Apple's Path to $199 (Wait-a-Thon)

So you might have heard that the iPhone 3G was going to retail for $199 from AT&T. I’ve already covered how it isn’t technically $199 for current iPhone users. And you heard Rene tell you that $199 is less than the notorious price DROP of the iPhone. Well TiPb has been wondering how Apple settled on dropping the price so dramatically.

And we settled on a story, kind of—more like a collection of reasons. We’ve analyzed the outcome back and forth, from reverse and from the beginning. And we think we have come to a conclusion (or at the very least, a conspiracy theory). In a purely speculative story, I’ll give you my opinion on how we reached $199.

Read on for Apple’s Path to $199

Apple Wanted to Revolutionize the Phone Industry

I believe that when Apple was analyzing the cell phone industry, they realized the problem with the current model resides with the carriers. The carriers were too powerful, they controlled too many avenues. Therefore when Verizon denied them the freedom they desired, they needed AT&T to give them that freedom. Making data plans more affordable and creating an Apple experience was a decision in attacking the carriers.

They were hoping that the iPhone was going to be ridiculously popular (it was) and that foreign carriers would see such popularity and ask for it on their network as well. Therefore in that case, Apple could then leverage the iPhone’s popularity into folding the carriers into having the same relationship with Apple as AT&T ‘enjoys’. Essentially making the carrier powerless to Apple’s demands and eventually change the way carriers work.

Do you guys remember the uniqueness of the original iPhone? This was a phone that toyed with AT&T, basically ignoring everything that the Death Star Company wanted. When AT&T asked for prototypes pre-iPhone launch, Apple reportedly created fake models to placate them. Apple created a new iPhone-specific data plan that AT&T had to abide by—$20 for unlimited data and 200 SMS. Apple created a new activation process that essentially cut AT&T out of the loop. You activate via iTunes, not with AT&T. Apple created a new business model for the iPhone that included revenue sharing—AT&T is paying Apple for users using AT&T’s service, just simply brilliant business. Phone Carriers don’t typically get thrown around like this.

It almost worked

Do you know what I think changed Apple’s desire to revolutionize the cell phone industry through the carriers? Jailbreaking and Unlocking. Entrepreneurs who wanted to make a buck and technological savants that wanted to utilize all of the iPhone’s features prevented Apple from having the ultimate leverage in negotiations because everyone knew that the iPhone could be unlocked. And used with ANY GSM SIM.

With the gray market in full affect, Apple lost their leverage. Foreign Carriers had no desire to bend to Apple’s unprecedented demands because anyone who really wanted an iPhone could easily get an iPhone through the gray market. And those using unlocked iPhone on a foreign carrier's network would HAVE to work with the current data plans in play. Therefore we have iPhone users across the world using the iPhone on network’s aimed to rip every dollar from the consumer.

What could Apple offer the carriers now? From the carrier’s standpoint, the money gained by having unlocked iPhones on their pricey data network was worth more than agreeing to revenue sharing models and affordable data plans. Not to mention the fact that when a foreign carrier introduced the iPhone to their country's market per ‘exclusivity contract’ it would only give unlockers a chance to use OTHER networks in the same country. So much for exclusivity, right. The money spent paying Apple for ‘exclusive’ rights was better not spent at all.

Apple still needed to increase marketshare

One of the first promises that Steve Jobs gave to his investors, Apple users, and iPhone doubters across the world was the 10 million unit promise. Apple doesn’t set such goals lightly and especially one so bold considering the original cost of the iPhone.

Back then, the idea was that foreign carriers would see the benefits of having an exclusive relationship with Apple and that would offset the costs that they would have to pay in a revenue sharing model. But with the gray market, all the foreign carriers had to do was stand pat and wait for Apple to come around because everyone knew they NEEDED to sell 10 million units in 2008. And that meant expanding to more countries.

So when the clock started ticking and Apple realized they had little to no leverage, they folded to the carriers demands. The carriers were too entrenched in their markets, they had too much power and Apple’s only leverage was lost. Nothing about the carriers was going to change.

AT&T demanded change

When AT&T saw that no other carrier was going to carry the iPhone and have the same ‘relationship’ with Apple that AT&T had, AT&T realized they were getting the short end of the global stick. They needed to make sure their company was going to get a fair shake and they had just reasons, Apple wasn’t agreeing with any deal that looked like Apple’s deal with AT&T.

So the revenue sharing disappeared. So did the activation process. So did the iPhone-specific plan. AT&T isn’t going to do it Apple’s way anymore because Apple folded to the demands of foreign carriers, thus giving AT&T a loophole to subsidize, raise data prices, and basically conform the iPhone to any phone in AT&T’s lineup.

So Apple needed to re-strategize

So the avenue of revolutionizing the cell phone industry through the root problem (the carriers) closed because of the iPhone’s availability on the gray market.

So how else could Apple revolutionize the cell phone industry? By aiming their attack at the other party. Cell phone makers. A $199 price point for the iPhone 3G will force people to notice and overhaul the system from the device end. In fact, the Samsung Instinct dropped to $199 after the Apple announcement. I’m sure RIM and other companies will have to follow suit. How could a company justify charging so much for such feature-strapped phones?

So Why $199?

Seriously, if Apple offered the iPhone 3G at the same price point of $399 who would complain? Many users were already prepared to pay the same amount; I mean that’s how Apple typically does business. They offer new features and keep the same price. What about at $299? That’s plenty good, people would have been happy enough.

But to be bold enough to declare it at $199. That’s a direct challenge to RIM, to Palm, to HTC, to Sony. $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? They are forcing cell phone makers to change their strategies and not simply rely on the carriers doing all the work for them.

A $199 price point can realistically put the iPhone in the hands of a lot of potential customers. They’re attacking the situation in reverse of what they originally intended. Putting it in the hands of the most customers possible and gaining market share to create change. With a larger install base, the App Store and iTunes Wi-Fi store become instant money makers. With users falling in love with the iPhone's usability, Apple gets their leverage back. Apple believes that when people finally get to own the iPhone, they'll always own an iPhone. Cell phone makers, you're going to have to catch up fast. Cell phone carriers, Apple is still going to come after you.

This plan actually makes more sense than Apple's original business model, when people fall in love with the iPhone, Apple would have a dedicated user base ready to follow Apple and the iPhone wherever they go, to whomever carrier it happens to be.

What does the future hold then?

This is an extremely tricky question that only Apple probably knows the answer to. A $199 iPhone not only puts cell phone makers on notice but it will also cannibalize some sales of the iPod. I was about to purchase an iPod nano yesterday for an upcoming trip and on my way to putting it into my cart, I realized it was the same price as the iPhone 3G. I quickly stopped my purchase. What will happen to the market of iPod touches? The iPhone used to have the premium on the iPod Touch, now it’s the other way around?

And what about expanding the iPhone platform, which is a natural progression in creating cell phones. What will an iPhone nano retail at? $99? Can Apple deal with the PR-nightmare it would have if they were to raise prices in the next editions?

Or could Apple simply put the iPhone in the most hands possible and then prep themselves to go completely unlocked? Could they manage to offer a $199 price point without carrier subsidies?

Final Thoughts

Apple couldn’t manage to revolutionize the industry through the carriers which is saddening to say the least. We here at TiPb would almost always trust Apple over AT&T, Rogers, Fido, etc. But its setting it sights on market share now and creating a worldwide army of iPhone users. In this way, Apple can achieve its wish to revolutionize the phone industry  by leveraging their millions of users. Like Apple once famously said, they’re not married to any business model. It looks like they had already divorced the old one and married a brand new, better-looking new model in only one year's time.

Or maybe I'm just a conspiracy theorist. Remember this is all speculation and opinion. Apple simply just could have realized they couldn't keep pace with the hype of the iPhone 3G and determined the best way to have conversation was to significantly drop the price. Shock and awe. Or maybe not.

What do you think? Why do you think Apple priced it at $199 and do you think the iPhone will ever go completely unlocked? Comment on this Wait-a-Thon post for a chance to win a $100 iTunes Gift Card!

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There are 49 comments. Add yours.

Dyvim says:

That sounds plausible. What's interesting to me is that I think this is a real price drop for Apple. They were getting $399 per phone + revenue sharing rumored to be as much as $10/mo from AT&T. Over 2 years that would have been $639 per phone (or $839 for early adopters). Now they're selling their new iPhone 3G for $199 and getting what? $200 from AT&T? That would be $399 per phone- the same thing they got for grey market gen 1 phones. Or is the AT&T subsidy to Apple actually more than $200? I think we'll get clues about that when we get the full details of ETF's from AT&T closer to launch date.
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).

Galley says:

Best article yet; keep up the great work!

Bad Ash says:

There is a good chance that at&t can ruin this whole thing... Which would be a shame but what can you do...

Ray Winter says:

Casey, I think that you are 'on-the-money'. Apple originally did not fully understand the cellphone market and have adjusted their marketing stance in the light of their experience. It will be interesting to learn whether the $199 price is reserved for AT&T (subsidised by). If the price is available for all purchasers, irrespective of the network they are signed-up to, then Apple's strategy is clear. They are after high numbers of 3G iPhone users purchasing other Apply services downstream. However, their bigger problem is iPhone users collecting their data when Roaming, as these hidden charges are prohibitively priced by the networks. Its far better for users to purchase a Dual WiFi / GSM Smartphone then the data can be collected worldwide for very little cost. The Mazingo Smartphone already has stereo MP3 + AAC & Mpeg4-IPTV on-board so why wait?

The Reptile says:

IMHO, Apple truly wants the original model they had with AT&T. It's closer to the PC model and for the sake of simplicity they want one supply channel not multiple, one way of doing things not two. However, I think you're correct on the jailbreaking and subsequent events that followed when Apple went to foreign carriers.
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.

iphonic says:

i dont think it's fair to blame the unlockers/jailbreakers. It's more like Apple looked to closely at the US market and failed to look at the rest of the world. They should have just offered an unlocked iphone instead of getting in bed with AT&T. Visual Voicemail's hardly a killer app after all.

NPR_Aficionado says:

This is a very thoughtful and insightful article. I believe that we will see how accurate it is when the exclusivity contract with AT&T is over, then we will be able to see what was behind Apples thinking.
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.

tschertz01 says:

It was a bold and noble experiment by Apple to exercise some control on the carriers that in the long run benefited the consumer, but sadly it failed. Now it's back to the same old subsidize and pay through the nose in the long run carrier model. It was nice while it lasted.

RjZ says:

Insightful article. We may never know, but you speculations seem about as plausible and indeed, more interesting as valid explanations, than many others I've heard. I will be buying an iPhone in July and I would have paid more for it. Anybody want to buy my iPod touch before the price drops?

WatersWest says:

Not only will we see what was behind Apple's thought process once the exclusivity with AT&T is over, but it is only then that some power will return to the consumer, which is what Apple intended in the first place. Wouldn't it be great to have multiple carriers competing for iPhone business? It is only then that we will see competitive pricing on data plans, sms plans, etc.

Kenny says:

Thanks for putting together a great article. However I think you are completely wrong on few statements you made in the “So Why $199?” section.
“$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.

John says:

What I remember from watching WWDC, SJ said $199 max for the iPhone. It did not say AT&T so I find it intersting that AT&T is trying to say only eligible upgraders will get the $199 price. I do not currently own an iPhone so the new price will get me into the market. The rest of your opinions make a lot of sense

intelinsanex says:

I think it is exactly how it has been communicated to people. Apple wanted to focus on adoption rather than exclusivity. The high price point was a barrier because it wasn't deemed affordable. The price of $199 is making it easier for people to swallow.
I think the iphone will be completely unlocked one day, just not within the next 4-5 years.

carsly says:

Expect two things now that Apple is in the land of carrier subsidies:
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!

patcom8 says:

This was a great post. its extremely no point to my beliefs. I think the idea of future iphones being higher priced then the current 3G prices, is very plauable, and would be great because likly that would mean that apple is able to lose the grip that the carriers have on the phone. its really sad to think these carriers are gaining mroe and more control over the phone because they are only going to ruin it. Apple will begin to care less about it and eventually forget about it.(this is very drastic but plausable in teh future). I really dont want to see the iphone fall apart just because everyone who felt like unlocking their phone ruined it for eveyone else.

mark says:

Spot on. Excellent analysis, but I'd add that the European carriers (O2, T-Mobile, Orange) did agree to the same relationship. I think the backbreakers were China, Japan, and maybe Russian carriers, which is where most of the jailbroken, unlocked phones went.
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.

jasonact says:

This really is not much different than their initial strategy with the iPod: Intoduce a revolutionary device and get people interested. Then, lower the price and reach for market saturation. Of course, working with mobile carriers makes this a much more complicated process, but with regards to the price drop, I don't see it as any different from their iPod strategy.
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.

mark says:

Kenny: First, most of the things that are "missing" can be added via software, which Apple is committed to doing, but not so for other mfrs. Cut&Paste is still missing because Apple is still working out its Touch UI. Apple has included every hardware feature (3G, GPS, Wifi, Bluetooth, video processing) that they believe is basically important for mobility to the iPhone 3G. And over the next 2 years, they will delight users with more and more software functionality using that hardware.
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.

Mike Plusch says:

The $199 iPhone 2.0 costs more than $399 iPhone 1.0 because of the higher monthly costs. AT&T is raising the data rate by $10/month which is $240 over two years. So the $199 iPhone 2.0 is $439 compared to the $399 iPhone 1.0. (but you get a faster rate) Also, because you now can't buy an iPhone 2.0 without a 2-year contract, the price is a lot more for many people who had used the unlock "feature".

Josh says:

On the future of the iPhone, I think it will end up unlocked someday. I also don't think that a price increase because of that move would necessarily garner a lot of bad press; Apple could spin it and make it obvious that it's because of the loss of subsidization. I imagine such a move would probably begin with Apple offering the phone both ways, as has been done in some of the other countries where it's available (drawing a blank at the moment—France, maybe?), where the subsidized-with-required-contract version sells at a lower price point, while the totally free version sells at a higher price point.

smileyboy says:

I wouldn't be suprised, if by the end of the year a unlocked iPhone is avalible for a $150-250 price increase. Here is hoping............
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.

Kevin Mauzey says:

This is a simple marketing fluffery. You have phone A and B, Phone A costs less than B but B has less features. The catch, phone A will cost more month-to-month then B. There's your price savings diminishing!

lino positano says:

No, Apple did understand the market at the time that it introduced the iPhone I, but then Apple, and no one else, foresaw that the iPhone's astounding popularity would create the "jailbraking" phenomenon, depleting -- as the author theorized -- Apple's leverage to dictate to carriers.

Jess says:

Fantastic article and it does raise some questions that are interesting to the readers, but I think we all have our own opinions. Mine is that yes, when the iPhone 3G was announced, I think that $199 is pretty decent and affordable and the fact that iPhones are going to be released in a lot of other countries. Apple is doing a great job with the iPhone and they are very smart, with the pricing and everything that the iPhone has to offer.

maxwellsteel says:

Apples goal is for everyone in the world to have an iPhone...

Tom says:

Excellent article.
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.

Tom says:

^Screw it up for them in the US that is.

nick says:

i think apple made a smart phone here. they took one of the fastest selling phones, found out the market share increase, and adjusted price accordingly. i think they saw how the palm centro was a hot seller for 199, they did the math and said "we could do a 199". this way more iphones in more poeples hands and now the cult has a new tool to lure customer to drink the apple cool aid. Customer: oh they sell computers too? well i love my iphone and ipod so ill try their computers and airport exreme oh and that mac mini. can i get a mobile me while im at it? BRILLIANT!

Mike says:

This is what I think its similar to video game market. Get the install base high with the $199.99 they get to make money in other ways. iTunes (music, video, games, etc), App Store. The great thing about the iPhone is its upgradeable easy thru iTunes. They have so much control of there software, and digital purchases. You where correct once you got iPhone you get an attachment. The world we live in is I have or have purchased multiple iPods so I know Apple knows how to sell hardware and resell what you already had. The more people they pull in the more leverage they have and the more ways they have to keep selling them. I dont see any other phone or carrier have the easy of use and distribution of music the way apple does.

Peter says:

People are talking now a lot about how the iPhone is undermining sales of iPod, and other Apple devices. The fact is, you don't have to sign a contract and pay a large amount of money each month for an iPod. The data plan alone on an iPhone will be over $300 a year. So, it makes sense the other devices would remain at the same prices.

Mr P says:

The tone of this article and some of the comments imply that Apple is fighting for the consumer. Nothing could be further from the truth.
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.

Erin Walsh says:

I love conspiracy theories!

David says:

First things first, the iPhone will never go completely unlocked. In response to the question of why the iPhone is priced at $199, it's that Apple simply removed some of the shock factor from the original tag. The price is simply subsidized from AT&T who pays Apple a certain amount whenever someone buys an iPhone. Ultimately, the $199 price tag makes the iPhone more approachable, and makes the $10 extra a month a little less painful to the end user.

Jake says:

I don't think the reason behind price drop is this complex. I just think that $399 for the original Iphone hurt sales and apple wants to get the new Iphone into as many peoples hands as possible. Either way it was fascinating story.

Cherie R. says:

I think that this was an excellent article that raises a lot of good points. I also think that the $199 pricetag is pure genius on the part of Apple. For the points raised in the article and because with the economy being in the state it's in, people will feel this is an excellent deal for the money and they will sell sell sell!

Victor says:

The original $399 price tag is very prohibitive. Fighting for the consumer? Come on now, this is big big business.

Megan B. says:

It will be interesting to see how the new price of the IPhone will affect the IPod Touch sales...but I think you have to take into account how expensive the plans are for the IPhone, I think that will discourage some people, it will probably have negligible effect I think.

Kyle says:

its unfortunate because while apple wants to gain a share of the market, users who already have contracts with at&t or who already have an iphone, may not be able to switch over to the new phone without shelling out an arm and a leg. i really want to get the new phone, but i am not eligible for an upgrade. if its only going to cost 100 more thats fine, but if its gonna cost 400 or 500 forget about it.

EdisonC says:

Great article.
I'm still glad that its only $199!

H22kai says:

Nice and 'meaty' article. I don't mind the $30 data rates as I was convinced I was getting a Bold for so long. I had already gotten over the shock of the high data rate. I am all set to go for July 11.

Susan White says:

I am one of the smart ones and have not bought an IPhone yet. I think it's great that they lowered the price to $199.

Alka says:

Absolutely terrific article.
I am completely ecstatic that the price hasn't jumped and that it going to be $199.

Jack says:

I really don't think the carrier exclusivity will ever change. We might see it happen with some government regulation, but I doubt it and it isn't necessary. Giving companies a means to make more money, especially ones like Apple, is a good thing(IMO).

Лена says:

Действительно интересно написано! Надобыотметить на ХабрХабре. :)

Skatch says:

Очень интересные мысли, хорошо рассказано, все просто разложено по полкам :)

Илья says:

Ждем на коньячок :)

Вороновский Петруша says:

Хе, почему ж вот так то? Я считаю, почему не раздвинуть этот обзор.

mygold says:

Кто в детстве мечтал стать космонавтом?