Analyst expects low cost iPhone, service plan soon
By Ronald O Carlson
Any marketing person worth his salt knows that it’s easier to make a customer for life by earning the customer’s loyalty at a young age. Whether you’re selling McDonalds french fries or Camel cigarettes, the latter being illegal these days, tailoring your message, product and pricing to the juice box crowd can provide decades of revenue from every youngling converted— Get ‘em when they’re pups!
Well, as Apple’s share of the online music and pocket media player markets reaches saturation, thoughts in Cupertino quite naturally have turned to the next form of technological crack device they’d like to see the kiddies carrying in the hallways of K-12 educational institutions.
Thereupon, Piper Jaffray’s 16th bi-annual teen demographic survey has found that 8 percent of those queried already own an iPhone and that a further 16 percent say they plan goad or guilt their parents into buying them one, a decline of 6 percent since the firm last took the teen pulse. However, the research firm thinks they know why the number of young hopeful Apple handset buyers has fallen and the solution Cupertino has at hand for bringing more kids into the folds.
We believe AT&T rate plans are adversely causing the discrepancy in teen’s interest in the phone, and actual market share gains; as much as teens want the phone, parents may be reluctant to add expensive monthly data plans to their teen’s phone bill. We expect Apple to address this issue in the coming months, with a family of iPhone models including a high end model with current plan pricing and possibly a low-end model with fewer features and lower-cost monthly data plans—Gene Munster, Piper Jaffray
Rumors of a feature reduced, cost down iPhone (nano) have circulated since Apple entered the handset market back in 2007. There’s no question that the market is there for the taking.
However, does Apple know how to make a low cost phone that isn’t a piece of crap? After all being just another turd in the netbook punch bowl has kept the Mac maker out of that market to date and any contribution the company would make to the $99 smartphone segment would likely be more phone than handheld, which doesn’t sound very Applesque. That sounds like another Motorola or Nokia P.O.S., and there’s already an abundance of those.
Alternately, Cupertino could simply sell last year’s handset (less GPS with the same crappy camera) for less while maintaining the high margin gravy train with this year’s “all new” full featured iPhone…
What’s your take?
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April 9th, 2009
Quite an interesting thought. Apple could have kept the original iPhone (Edge) as that low cost option for the hardware. I’m still using my 8gb iPhone, it works great but I’m looking forward to the new hardware in June/July.
But the burden of rate plan falls squarely on AT&T’s shoulders. iPhone users are getting screwed. Why should a minimal iPhone plan cost $70 a month? MMS may have been a missing feature from the iPhone software but why? Not because Apple couldn’t do it, but because AT&T probably wanted that feature crippled. And with the OS3 coming out and new hardware rumored to becoming this summer it’s almost a guarantee that the iPhone rate plans will increase while other smartphone plans remain untouched.
It’s hard to hook the young ones (and some old ones) even with the hardware subsidy, when the rate plan remains out of their price range or is more than what a parent is wiling/able to afford.
April 9th, 2009
The thesis to this turkey topic is entirely too thin to think about on this thursday.
April 13th, 2009
Discounted prices for iPhones are a little bit slight-of-hand on the part of AT&T. They make back their money through the mandatory data contracts.
AT&T is going to sell the 8GB iPhone for $599 with no contract. They’ll discount it to $199 if you get a 2-year data contract. But that’s $720 for 2 years for the 3G plan. They more than make up the original discount, on average, through the data fees because the typical user won’t use as much 3G data as they pay for.
And I’d be willing to bet that AT&T doesn’t pay Apple $599 per iPhone.
I’m not writing this to criticize AT&T’s policies. There’s sense to it. But folks need to realize, there’s no free lunch and there really is no discount on iPhones.
May 1st, 2009
I’ve never been so disappointed in my service provider. Owning the iphone is not worth the price of dealing with AT&T. Their plans are way too expensive, they never listen to their customer complains and I think they are a bunch of crooks. I will be cancelling my iphone / at&t tryst at the end of the month and going back to Verizon. I’ve already reported AT&T to the Better Business Bureau.