Rumors are abound that soon you'll be seeing a 4GB iPhone on sale in Walmart stores for $99. Would this price drop devalue the iPhone and transform it into the RAZR?
I'm not going to comment on the reliability of the rumor, other than to say that I've had a few people tell me that this might be happening, but iPhone-related rumors are dime a dozen. I'm more interested in thinking about what kind of effect a cheap iPhone would have.
My guess would be that a $99 iPhone would sell well, even with a 2-year contract. The fact that it only housed 4GB of storage wouldn't matter - the iPhone has attained a cool factor that goes beyond things like storage, a removable battery and the ability to send MMS messages. My guess is that within a year the iPhone would have become the next RAZR (or iPod) and you'd be seeing them everywhere.
So, a cheap iPhone would sell, no doubt about that. But would it be at the detriment of the 8GB and 16GB models? After all, why spend $200 or $300 to achieve "cool" status when you can pick it up for under $100? The way I look at it, not only would a $99 iPhone be a threat to pretty much every other cellphone maker out there, it would also threaten the more expensive iPhone models. On top of that, a $99 iPhone is a darn cheap 4GB iPod.
Another issue that a cheap iPhone might raise is one of making the iPhone obsolete before its time. Part of what makes the iPhone cool is the exclusivity. There's little that's cool or exclusive about either Walmart or a $99 price tag, and that could mean that Apple would be forced into a more aggressive update cycle like other cellphone makers.