now it seems it's just expected whenever a price decrease is rumored to come along :rolleyes:. Maybe Samsung should reimburse me half the price of my LCD TV, because I paid double what they cost now.
     
  24. Cask Guest

    Joined:
    Jul 14, 2008
    #24
    Well here Mexico with the most expensive plan the 8GB iPhone only costs about 50 USD (taxes included). However, you also have to sign a two year contract for a 110 USD monthly plan, which includes 600 minutes, unlimited data and 300 SMS. I believe that for that rate on the US you get unlimited everything right?
     
  25. CocoaPuffs macrumors 68010

    Joined:
    Aug 23, 2008
    #25
    Apple cannot maintain the price of iPhone at current value. $99 or lower is inevitable and logical, just matter of when.
     

Share This Page