Apple

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 book, Follow the Geeks.

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