iPhone

Prediction: Apple's 3G iPhone will include a price drop

Steve Jobs is set to unveil the new iPhone on Monday. Most of the details are still unclear. With no orders being taken and price pressure from competitors, expect Apple to drop the price tag.

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Steve Jobs is set to unveil the new iPhone on Monday. Most of the details are still unclear. With no orders being taken and price pressure from competitors, expect Apple to drop the price tag.

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On Monday, Apple is widely expected to unveil its 3G iPhone during the Steve Jobs keynote at the Apple Worldwide Developers Conference (WWDC08). Beyond that -- and the already-announced software upgrade for the iPhone that includes enterprise features -- there aren't many other details we know about the new iPhone, since Apple has veiled the product announcement with its standard shroud of secrecy.

Naturally, that means there is plenty room for rumors, guesses, and opinions. Some of the more interesting rumors are that the new iPhone will include GPS and video chat.

I'd like to add a prediction to the list: Apple will drop the price the second generation iPhone.

Why a price drop could be coming

One of the reasons everyone is so certain about the iPhone 3G being announced at the WWDC is because an iPhone shortage has been brewing across the U.S. since April. That's a fairly typical pattern when a company is about to replace a product with new version, a new model, or a new product line.

What's not as typical is that Apple, AT&T, and other iPhone retailers -- both online and brick-and-mortar -- have stopped taking orders for the iPhone. At the very least, you would expect Apple's online store to continue taking orders and simply note the product was "back ordered" and then fulfill the orders with the new iPhone when it's released.

But, that only works if the price of the product will remain the same. The fact that none of these out-of-stock retailers are taking iPhone orders right now points to a potential change in price. If you go to the Apple Store's iPhone listing, you'll see that neither the 8 GB model ($399) or the 16 GB model ($499) have the "Select" button that you click to add the product to your shopping cart.

This could also mean that Apple is just switching the storage capacity of the two models and offering a 16 GB model for $399 and a 32 GB model for $499. It's also possible that Apple is actually raising the price of the iPhone back to the $499 and $599 price points from the original iPhone launch, since the new iPhone will undoubtedly have a variety of new technologies and features.

However, I think the most likely scenario is that Apple will keep the current storage requirements and drive down the price. Remember, Apple set its own goal of selling 10 million iPhones in 2008, so it is motivated to move a lot of products. The big question in my mind is whether Apple's least-expensive iPhone will be $199 or $299.

With BlackBerry continuing its momentum in the smartphone market and the BlackBerry Curve and Palm Centro both available for $99 through the carriers, the iPhone is facing price pressure if it wants to expand its footprint in the smartphone market, both among consumers and businesses. But, with the iPhone's well-documented innovations in usability, a $199 iPhone with a significant software upgrade could have a major impact on the market.

Additional WWDC predictions

For more predictions on what to expect from WWDC, check out this Daily Debrief video from News.com:

About

Jason Hiner is Editor in Chief of TechRepublic and Long Form Editor of ZDNet. He writes about the people, products, and ideas changing how we live and work in the 21st century. He's co-author of the upcoming book, Follow the Geeks (bit.ly/ftgeeks).

18 comments
mobileworldinc
mobileworldinc

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coonass13
coonass13

any chance the iphone will be available to other carriers?

chamindra_h
chamindra_h

hmmm this is indeed interesting I am looking forward to see what happens :)

m61
m61

as i live in canada and we are just getting the iphone, i also hope it's the 3G one.

m61
m61

..confirmation $199 for 8gb and $299 for the 16gb [note: canadian funds] release date is july 16, 2008

NaughtyMonkey
NaughtyMonkey

they announced July 11th at the conference and that is what the site says.

18th Letter
18th Letter

I would hate that since I just got one

jasonhiner
jasonhiner

Original post: http://blogs.techrepublic.com.com/hiner/?p=728 I think the price is likely to change. Will it go back up, or will it come down to match more standard smartphone prices?

CorporateLackie
CorporateLackie

Is there a way to watch Job's announcement of iPhone2 via the web? Anybody got the details? Thanks!

CorporateLackie
CorporateLackie

I find it interesting that ATT / Apple do not allow subscribers to use their corporate discounts on the service plans for the iPhone. Maybe that will change on Monday also, but currently if I buy any other phone from ATT my company has negotiated a corporate discount on the SERVICE PLAN that is a double-digit discount off list price. With the iPhone, sorry no discount. I'm not sure I care if the phone costs $299 or $499 ... If I'm going to pay $2400 to use it for 2 years??? I may buy one anyway... but to state the obvious ... the service plan is where all the bucks are...

Hurell.Lyons
Hurell.Lyons

Is that they rope you into that stupid iPhone plan. If you buy unlimited data and have an unlocked iPhone (Which is probably the easiest phone to unlocked currently and I have unlocked motorola's, Windows mobile phones etc...I can honestly say the iPhone is the easiest) then you don't need to use the iPhone specific plans. I would much rather pay for the phone itself and unlock it and use it with the GSm provider i choose or if like in my situation I have a AT&T phone with my company and I have unlimited data anyway its a no brainer. Apple won't touch your phone unless you have signed up for contract with AT&T regardless of what the issue is. I had a brand new phone with the power button issue (Button stays depressed) they refused ot help me because the phone wasn't signed up yet (they didn't know I unlocked). I spoke with the manager and told him I found it absolutely crazy that I have to sign up for 2 years to have apple replace or fix an obvious defect. He just shrugged his shoulders. I wanted to break the phone on his face (I was really upset).

NaughtyMonkey
NaughtyMonkey

Purchase a plan and get your free phone. Order your IPhone from Apple. Set it up with your number. Update to add that that is no longer possible since new Iphones must be activated at an Apple Store or AT&T outlet where you will have to sign a new 2 year contract starting at 39.99 plus 29.99 for data. Oh well, at least since they don't have 3G around here, I have no reason to upgrade. At least I get the software upgrade for free.

CorporateLackie
CorporateLackie

NM: Geezzzzzzzz I like your plan! For the person that currently doesn't own an iPhone or have service with ATT ... is there a "way out" of paying the $70+/month "iPhone" rate for the first 2 years? thanks!

NaughtyMonkey
NaughtyMonkey

for my IPhone. I hooked it up, input my number for the secondary line I wanted it to use, and I pay $25/month for mine with unlimited data. My primary remained the same as well. No difference at all. The IPhone plan is for new contracts only or adding lines.

Hurell.Lyons
Hurell.Lyons

Apple has marched to the beat of the own drum typically so while raising the price is very possible, lets not forget how quicly they dropped the price last year and the amount of flac they caught from early iPhone adopters ($100 gift card anyone). I think they will offer the 16GB 3G model for the price of the 16 GB (399) and a new 32 GB for 499. they may even keep the 8 GB around for 299 to entice peopel thinking about getting one but not wanting to shell out too much money. I thin kthey will let AT&T subsidize the phone price with a contract making it more attractive to people to sign up for 2 years and moving more phones. I have had Nokia's, Sony's and Windows Mobile phones. I normally don't keep a phone long. I had the iPhone for 3 months. I can honestly say if I'm not in line on Tuesday (Hopefully the release date of the iPhone or order date on line) for a 16/32 Gb model then it will be because it hasn't been jailbroken yet (Want to use it with existing AT&T service my company pays for with the AT&T tilt). It is by far the best phone I have ever used and with exchange functionality it will probably be my last phone that i buy...that is unti lthey come out with a better model.

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