$99 iPhone? Don't hold your breath (and why 'Apple = premium' isn't the answer)

Just yesterday I caught a Tweet of Wired's Brian X. Chen lamenting the $99 Apple iPhone rumor at Walmart:Is sick and tired of reading about the $99 Walmart iPhone rumor.
Written by Andrew Nusca, Contributor
$99 Apple iPhone?
Just yesterday I caught a Tweet of Wired's Brian X. Chen lamenting the $99 Apple iPhone rumor at Walmart:

Is sick and tired of reading about the $99 Walmart iPhone rumor. It's unsubstantiated BS from an unreliable source. Can we drop it, please?

The sentiment seems to have reached Chen's Wired colleague Charlie Sorrel, who posted "Why Apple Won't Sell a $100 iPhone, a Netbook or a Tablet," with an analysis of why such a product doesn't match up with Apple's corporate mission, summed up in this paragraph:

Fact: Apple will in fact sell iPhones through Walmart, but they will be the same ones you can get elsewhere, and at the same price. What every one of these analysts fails to understand is the Apple business model. The company just doesn't do cheap.

(That hasn't stopped them from posting a rumor about a Zune phone, though.)

So who's right? Analysts predicting that outside pressure will force Apple to offer such a device, or the tried-and-true company position that Apple is a premium brand?

Just who's in charge of the good ship Jobs, anyway?

Ever since I heard the rumor, I've approached it with a grain of salt. A $99 price tag for an already-subsidized device is really scraping the bottom of the price barrel for Apple's flagship mobile product. On the other hand, it was almost inconceivable to me that Apple's iPod shuffle can be had for $49 when that price point was first established -- and besides the stylistic cues, there's nothing premium about that product.

My point is, this is all about branding.

Apple as a "premium" company has always been a branding, and thus marketing, coup for the company. Like "classic" is to Coca-Cola and "reliable" is to Maytag, so "premium and stylish and cool" are to Apple.

But that's what the company wants you to think, and that's what's been echoed by so many tech journalists. But do the products actually match up?

Stylistically, yes, they do. Apple is always at the forefront of setting the bar for visual trends. And no one's ever said that Apple's work in touch interfaces has been anything less than glorious. And the innovation is definitely there.

But when it comes to the actual product as technical tour de force, I really don't think the "premium" thing is anything less than perception: everyone's quick to poo-poo iPod headphones, Macbooks really aren't any more of barnburners than equally-equipped PCs, and iTunes might be the "greatest" media player, but it's also a bloated mess.

Which brings me to a $99 iPhone. At first, it seems inconceivable. But really, if Apple's planning to turn the iPhone into a product family -- much like the iPod -- shouldn't it have an entry point, as well as a premium model? (And no, more GB doesn't indicate a premium device.)

Therefore, I reject any arguments against a $99 based solely on "Apple as a premium company." If Apple does indeed have a $99 iPhone in the chute, the trend-setting company will introduce the product on its own terms -- not as an arm-twisting response to a poor economy. If it doesn't -- and that's highly likely, since iPhone sales haven't quite drooped just yet -- there's no reason to chalk it up to Apple preserving high price points.

It's simple economics, stupid.

Editorial standards