Apple chief executive Steve Jobs likes to wow the crowd during his keynote addresses with his “boom!” moments and then saves the best for the end with: “One more thing…” This summer, potentially at the WWDC conference, he may have two perfect candidates. The “boom” would be the 3G iPhone. The “one more thing” could be its price: $199.
Yes, you read that right.
When the 3G iPhone is released this summer (and we are saying “when” and not “if” at this point), AT&T is ready to shave as much as $200 off the cost of the phone, according to Fortune, which says it has a source familiar with the matter. This discount would be applied when customers sign a new 2-year agreement.
If true, this is big news. Plenty of people out there were planning on buying the 3G iPhone at $399, $499 or even $599 if need be. If the device comes in at $199 and $299 after the discount, the saying “flying off the shelves” may have to be redefined.
Rumors have been around for a while that Apple and AT&T would discount the current crop of iPhones when the 3G model hit, but this is the first time anyone has said that the companies would be willing to lower the price of the new 3G version.
It wasn’t even a year ago that the iPhone was launched to the public at the steep price of $599 (the 4GB version, which no longer exists, was only $499). There was some public outcry because AT&T was not subsidizing the cost of the phone even though purchasers had to sign a 2-year contract with the company. A few months later Apple decided to slash the prices by $200, and now we’ll have our subsidizing — making for a very affordable $199 iPhone.
The newer 3G (the cellular broadband network, faster than the current network, EDGE) iPhone models are expected to come in the current capacities of 8GB and 16GB. However, the larger, 32 GB capacity which Apple uses for the iPod Touch, should not be ruled out either. The older models would be discontinued.
If this price-cut is in fact intended for the 3G iPhone and not the older models, BlackBerry and other smart phone makers are in big trouble. Not that they weren’t already.
The Fortune piece goes on to say that the new iPhone will be 2.5 mm thinner than the current version (which goes against the reports from a few days ago), will have a GPS chip (which has long been rumored) and interestingly, “other location-based services.”
update: I was just chatting with a friend who shied away from buying an iPhone last year and wasn’t sure about getting one this time around. When I told him about the new potential $199 price, without hesitation his reply: “I’ll be getting one then.”
[photo: flickr/William Hook]
Tags: co:Apple27 Comments
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David Anderson said:
Oh man. My Verizon contract expires in June. I’m going to be making fun of all my early adopter friends who I’ve been jealous of for the last few months.
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MG Siegler said:
@David - That will be fun for you — but I bet anyone who dropped $599 the first time around (myself included), will gladly drop $199 or $299 this time around.
More importantly, that sound you hear is Verizon, Sprint, RIM and the other competitors screaming in horror.
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Canadian CEO said:
Do you think Rogers in Canada will be offering similar pricing?
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Adam said:
I wouldn’t pay $99 if it meant being tied to AT&T for 2 years. Incompetent bunch o’ price gougers…
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MG Siegler said:
@canadian CEO - I talked about that briefly in the post earlier about the Canadian iPhone - that would be awful if they launched the device there without all the perks (3G and the nice price) that we’d be getting here in the states. Not sure what Rogers policy is for subsidizing, but I assume they do it on most other phones, no?
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MG Siegler said:
@adam - I too wonder if you’ll be able to pay full price and now not be locked in to an agreement with AT&T — my bet is no.
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Webomatica said:
Really hope this is true. If so, I might buy two iPhones (myself and the spouse) instead of just the one I was planning on!
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MG Siegler said:
@webomatica - you are the second person in a 10 minute span to tell me that this pricing means that they would probably buy two instead of just one. I think AT&T and Apple may be on to something here…
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dan said:
wasn’t everyone already effectively tied to ATT since they are the exclusive carrier for the iPhone? Current owners: did you not already have to sign a two year contract?
That said, a $199 price instead of $399 will also make it attractive for people to pay the $150 or so contract breakage fees with their current carriers. I plan to get two iPhones if the features and price target are right, and one of my current sprint phones is off-contract now, the other goes off in October. Sounds like a no-brainer now, with a price like that. Without subsidy, those are pretty damn pricey, and dropping nearly a thou for two phones is hard to do. $400 for two is not too shabby.One wonders, though, if the whole “subsidy for 2 year contract” thing means that the iPhone is about to be available to other carriers? Could explain why ATT suddenly is willing to subsidize the costs, to lock us in… Maybe the 2009 announcement will be unlocked iPhones :-)
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MG Siegler said:
@dan - yes, you were tied to AT&T already, perhaps there is something going on behinds the scenes there with Apple and AT&T — or perhaps they just want to sell A LOT of iPhones.
The latter seems to be working, as you’re now the 3rd person stating in the comment area that they will BUY TWO!
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Sujith said:
Been wanting to own one since the launch.AT&T service is kind of bad in my area. My wife had almost convinced me to go with her network(Alltel).Today, she was the one who was all excited reading this article and telling me about the new price.Looks like i am in for two as well !
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andy said:
i have a hard time believing this. and if true, i can’t see how they can possibly keep up with the demand it will create.
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MG Siegler said:
@Sujith - I really hope this is true for all you guys sitting out there waiting to buy iPhones for you and your wives.
@andy - I’m still quite skeptical as well, I keep thinking Fortune’s source simply got the facts wrong. It really does seem too good to be true and yes, if it is true, it will be nearly impossible to get one for a LONG time. We’re talking Wii-long.
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jalarmo said:
It just doesn’t make sense. iSuppli says that it costs almost that much to *make* the iPhone. Apple does not sell low-margin products, ever.
It doesn’t make sense.
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MG Siegler said:
@jalarmo - it would be entirely AT&T eating the $200 — they quickly make that back in monthly fees. that’s how it works for most carriers and most phones, at least in the U.S.
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Adam H said:
I am currently using my iPhone on my brothers family plan. Now that AT&T has an unlimited plan I was going to make the complete leap to my own account. Now I will wait until WWDC. They said that it may be for NEW contracts (the discount).
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jalarmo said:
“Brett Arends and Scott Moritz are not reporters, they simply generate torrents of false information. Anyone citing them as reputable sources of news is equally guilty of spreading false information.”
Cramer and Moritz as securities criminals:
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Peter Antypas said:
I will gladly drop the $199 to upgrade as soon as it arrives. This is brilliant. Major disruption in the making, plus creating a huge market for the application store coming later this year.
Verizon can eat shit. They were too stupid to get the iPhone in ‘07, let them pay for their mistake.
RIM->RIP
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MG Siegler said:
@peter - I do wonder if Verizon will look back on passing up on the iPhone as a fatal misjudgment. They already cannot be very happy about it.
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Steve said:
I’m not sure why Apple would allow AT&T to sell the iPhone for $199 because a price that low just devalues the brand. The iPhone is a premium product, and Apple products in general get a high quality perception from consumers. I don’t know why Apple would want to mess with that formula, but we’ll see.
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MG Siegler said:
@steve - I’ve thought about that as well, it’s the same idea why Apple doesn’t sell super-cheap laptops. However, this market is theirs for the taking quite easily with a deal like this, it could be too hard to pass up.
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Marc Fawzi said:
With all due respect to everyone, the level of enthusiasm here proves that people are “feeling” animals not “thinking” beings.
Apple is trying to take over the market while enforcing all sorts of restrictions on the developer and consumer.
But no one cares. It’s free sex.
:)
Apple used to stand for “counter culture.” Now they stand for mainstreamishness. Everyone has an iPod. And everyone will have an iPhone.
How do you differentiate yourself from the borg?
How do you encourage corporations to be more open and transparent in what they do (which Apple is not) when all you care about is the appeal and functionality of their products?
I realize I’m barking up the wrong tree here but it’s important to have an opinion that challenges the mainstream.
:)
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buy3gipone said:
Instead of waving off the 200$ (AT&T) Apple should make the phone carrier free…. That would have been great …
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Bruce Adams said:
When one buys something brand new, one pays for the extra R&D on the product. If this phone is sooooo great, then it should still be sooooo great 2 years from now (when you can buy it at 50 bucks). I’ll wait till then.
Sometimes eating the Jone’s scraps, can be just as good as keeping up with them.
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mark said:
This sort of introduction is exactly why I moved away from Macs years ago. Apple likes to get people in at high prices and the do product launches while products are overpriced and that alienates the initial buyers. Screw Apple, I’ll wait for a competing product. Like the products but sooo hate the company.
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Edgar Grimes said:
If you purchase a iphone from Apple and not ATandT, can you still take avantage of the discount? Wouldn’t that be sort of unfair to those who may buy the iphone at an Apple store versus an ATandT store? Not sure how that all would work.
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MG Siegler said:
Good question Edgar. I assume upon activation AT&T would give you some sort of credit perhaps.
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