“Apple Inc.’s iPhone 3GS model is more than two years old and shunned by gadget snobs, and yet it’s turning into one of the company’s bigger weapons against devices running Google Inc.’s Android software this holiday season,” Peter Burrows reports for Bloomberg.
“When Apple rolled out its new iPhone 4S on Oct. 4, it slashed the price of the 3GS model to zero — if it’s purchased with a contract,” Burrows reports. “The decision thrust the company into the free- phone market for the first time and will help the 3GS account for as much as 20 percent of iPhone sales this quarter, said Shaw Wu, an analyst with Sterne Agee in San Francisco.”
“The move pits Apple’s iPhone against bargain Android phones, without much damage to the company’s profit. That’s because Apple gets cost savings from using older, cheaper parts. And though the device lacks some of the whiz-bang features of the 4S, such as the voice-activated assistant Siri, it’s still better than rivals of the same price, said Roger Entner, founder of market research firm Recon Analytics LLC,” Burrows reports. “‘Apple can shovel them out by the millions,’ he said. ‘What free phone or even $50 phone is going to be more appealing to consumers than an iPhone 3GS?'”
Read more in the full article here.
MacDailyNews Take: It’s amazing to us that the purchase price matters at all to individual buyers when the vast majority of a smartphone’s cost is the cost of the two-year service plan.
If you’re buying a single iPhone, divide iPhone 4’s $99 upfront price tag over the 24 months of the contract and it comes to $4.13 per month. Divide iPhone 4S’s $199 upfront price tag over the 24 months of the contract and it comes to $8.29 per month. So, 20% of individual iPhone buyers are choosing an antiquated iPhone 3GS over an iPhone 4 or iPhone 4S (with Siri, no less) in order to save four or eight bucks a month, respectively? Seriously? 20% of iPhone buyers can’t all be parents buying multiple iPhones for the family in one shot, can they?
Individual iPhone buyers, if $4-8 per month matters that much to you, you either can’t afford a smartphone or you’re a sticker-price-obsessed-TCO-ignoring Windows suffering fool.
[Updated Take at 10:50am ET as per Springer’s comment below to reflect that we’re talking about individual iPhone purchases only.]