Here's why I predict iPhone will come down to $299 within a few months

Here's why I predict iPhone will come down to $299 within a few months

Summary: With his customary deftness, my CNET colleague Tom Krazit mashes up some numbers from AT&T's earnings call this week with other numbers from Apple iPhone sales and projected sales reports.Tom's conclusion: iPhone sales are slowing, especially in AT&T's sales channels.

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With his customary deftness, my CNET colleague Tom Krazit mashes up some numbers from AT&T's earnings call this week with other numbers from Apple iPhoneiphone23.jpg sales and projected sales reports.

Tom's conclusion: iPhone sales are slowing, especially in AT&T's sales channels.

OK, let us take that as fact. Where does this lead us?

First it would be helpful to understand why this appears to be happening.

I think that in terms of iPhone sales, Apple is right at a "crossing the chasm" moment. First coined in 19 by author Geoffrey Moore, "crossing the chasm" can refer to the place in a tech product life cycle where the early adopters have all bought the product and now said product must cross over to the mainstream.

The iPhone is right at that point. Most everyone who simply had to have an iPhone now has one. But to vigorously expand its user base, iPhone needs to harvest users who aren't tied down to AT&T and are a while from cycling out of their two-year agreements.

And in an economy that appears to be headed for megastress, Apple will need to lessen the $399.99pain of buying an iPhone.

The pump needs to be primed.

We're talking simple economics, here, people. iPhone will come down to $299.00. And I am saying sooner rather than later. A few months at most-no later than late May of this year, which would mark a year from iPhone's crazed debut.

Topics: Enterprise Software, iPhone, Mobility

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19 comments
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  • Compared with...

    ...the Nokia N95, the iPhone is a 'toy'.

    [url=http://www.nseries.com/open]Nokia: Open to Anything.[/url]
    D T Schmitz
    • Dumb to call the Iphone a toy.

      The iphone is hardly a toy. For me the reason that I don't have one is the carrier.
      There is no AT&T service in my area. I think the reason more haven't been sold is that
      there is only one carrier to choose from. I really don't see it taking off until Apple's 2
      year agreement with AT&T ends.
      Prime Detailer
  • Good article and completely agree

    I don't have an iPhone in my household for three reasons.
    (1) Use a Blackberry for my job and issued by my company
    (2) Better half has a Motorola Razr and iPhone is not worth $399
    (3) Wireless internet is too slow for practical use

    ALL of the above issues and iPhone roadblocks will surely go away soon. The iPhone by far, has the best UI of any handheld device. With the above issues going away, I predict you are right. Another huge wave of iPhone buyers will be there.
    Prognosticator
  • RE: Here's why I predict iPhone will come down to $299 within a few months

    Hmmm, strongly agree with you but the price adjustment can happen only when they release iPhone v2.0 with 3G or GPS such that it is a win - win situation for both the consumers, Apple and ATT. With such great speeds (3G) iPhone can do wonders (out of my 7 months experience with the iPhone!!).

    In may 2008 ::
    iPhone 1.0 = $299
    iPhone 2.0 = $399

    The numbers make sense to me. Does it to any others??

    iLikeMyiPhone.com
    coolguy.net
  • RE: Here's why I predict iPhone will come down to $299 within a few months

    I certainly hope so and tend to agree. A new version should be more robust, and include stereo bluetooth headphone capability - hard to believe this is not there currently
    john.carroll
    • Other missing features...

      besides the bluetooth stereo headset

      1) Voice Dialing
      2) Cut/Copy/Paste between applications.
      3) External storage such as an SD card.
      mrOSX
      • To me, there is only 1 showstopping feature

        While I think the iPhone has some other deficiencies, there is only 1 showstopping feature: I am forced to live with the apps that Apple, and only Apple, believes I should have. No, web apps don't count. No, unlocking the phone and then not being able to update it does not count either.

        Hopefully the SDK will remove that showstopper although from what I hear, you will only be able to install programs purchased through iTunes and if so, I would still consider it a showstopper.

        *REQUISITE DISCLAIMER* This is [b]my[/b] showstopper and in no way is meant to suggest that it is your showstopper, your mother's showstopper, or your grocer's showstopper. It is not meant to suggest that your iPhone, that you love, is anything less than perfect for you. It is also not meant to suggest that the Zune is better or that M$ isn't the evil empire or whatever other assumption you may want to make about my brand loyalties based on me saying that an Apple product isn't perfect for everyone.
        NonZealot
  • RE: Here's why I predict iPhone will come down to $299 within a few months

    The iPhone's original HIGH price was just a marketing tactic called "skimming". It rolls out a product, and due to the initial "wow" factor, and pent up demand, can charge a price that the market will tolerate.

    Absolutely, the price will come down based on market demand and supply.

    www.SalesDrivenMarketing.com
    The Internet Advertising Experts
    marti208
  • It is getting time

    The iPhone has been out long enough for changes. It
    certainly didn't take Apple long to drop the 4 gig version
    so I'm in the group that believes there will be a 16 gig
    added to the high end at $399 and the 8 gig dropping to
    $299.

    One determining factor will be the uptake of the SDK by
    developers and I believe that will be strong - just like it
    was when the Palm Pilot was going strong. Lots of new
    apps and you're going to want more memory.

    I'm waiting for the 16 gig + a vigorous developer community before buying one and I think I'll be getting
    mine this year.
    Ken_z
  • OK, let us take that as fact????

    Hang on, your CNET colleague did "mashed up some
    numbers" and we should accept that as fact?

    How about we accept it as his "conclusion" or his
    "opinion" or maybe as his "assumption" or his
    "hypothesis," but without any proof, how about we don't
    take it as "fact?"
    msalzberg
  • The price will go down

    Apple people might say that the iPhone is the mother of all phone and the current price is reasonable. But when iPhone begins sales in Asia, I am 100% sure the price will go down. Why? Asians are price-conscious. If they can't afford the cost of iPhone they will surely buy the iphone clone which is below a $00.

    To kill the clone, Apple will lower the iPhone's price. Mark my word.

    Mars M.
    marswoo
  • iPhone Nano

    Apple will approach the mainstream market with a new 'lite' version of the iPhone, just as they do with iPod Nanos, MacBooks, and Mac Minis. This seems fairly obvious to me. There were even rumors about a lightweight version of the iPhone to be released this year swirling a few months back.
    wakka@...
  • great catch... not

    All tech drops in price eventually - including the iPhone. If the scuttlebutt is correct a new and improved version is on the way by mid year and that is reason enough to go for a cut. I think that Apple has learned there is no percentage in many models of iPhone, and will aim for the same price point, but offer more RAM, etc. for the money.

    I do not think EDGE is going away anytime soon (5 year exclusive with at&t I think - we are only 20% into that time frame). For all the touting of the 3G N95, I understand it renders a web page much slower than the iPhone on EDGE... and comparisions to the iPhone on Wi-Fi web rendering makes the N95 seem like it is on dial up.
    Jim888
  • I don't see it

    I don't see it... Apple dropping the price... I think the price is about as low as it will get for a while... I also think it will be a year before we see a new Rev and the new Rev will be the same price as well.

    I had to sacrafice Sprint to get my iPhone, fortunatly I was at the end of my contract and was able to switch. I really would have preferred to stay with Sprint, but oh well, I guess we can't have everything.

    According to what I have read, A third party company has already developed a true GPS add on module for the iphone and ipod touch. I will be able to do everything a regular GPS can do including voice nav, text to speach, etc.

    Additionally, Lotus Notes will be released for the iPhone very shortly and there are a ton of other Apps on the horizion as well.

    Now the iPhone is a computer.. it Runs OS X... all Apple has to do to beat a competitor is unlock it just a little bit more. (which I believe they are already planning on doing). They are just releasing bits at a time so they can work out any bugs and secure it as they go.

    I think Apple is aware that a lot of future iPhone users are currently locked into 2 year agreements with other carriers and cannot switch over yet. But once they can, they will. There is also the part where AT&T need to expand coverage to get others to be able to make the transition.

    I've seen people awestruck when I let them play with my iPhone. And no other phone can come close nor can hope to have even 1/100th of the potential the iPhone has. Once you guys actually get your hands on one, you will finally understand.

    I think it would be great if Apple lowered the price, but I just don't see it, not when you look at the price and rev history of all their other products.
    i8thecat
    • If Apple is true to form

      the price on this version of the iPhone will go down after the new iPhone with more
      storage, added features is released for the same current price, whenever that might
      happen.
      MarcB_z
  • UK Price even worse

    I hope so, as this will drive the UK Price down as well.

    Currently available for dollar equivalent of $499 in UK for 8Gb model with an 18 months contract @ minimum $69/month. With the strength of the pound against the dollar, should be cheaper not more expensive!

    You can get the equivalent 8Gb Nokia N95 for free at the same tarrif.

    The iPhone is really really nice, but is simply **too expensive** in a crowded market, esp. in the UK where it is a rip-off compared to the USA price. However, the contract with O2 in the UK allows international roaming, which the USA AT&T doesn't :-)

    Apple also need to bump up the memory towards say 32Gb by XMAS 2009, and do a deal with Tom Tom for SatNav. And also sort out the silly headphone socket.
    neil.postlethwaite
  • RE: Here's why I predict iPhone will come down to $299 within a few months

    Those not a fan of AT&T are a bigger threat to the iPhone than the price. In our area, there are better service providers due mostly to signal coverage. I, for one would love to have an iPhone, but until I can get it through a service provider of my choosing I will refrain for getting one.
    dougr.adams
  • perhaps...

    I really only see it happening if they introduce a second iPhone. If they introduce a 16gb at $399, they could make 8gb available for $299. I just don't see them dropping the $399 price point option all together.
    ephartke
  • RE: Here's why I predict iPhone will come down to $299 within a few months

    My state representative once said one letter represents at least 60,000 other voters with similar views; nationwide, it's much larger. I want an iPhone, I'm out of my existing carrier contract, but to lock into an AT&T 2 year contract that costs DOUBLE what I pay now for a family plan is idiocy at it's finest, Regardless of the iPhone purchase price. Apple and the iPhone's arrogant disregard of the Marketplace will bite them in their apple, I for one an almost totally alienated and about to refuse to patronize Apple, I already refuse to patronize AT&T for their gouging practices, and that's from 10 to 15 years ago. Some of us consumers have very long memories! If I can get an iPhone that I can use on MY carrier of choice, in the next month or two, I probably would, but wait any longer, and you can kiss me, and at least 60,000 other customers goodbye Apple.
    M. Mann