As Apple mulls over cuts to its Mac prices, iPhone partner AT&T is also looking to trim the contract prices on the Apple iPhone in the U.S. The new decrease would reportedly accompany a new version of the handset hardware, that is widely expected to launch in June, along with Apple's new iPhone operating system.
Michael Cote of Cote Collaborative says that his inside connections at both companies reveal that there is a "strong possibility" that the price of the iPhone's introductory plan will be cut from $69 to $59. He expects the cut to be announced, along with a new iPhone, at the World Wide Developers Conference in San Francisco on June 8.
The iPhone currently retails for $200 which is in line with its smartphone competitors. However, the total cost of basic ownership -- the price of an 8GB phone and 24 months of the most basic iPhone voice and data plan -- amounts to a whopping total of $1,856. A cut would sweeten the deal, dropping this slight to around $1,600.
Apple's previous cost cut proved to be very effective. An early cost cut from $599 to $399 propelled the iPhone to sales of 4 million units in 2007. A second cut in 2008, with the release of the 3G iPhone, saw even greater success, boosting sales to 17 million units.
Cost cutting is a painful, but growing necessity for companies competing in the smart phone market. Research in Motion utilized Verizon's "by one, get one" promotion to propel its Blackberry Curve smart phone past the iPhone in total sales for the first quarter of 2009.
With the much-anticipated Palm Pre set to hit the market, and strong competition from T-Mobile/Google's G1, which recently sold its millionth unit, Apple and AT&T have much at stake. And analysts believe a price cut could be just what they need to restore growth to the iPhone's momentum.