An iPhone for $199?
With competitive pressures mounting, AT&T may cut the iPhone's price to boost demand -- and cement its relationship with Apple, according to media reports.
With less than two months to go before Steve Jobs takes the stage at Apple's Worldwide Developers Conference, where he's expected to unveil a new iPhone, it appears that AT&T may not be convinced that new bells and whistles will be enough to get droves of new customers to switch from other wireless carriers. So after a year of charting a new wireless business model by selling the vaunted iPhone at premium prices, the nation's biggest phone company may resort to the oldest trick in the cellular book: big discounts, Businessweek.com reported.
Published reports that first appeared on the Web site of Fortune Magazine suggest that AT&T, which has an exclusive five-year deal to sell the iPhone in the U.S., is prepared to subsidize the device by as much as $200, slicing the purchase price as low as $199 for customers who sign a two-year service contract. Apple and AT&T declined to comment on the matter.
Such a discount could cause a surge in demand, although it's also likely to irritate customers who have paid a much higher price for their iPhones.
At last count, Apple had sold some 5.4 million units, the vast majority of them for AT&T's network, even with price tags of $400 to $600.
For AT&T, eager to generate returns on its multibillion-dollar investments in a next-generation data network, a $200 subsidy on a device with a proven success record may be a no-brainer, Richard Doherty of the Envisioneering Group told Businessweek.com. "This is not unexpected at all," he says. "The $200 is a small fraction of the revenue that AT&T makes over a two-year contract.
AT&T brings in about $90 a month from each iPhone user, reckons John Hodulik, analyst with UBS Investment Research (UBS), Businessweek.com reported. "When Apple cut the price on the iPhone by 33 percent earlier this year, it stimulated demand," he says. "If this new price turns out to be true, it would do it again. It's like deja vu all over again."
File photo
The price of an iPhone could be going as low as $199.
