Apple iPhone 3G may cause both handset makers and wireless carriers to suffer

“It didn’t take Apple long to make its mark on the mobile-phone industry. In the first year after the introduction of the iPhone, Apple grabbed handset share from rivals including Research In Motion while AT&T, the only authorized U.S. provider of iPhone service, used the device to lure customers from Alltel and T-Mobile USA. Imagine the ripple effect of a cheaper, faster, more feature-packed version of the iPhone,” Olga Kharif reports for BusinessWeek.

“Not only has Apple whacked as much as $200 from the iPhone price and made it capable of working on a faster wireless network, but the company is also adding a wide range of software features that may make it more appealing to consumers and business users alike. The new iPhone is due in July,” Kharif reports.

“Now that AT&T is boosting its subsidy of the iPhone, chances are other operators will follow suit—especially on iPhone copycats. ‘Most people want the iPhone, just as they want the iPod and not some other MP3 player,’ says Gloria Barczak, professor of marketing at Northeastern University. ‘People want the real thing.’ Consumers will need an incentive to settle for something other than the iPhone, she says,” Kharif reports.

“Handset makers, currently benefiting from double-digit growth in the overall smartphone market, could have their share of iPhone-related headaches, too. While carriers are the ones that absorb subsidies, they can also step up pressure on their suppliers to cut prices on bulk orders. What’s more, if iPhone sales surge as many analysts expect, market share for rival handset makers will erode,” Kharif reports.

More in the full article here.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]


  1. You’re right John.

    This is what the others just don’t get. It’s about the software.

    Sure my iMac is beautiful, but it’s the OS and apps that make using it a joy.
    Same with the iPhone.

    Lord willing, I’m planning on getting the 3G a week or so after the initial launch. I don’t want to be caught in any activation traffic jam.

  2. ‘Most people want the iPhone, just as they want the iPod and not some other MP3 player,’ says Gloria Barczak, professor of marketing at Northeastern University. ‘People want the real thing.’

    … Priceless

    MaWo: ‘game’. As in, ‘iPhone has it…’

  3. Maybe Apple has wacked $200 off the price of the iPhone, but the new ATT plan has actually made owning it more expensive than the old iPhone. Sorry, but I am getting a big tired of reading how the new iPhone is less expensive than the old one. It must come with a contract and that contract eats up the savings and more. As I have said in other posts, a new iPhone would cost me a $1000 more over two years than my current smart phone with Verizon. Not so good.

  4. It’ already well documented that the new iPhone will cost only about 50 dollars more over the life of the contract after you factor in the cost of the new iPhone, compared to the cost of the old iPhone plus the total cost after the 2 year contract. 50 BUCKS!!! BIG FRIGGIN’ DEAL!!!

  5. @ FreddyThePig:

    I don’t know about JoshTheiMacGuy, but an iPhone would mean a pretty decent increase in my costs, and I’ll supply the numbers:

    Monthly cost, after taxes, fees, etc. is about $85. Covers three phone lines, sharing 550 anytime minutes. Unlimited data on 2 of 3 lines (1st & 2nd lines are smartphones, 3rd line isn’t). All lines have unlimited nights and weekends, nationwide long distance, and 100 SMS messages per month. Assuming AT&T;only charges $9.99 per additional line and a base cost of $69.99, I’d be looking at $89.97 per month before taxes and fees. It’s probably safe to assume that taxes and fees will add up to at least $10/month, so my total would be around $100/month. I’m not sure if AT&T;includes unlimited data in their iPhone plans or not.

    So, for $15 month more (assuming unlimited data is included in AT&T;’s price), I get visual voicemail, a better browser, and a nicer interface, and I lose copy-and-paste and the ability to easily store documents on the phone. I currently have a handful of Excel, Word, and PDF files that I can access through my current phone, and in the case of the Word & Excel files, edit them.

    Of course, that does not count the cost of the equipment.

  6. Freddy-
    good way of looking at it. What I’ve not seen stated much is that many businesses (such as where I work) will pay for the wireless phone plan, but the user has to choose and pay for the phone – so if I want a free cheapie phone, I have no cash outlay at all. Thus for many corporate users (whom Apple is now targeting), the lower up front price on the phone is a huge savings to the end user, who don’t pay the monthly fees anyway. Some businesses even buy the phone.

    [Of course, we’re stuck with Verizon Wireless for the foreseeable future. Every time I talk to a Verizon rep, I ask innocently, “so, when will you guys be getting the iPhone?” – I am sure that question gets on their nerves… and it makes me feel a little better…]

    To sum up, these complainers about the new iPhone plan costs should not assume this affects everyone who gets an iPhone. As the iPhone gets adopted by businesses, it will matter less to more and more end users.

  7. Well nothing pleases me more than Apple succeeding in the marketplace. And in the case if the iPhone 3G, AT&T;will be more successful too, right? So, do what do you think AT&T;, do you think you could find it within your corporate bowels to improve your network? Could you make my life as an iPhone owner a little easier and more productive? Would you please make it possible for me and other tortured iPhone users to enjoy the full potential of our phones in places more than a half a mile from a freeway? I mean, honestly, more bars in more places? Compared to Verizon, AT&T;’s cell network sucks!

  8. “Apple whacked as much as $200 from the iPhone price”

    Really? Show me where I can actually buy one for this “new price”. The old iPhone was available without a contract for $399 but the new one isn’t, making the price of ownership a stunning minimum $1975. Even if you buy out your contract early you still can’t put one in your pocket for less than $375. Contrary to what some marketing geniuses think, many of us can actually add basic numbers.

  9. Oh yeah.

    If you’re a struggling tech company, the best way to get back on track is to cut R & D.

    This isn’t a recipe for a turnaround, it’s a recipe for “let’s see if I can keep this boat afloat ’til I retire.”

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