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Apple does the unthinkable with the iPhone

Do you hear that sound? It's the sound of thousands of iPhone customers crying their hearts out. In addition to the new iPods, ringtones for the iPhone and iTunes Wi-Fi Music Store, Apple has announced a price cut for the iPhone.

Apple has dropped the 4GB model from the iPhone lineup. Its sales have been lagging behind the more spacious 8GB model so Apple decided to remove the dead weight. In addition, Apple has cut the price of the 8GB iPhone by $200 – the device will now retail for $399.

This move by Apple even undercuts the pricing for refurbished iPhones that was announced in late August. Refurbished 4GB and 8GB iPhones were listed on the Apple Store for $399 and $499 respectively.

Apple is being quite aggressive with its iPhone and the $200 price cut leaves room for a 16GB model on the high end in the future. Considering that the iPhone-esque iPod touch comes in a 16GB model, the move is inevitable.

Update 9/5/2007:
Although Apple is discontinuing the 4GB iPhone, that isn't stopping the company from offering it for $299 at the Apple Store until the supply is exhausted.

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RE: Wow
By Ralph The Magician on 9/5/2007 6:11:37 PM , Rating: 2
The price cut really has little to do with Apple. Of that $200, at least half is simply an AT&T subsidy. This happens with every phone. If it starts selling well, the telco(s) start subsidizing like crazy in a bid to get as many subscribers as possible before the next big seller. The goal is to get as many people locked in for as long a period as possible, but their subsidizing budget is fixed so they have to wait and see which products are worth backing.

Now that the iPhone has shown that it has staying power, the price is just going to get lower and lower. Don't be at all surprised by a $299 iPhone come December/January.

You might even see a $99 iPhone before the AT&T/Apple exclusive is up. You might be saying, "But that will kill iPod sales!" Well, yes-and-no. Apple probably has the final say in price, but they also probably don't care. You might buy it for $399 at the store, but Apple is getting $499+. So if AT&T decides to subsidize it even further, and they will, Apple will still get $499—even if they sell it to you for $99. You think Motorola gets $49 well you buy a RAZR? Nope. Look at the unsubsidized price of a RAZR—it's $199-$299+ depending on the model.

RE: Wow
By kkwst2 on 9/5/2007 8:23:54 PM , Rating: 2
What about the part in the contract where AT&T agreed to not subsidize the phone at all. They agree to sell it at the price that Apple sets.

So it happens with every OTHER phone, perhaps. So I would say the price cut has everything to do with Apple

RE: Wow
By Ralph The Magician on 9/5/2007 9:31:09 PM , Rating: 2
Why would you think AT&T doesn't subsidize iPhones?

RE: Wow
By Spotacus on 9/6/2007 1:31:41 AM , Rating: 2
Because you can buy an iPhone from Apple or AT&T for the same price, which suggests that they aren't subsidizing the cost. If Apple wasn't selling them separately, we wouldn't know. Or if Apple sold it for more like the other phone makers like Motorola, then yes it would be subsidized.

But to say
You might buy it for $399 at the store, but Apple is getting $499+
when that store might be an Apple store, not an AT&T one? Probably not happening.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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