“‘The $199 price point is where demand leaps,’ AT&T CEO Randall Stephenson says [of Apple iPhone’s base model subsidized price]. ‘This is going to bring in a whole new demographic,'” Leslie Cauley reports for USA Today.
“That ‘demographic’ isn’t actually a demographic; it’s mainstream America. So long as the iPhone had a hefty price tag, Stephenson says, he and Jobs feared it would never become a mass-market item. With a price of less than $200, however, they thought the iPhone could finally jump into the mainstream. ‘It seemed like an opportunity to change the game,’ he says,” Cauley reports.
“AT&T also gets some serious lift. As with the original iPhone, 3G customers must sign a two-year wireless contract. Existing AT&T customers have to re-up for two years,” Cauley reports. “Those who want to surf the mobile Web — and why else buy an iPhone? — also must buy a data plan. Total cost: around $100 a month. That’s almost double the $55 generated by the average AT&T wireless customer. ‘You just don’t find many opportunities like that,’ Stephenson says.”
“The U.S. cellphone market is rapidly approaching ‘saturation’ — meaning everybody who wants a cellphone already has one. To add subscribers, Charles Golvin, a senior wireless analyst at Forrester, says carriers basically have to steal them from each other. That’s where the iPhone could come in handy, he says,” Cauley reports.
“In exchange for its payout, AT&T got a year extension, into 2010, on its exclusive distribution deal with Apple, people familiar with the matter say. Sources asked to not be named because the terms are confidential,” Cauley reports.
Full article here.
[Thanks to MacDailyNews Readers “MacVicta” and “GizmoDan” for the heads up.]
MacDailyNews Note: AT&T stated in a July 1, 2008 press release, “In the future, AT&T will offer a no-contract-required option for $599 (8GB) or $699 (16GB).”