iPhone 3G. Now Selling for Just $199

iPhone 3G Priced at just $199

Read that title again, and realize that the iPhone 3G will sell for LESS than the infamous price drop given the original iPhone before the holidays. (Recap: it's started at $599 and was dropped to $399 with early adapters getting an equally infamous $100 Apple Store gift certificate Jobs-a-culpa).

And while the price drop was big news then, the retail price of $199 should be HUGE news today.

At $199, that's HALF the price of the original iPhone at its lowest. It's the SAME price as an 8GB iPod Nano. It's LESS than an iPod Classic, and MUCH LESS than an iPod Touch!

When we consider the possibility of carrier subsidies on top of that (Europe has been heavily rumored, with Orange at the extreme gossipy end of giving them away free to current iPhone owners), the iPhone may just be cheaper than "competing" Blackberries, Windows Mobile, and Treo smart phones.

Profit margins (averaging 30%) on hardware have historically been Apple's bread and butter, but this isn't the personal computer market (where they're a founding name) or the MP3 player market (where they have a dominant market share already), this is a much bigger, much less saturated market for Apple. Consumers will buy for a variety of reasons. Features often tops the list. Fashion certainly plays its part. But price can be the difference between dream and reality for a lot of shoppers.

Apple knows this, and they've developed an unparalleled 360 degree, spherically integrated business model to support it. A share of App Store sales and MobileMe subscriptions are just two examples surfaced today. Apple Retail Store profits, accessories, Mac hardware, licensing fees, iTunes sales, and a host of other factors let them maintain profitability while minimizing sticker shot for their users.

Steve Jobs once said that the mistake made by the management prior to his return was to go for money rather than market share. By keeping high prices in the present, they all but killed the platform's future.

Judging by today's WWDC 2008 Keynote, Jobs learned that lesson well.

8GB iPhone 3G for $199. Perfect price-point storm?

What do you think?

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, The TV Show, Vector, ZEN & TECH, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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There are 19 comments. Add yours.

Byron Van Arsdale says:

Rene:
Agreed. This, along with the more enterprise friendly sw should open many potential users to leave other platforms and go with Apple. Of the countries not included in the July 11th ship date - we'll have to add Verizon and T-Mobile! :D
What I found interesting was the selling of iPhone apps through Apple's web site where the developer gets 70% and Apple keeps 30%. One central place to view and buy all apps for the iPhone - very smart. As the market share grows, this should be a solid revenue generator for Apple as developers flock to bring apps to the market place. Seems Jobs and company found a nice way to shift from profit on hardware margins to profit on the work of others!! Definitely a win-win-win.
More users will make it easier for AT&T to lower the cost even further. Whoo Hoo! Good observation/recall of history re. high prices. Check your spelling in that sentence - something got messed up.
Byron
iPhonoclast: one who thinks differently and happily avoids poor user experiences by using an iPhone!

Tom says:

I have been hearing quite a few things since the announcement. One of the latest rumors I have heard is that current At&t customers in the middle of their contracts won't receive this price. I have heard that the price for these customers is "to be determined."
I haven't a clue how true this is, and I am taking it with a grain of salt, but it still makes me nervous. They are increasing the data plan to the normal smartphone rate of $30, so who's to say they don't find a way to weasel existing customers out of more money...
Not that it would be anything unusual. All other phones are sold in this manner, so why should the iPhone be any different? My one thought that is keeping me from believing the rumor is that I recall Jobs claiming the $199 and $299 prices are the MAXIMUM prices that could be charged...
I don't know, but At&t receive more control over the device makes me nervous.

Sean Peters says:

Steve Jobs once said that the mistake made by the management prior to his return was to s has said thago for money rather than market share.

"To s has said thago"? WTF?

Cameron Keith says:

Do we know how many iPhone are going to be in each store?

nuKiDD says:

I have searching all day to find any comment that addresses my concern about how to get raid of my current iphone for the new/upgraded version?
Has anyone seen or read anything about this?

isaac says:

As soon as I found out yesterday that the 8gb 3G would be available for $200, I posted an ad on craigslist to sell my current 8 gb and it sold right away for more than $200. Looks like I'll be getting a free upgrade, sort of. The site was flooded with people trying to sell their iphones, its going to be a tough market for the 1st gen now.

Tom says:

You should have done more research and kept your phone isaac...

Sam says:

i cant wait for that
199.00 is best price
can new 3g can be jailbreak

Anwar Hasan says:

How do we book an $199 iphone in advance?

David says:

i don't believe it at all, you might be able to buy it for this money, however you will be forced to sign the contract for at least two years for the highest possible tariff. Who could tel me where i can get it without tariff? appreciated your reply

Trrey says:

I Just Cant Wait TIl I Get My Hand On It OMG 199.99 U Cant Beat That......

Tran Phi Long says:

Oh my god! I want that soooooo much!!! but.. idon't have enough money and i'm live in Vietnam buhuuuu :((

vbe says:

guys, if ever your interested, i am selling my iphone 3g(16gb).. SUPER RUSH.. This is a sacrifice sale.. I am selling it for 200$ only.. shipping fee will depend on your location.. FAST TRANSACTION PLEASE!!!
pm me: rofl_123@rocketmail.com

chan says:

very lucky for US Iphone lover because the price is very cheap. In Malaysia the Iphone is only available by one provider. Price is very high. 3G Iphone cost about RM3000 equivalent to about USD700. Now you can see the gap between US and Malaysia version. Different about USD500.
So quickly buy the Iphone while stock are still available.

King Faisal says:

Hi ?
I am from Kigali Rwanda and I zould like to buy an iphone 3G-s 32GB from US but I dont know how much it costs plus it shipping costs. Please do help me so that I could buy an iphone of that capacity from your stores since here in Rwanda, we do not have any Apple iphone Agents. This is my telephone number +250788509970. Am looking forward to hear from you soon.N.B. Please let me know the ;eans of pay;ent if Western Union is acceptable to your selling policy. Thank you

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Haig says:

I just heard Toyota is considering recalling some vehicles with braking issues . My good friend drives a Toyota, can the vehicle be used before being replaced?