Anticipating Verizon iPhone, T-Mobile wages smartphone price war

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.
Written by Andrew Nusca, Contributor

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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