Anticipating Verizon iPhone, T-Mobile wages smartphone price war

Summary:To counter a Verizon iPhone, T-Mobile is moving aggressively to push prices down on premium smartphones and appeal to low-end customers. It might just work.

If you're not AT&T or Verizon and don't have Apple's wildly popular iPhone at your disposal, how do you gain customers -- or better yet, stem the tide of losses that's already underway?

If you're T-Mobile, you aim for the bottom.

A Wall Street Journal report notes that the beleaguered carrier, the smallest of the four major U.S. wireless carriers, is "aggressively heading down market" in the smartphone business.

Roger Cheng reports:

Chief Executive Philipp Humm said in an interview that many of his smartphones will eventually be made up of Google-powered phones costing less than $100, half as much as the smartphones typically available at U.S. carriers. In October, to lower the cost of monthly bills, Mr. Humm introduced a limited data plan that costs $10.

The target: low-end or prepaid customers.

It's an interesting dynamic in a market that seems to react only to the successes of the most popular (and most expensive) smartphones, like the iPhone, Motorola Droid X, and HTC Evo 4G.

That's a good thing for customers shopping for a new contract, and bad for the carriers themselves -- at least temporarily. (After all, your data usage will eventually make up the difference.)

The question is whether T-Mobile can get the subscriber base to make a high-volume but low-margin customer base as profitable as one from a larger carrier. (One added variable: will a large carrier like AT&T use Windows Phone 7 as a hedge to this? Last night, a television ad showed the $99 Samsung Focus, a WP7 handset.)

But make no mistake: as Verizon and AT&T pursue the top of the market with an iPhone, T-Mobile and Sprint are looking to steal the customers left in their wake.

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Topics: Smartphones, Hardware, Mobility, Verizon

About

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. He is also the former editor of SmartPlanet, ZDNet's sister site about innovation. He writes about business, technology and design now but used to cover finance, fashion and culture. He was an intern at Money, Men's Vogue, Popular Mechanics and the New York Daily Ne... Full Bio

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