Analyst: Forget about near-term AT&T subsidies on Apple’s next-gen iPhone

“Next week, Apple Inc. CEO Steve Jobs is expected to announce the next iteration of the company’s iPhone at Apple’s annual developer conference,” Phil Carson reports for RCR Wireless News. “In the run-up to the purported announcement, several issues have been bandied about by the global media, which has been fascinated by the device and its disruptive effect on the cellular industry — effectively creating the buzz that Apple’s PR department could never deliver.”

“One of the most-discussed issues is whether AT&T Mobility — and, conceivably, other operators across the globe — will subsidize the device to a disruptive price point from its current perch at $400 and $500, for 8 GB and 16 GB models, respectively,” Carson reports.

“Recent, general remarks about the efficacy of subsidies by AT&T Inc.’s CFO Rick Lindner on May 22 at a Reuters conference in New York further fueled speculation on the issue. Media speculation has focused on possible iPhone pricing as low as $200. Neither Apple nor AT&T Mobility have publicly, directly addressed the topic,” Carson reports.

“Analyst Roger Entner at Nielsen/IAG, however, dashed some cold water on the notion of near-term subsidies last week,” Carson reports,. “‘There’s no need to upgrade the device’s capabilities and lower its cost at the same time,’ Entner said. ‘AT&T Mobility first will have to see the effect that a 3G iPhone will have on its HSDPA network. Right now, that HSDPA service is robust, with only a few million laptops riding on it. Add a few million iPhone users, who are heavy users of the Internet, and it could be like shaking a skyscraper. AT&T Mobility is not just selling a device, it’s selling a service. AT&T Mobility doesn’t want complaints about its service. That would spell out no abrupt price subsidy for the device.'”

Carson reports, “An iPhone subsidy, should one be contemplated, would represent ‘a secret weapon for Christmas’ should Apple and/or AT&T Mobility determine that they need to gin up device sales to reach or exceed Apple’s 10 million-unit goal by the end of 2008, Entner said.”

Full article here.

26 Comments

  1. Why would Apple drop the price of the iPhone? Apple will sell every iPhone it can make – look at how the current model is out of stock virtually everywhere.

    You drop prices when you need to generate more sales. Apple doesn’t need to generate more sales, especially not when the new iPhone is released. You save the price drop for later after the initial pent-up demand is met.

    I wouldn’t count on Apple continuing to sell the current iPhone alongside the new iPhone. Apple rarely does this (iPod classic being an exception), particularly when the new device does everything the old one did plus more.

    I expect the new iPhone to be released with similar price points and similar data plans. The compelling features are going to be the software enhancements, 3G, upgraded camera, and probably GPS.

  2. Glad to spark such vibrant conversation. Those that commented are taking me too seriously.

    I don’t care personally, but I think a $200 price drop (no matter how they do it) at the holidays would upset another round of early purchasers, like it did last year. Even worse possibly since it would be twice in a row. With all the bad press last year, I think they would want to avoid that situation and introduce any price deals earlier rather than later.

    If they do a price incentive, perhaps they make it part of signing up with a carrier. Buyers would pay full price at the store, but when they plug it into iTunes and sign up for 2 years, at that point they get the discount. Like say $200 back on their credit card. Since Apple is getting a cut from the carrier, they would still make a profit on the phone.

  3. The analysts simply do not get it. Apple will never allow it’s phone to be bundled free with a service contract. This is what Apple is fighting against: the devaluation of the phone as a device.

    The main reason Motorola, Nokia, and even Sony haven’t produced the iPhone is because they allowed themselves to become vassals of the telcos. Innovation was stifled and phones were throwaway loss leaders to get people to sign contracts. This perpetuated the telcos control and butchering of the capabilities of even full featured phones like Sony’s lineup.

  4. Apple doesn’t put demo programs on their phones to cover some of the price of the phone. Everything is their doing. No java apps or any BS that used to come on those other “phones”.

  5. I agree with Olternaut. These analysts are basically just using the Apple hype to drive attention to their articles. This is another example of SPOAF. Stating Personal Opinion As Fact. This analyst doesn’t have any more insight into this issue than we do at this time. He shouldn’t stir the pot. He should report relevant useful insights…if he has any. If not, just wait until next week…like we will.

  6. Possible the “new” 3G model will be the only iphone model. Wasn’t it out of stock and already being sold at low cost across europe? Sounds like the typical fire sale to clear the channel before the new model arrives. Apple still “supports” the iphone EDGE with OS upgrades etc but it’s now moved to the faster network etc. Same price point, new device.

    Notice BB Curve is being sold dirt cheap, it’s likely a month or so till the BOLD so the channel is being cleared. Everytime a new model comes out you see this.

  7. @mas
    See, every one is responsiv for whatever one buys. With you theory, the computers would still cost around 50’000$ And only very few people could afford having a television for themselves at home!
    iPhone is a consumer product and it’s price will fall like any other’s.

  8. Everyone wants something for nothing. Apples strategy across their product lines has been to hold their price points by offering ever increasing value, rather than sell the same old same old for less and less. They have built a highly profitable company in this way. Why would they change when then are about the introduce the most anticipated product of the year?

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.