iPhone. Will Price Drop on Release?

By Richard Menta 5/20/07

When Apple announced that the price of the iPhone would be $499 for the 4GB version and $599 for the 8GB version there was something in my gut that said those prices were released more for the benefit of the mobile market manufacturers than consumers. But why I feel that way - and I still do - is something I have not been able to put my finger on.

Certainly, the iPod's history shows that Apple is comfortable with that price point. Back in the October of 2004, when Apple introduced the iPod Photo, it sold the 40GB version of that player for $499 and the 60GB version for $599. At the time I thought that was too high a premium for endowing the iPod with a color screen and JPEG reader. I suspect consumers did too as word circulated on the Net that sales for Apple's most expensive player were soft. Apple doesn't separate iPod sales by model, so those rumors were only conjecture. But Apple did discontinue the 40GB version just a few months later, replacing it with a lower priced ($349) 30GB version in February 2005. They dropped the price of the 60GB model too. Maybe this is the root of my stomach rumbles? Maybe not.

The Cowon D2 is available on Amazon

The iPhone offers many more features than the iPod Photo, reason enough to disregard my intuitive musings about price as this unit is chocked full of compelling stuff. The swelling consumer interest at this price point prior to the June release is another reason. Yet, I can't dismiss this feeling I have. I have been covering portable media devices since the end of the last century and have been right more than once. Something here is subconsciously gnawing at me. Something that says Apple announced a higher price just to still the competition, who for the first time were given a good look at an Apple product well before launch, about 6 months early courtesy of the FCC.

I could be wrong. I probably am wrong. But, what if Apple announced on release day that these phones will sell for a hundred dollars less?

At that price point 1% market share of the mobile phone market comes off as way too conservative. Apple is just entering this market and like every savvy company they re-evaluate their pricing just prior to launch. Even if $100 is too much of a drop $50 is certainly within reason as dropping flash and processor prices over the past half-of-a-year could account for it. Then again, when you consider that an iPhone can only be acquired with the purchase of a 2-year contract from AT&T one wonders if that mobile carrier's usual subsidy for multi-year contracts was conveniently excluded in the "announced" price. If that was the case an additional $100 off may very well be in the cards, especially since AT&T's ultimate goal is not to sell phones, but to lure as many defectors as possible from service competitors.

We'll just have to wait and see. Meanwhile, my arthritic knee is acting up. We must be expecting rain.

Other MP3 stories:
iPod Killers for Summer 2007
- 38 new portable players
iPod Killer Graveyard: Failures Equal NIB Bargains


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