I’m still glad that its only $199!

Throughout Apple’s history, their business plan has been based on locking down consumer options as much as possible to maximize their own profits. They don’t even let you replace the iPhone/iPod batteries or add memory for crying out loud. Is that really what a consumer-friendly company would do?

I’m not a big fan of the way big telecom works, but to imply Apple has been fighting for the good of consumers worldwide is ridiculous.

Regardless, this was an interesting read.

I agree with pretty much everything you said. The one nagging question I have is how will At&t ruin the ideal of putting an iPhone in as many hands as possible. This upgrade eligible, not eligible nonsense is creating a huge rift for potential iPhone purchasers. I understand that it is the same model as other phones, but when you buy another phone at its full retail price, you are not required to sign a new contract. With the iPhone, you are. No questions asked, there is no activating a 3G iPhone with no contract.

How can At&t hope to force a retail price on those who are not eligible to upgrade while still requiring a new contract? There are presently two reasons to buy any other phone at full retail price: The first is because you are in the middle of your contract and you just want a new phone. The second is to avoid the contract altogether, whether you are a new customer or one in the middle of your current contract.

At&t is effectively saying, “screw you.” They are compounding that “screw you” even more by refusing to just tell us how much it will cost to get the damned phone at the non-upgrade price.

The biggest problem for Apple in losing control is just that. They lost control. Now, At&t is causing them grief that needn’t be caused. I currently have an At&t plan that is only about 5 months old. I am not eligible for upgrade, and now I am being told that the only way for me to get the iPhone is to pay full retail AND sign a new contract. The full retail part I don’t have a problem with —assuming it isn’t stupid expensive, but being forced to sign a new contract AND pay full retail doesn’t sit nearly as well.

I may just buy a used iPhone and be done with it. The blame is on At&t, not Apple, but Apple is the one “suffering.” They aren’t suffering because of me alone, not by any means; they are suffering because I am not the only one in this predicament, no, there are millions more like me. One lost sale means nothing to Apple, potentially losing millions isn’t quite the same. Lost sales isn’t their only issue though. Jobs and Co. are also being portrayed as the great liars by this speculation. They said $199 “max,” yet I am being charged more? The bastards! Just another way Apple is feeling the heat from At&t’s decisions. (Granted, this could all be moot if the “retail” price isn’t that high, but until we know, it is needless speculation.)

If what you are theorizing is true, it is a spot on plan to get the iPhone into more hands, so long as At&t doesn’t screw it up for them.

Whatever the reason, I don’t buy the crap everyone is selling that the iPhone actually cost more money this time (data plans). Most of the complainers are paying anyway for their outdated POS or WM phones.

Who cares?!

By that logic, go buy a RAZR and call it quits. iPhone hands down best phone to date. You have to pay to play. Just my $0.02.

Second, Jobs said most iPhone users used 10 or more “features” on iPhone. It’s usability. It’s not that it’s visually pleasing, and it doesn’t matter how many features a phone has; if it’s not easy to use the feature, then it’s just words and lists on a box. As long as competitors just keep comparing those lists and ignoring the UI/OS usability gains (just like you did in pricing the iPhone at much less than 199), those competitors are toast.

Apple’s focus is on the mainstream user, not the geek. In the same way that the mainstream user has bought into broadband for the home at a cost of about $40/mo (US), Apple is betting that it can convince them to get “broadband” data for the phone at a cost of $30/mo (US). The US has gone from 0% to 50% in home broadband over the last 10 years. Less than 3-5% of consumers (not business users) have phone broadband today. That’s a huge untapped market to hit.

Also, I reaslize that the true cost of the phone over the life of the contract may actually be a bit higher because of the higher priced data plan, but I don’t think most users fully take that into consideration when buying a phone. If they see a $199 phone and a $399 phone, they much more likely to go for the $199 phone regardless of the contract cost because the cost of entry is given priority at that moment. I know I’m like that. I’d rather pay less upfront and more over time because I can afford that easier, even if the total amount I end up paying is slightly more.

And Dyvim is correct that Apple is giving revenue back to the carriers. But in exchange, Apple will collect revenue from iTunes, MobileMe, and AppStore. Apple has broken through the carrier’s walled gardens, and has primary placement for all these services on the handset. Today, MobileMe is just being billed as Exchange for the rest of us, but I’m sure Apple has a lot more planned – see CocoaTouch and SproutCore stories for rich web apps with local usability, and note presence of GPS for building location-based services.

Finally, I don’t expect a cheaper iPhone nano as Apple is not interested in making just-a-voice phone. Any iPhone will be an Internet Communicator (and collect on all those revenue-generating possibilities) and $199 (plus contract) will be the low-end price point for a while. I think, come Sept, all iPods will be $199 or less.

But I do expect a premium $299 or $399 iPhone (with contract) in Nov or in Feb, possibly with two 3MP/5MP cameras with video, faster processor, and more colors.

1 – Fewer hardware refreshes (less incentive to upgrade more than once every other year due to 2 year carrier contracts) 2 – Shift in Apple revenues / income from devices towards applications / software / content

Apple was smart in creating a third computing platform (sorry RIM – your clunky OS is killing you and Palm, this was your market but infighting [hello...and goodbye Handspring] and a lack of vision on the hardware side shot your chances when you should have dominated with a nice, clean, light touchscreen OS with a usable keyboard). In doing so, whether people buy a true music only device (nano), music, video and light web (touch) or full-featured connected platform (iPhone) matters less as they are just ways of driving the software and content spend through Apple. Welcome to the Wal-Mart of the digital age, brilliant play by Apple, truly brilliant!

I think the iphone will be completely unlocked one day, just not within the next 4-5 years.

“$199 is the price point you have to hit and if you don’t, consumers are going to wonder why is a phone that’s not as full featured as the iPhone cost more than the iPhone?”

Sure the iPhone is great looking and does most of things that are not so complicated great. But the phone completely breaks down when it has to do heavy processing work.

The iPhone is not as full featured as 95% of the smartphones in the market. For example, the phone doesn’t do “Cut&Paste”, can’t send contact info via email, SMS, Bluetooth, or any other method (vital in most part of the world). And these are some of the basic example.

I don’t think there is any comparison to RIM, Palm, HTC, and Sony as each of the phones from each of the manufactures are meant for different user base and different markets. iPhone is a great Multimedia and internet browsing phone but other then that the iPhone is useless besides making phone calls and even then the phone craps out when handling multiple calls back-to-back. Sure you can use it to read emails but try to send long responses using the keyboard.

Even though the iPhone is the best phone I have ever owned or used it is a far stretch to say that the phone is more full featured then RIM, Palm, HTC, or Sony. In my opinion, the most full featured phone that ever existed was the Sony Ericsson P800 and it was introduced 5 years a go, far more advance and featured then what Apple could possibly dream off.

I think what you are trying to say is that most of your average consumers, which probably makes up for 85% of the cell phone user, have no clue about what is full featured and what is not full featured. I think most consumers out there really care about the phone being visually pleasing and not a POS, which the iPhone excels at compared to other phones.

Due to the limitations and the simplicity of the iPhone, for Apple to hit the wider consumer market they had no choice but to agree to a lower the price in order to increase market share. After all how can any average consumer justify to themselves that a $399 or even $299 phone is something they badly need. But at $199 (less then $200), they get a visually pleasing phone, with built in multimedia support (iPod), and a status symbol which majority of the consumers will not be able to resists.

But if you ask me, based on the comparison you have made in your article I would say that the iPhone should’ve been priced at $99. Look at any of the manufactures you have listed, they offer phones with much wider and fuller features with better quality material (but POS OS and supporting software) but yet they price their phone much lower then $199. So comparing apples to apples, the phone should’ve been priced much lower then $199.

I do believe the SDK helped Apple to make the price change. If they have enough faith in the applications that are going to be offered, then they could make up the lost revenue from AT&T through app sales.

The one thing that may change the game yet again is the PA Semi acquisition. 12 months from now we’ll be seeing PA Semi chips in the iPhone that will make it difficult if not impossible to jailbreak an iPhone. At that point, Apple will have sold tens of millions of iPhones and be in a position of power to change things back if they so choose.

I also think that Apple has their eyes on WiMax as well. I would not be shocked to see an iMax iPhone or iPod Touch or tablet device for WiMax as the networks are built out here and in a few other countries. With that they’ll be able to have networks compete against each other which will trend towards openness and the utopia that Apple wants in mobile devices.

AT&T meanwhile stands to make a killing with iPhone 3G. With the 1st iPhone they had to give as much as $240 of their $480 in data plan revenue to Apple. Now with iPhone 3G they have to give Apple $200 (or is it more?) up front and then get $720 in data plan revenue for themselves. That’s a net of $520 compared to $240 in data plans per iPhone (ignoring the voice plans and possibly stinging 3G users on SMS messaging as well).