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Apple iPhone 2.0 Less Expensive
People love their iPhones. But not enough people have them, and that isn't for lack of interest. On the contrary, many more people want iPhones than have them, and the number one reason why is price point. People simply are not willing to pay $400 and upwards for a smartphone. And even those who may like to spend that amount for an iPhone simply don't have it to spend. Times are hard, and it's being reflected in iPhone sales which, while high, are far lower than they could be.
Fortunately AT&T, currently the exclusive iPhone wireless service provider in the U.S., has heard the call and, in response, has announced that the next iPhone (iPhone 2.0) will be as much as $200 cheaper than the current iPhone. And that might be just the thing to get their touchscreen-loving fingers into more people's pockets.
While Apple's chief exec Steve Jobs plans to highlight all the bells and whistles of the new iPhone 2.0 when he introduces it to the world at this summer's Worldwide Developers Conference, AT&T plans to tout one new feature and one new feature only - a lower sticker price. AT&T is wagering that this, and not all the sundry new features bundled into the second generation device, will be the feature most appealing to consumers, and the clincher for most to make the switch from prospective customer to satisfied customer.
Will $199 be low enough to woo smartphone customers away from all the burgeoning iPhone copycats emerging in the smartphone marketplace? Only time will tell. But AT&T does have research supporting its expectations, noting that when Apple itself cut the price of the iPhone by a third, it heavily stimulated consumer demand for the device. AT&T figures (and quite likely rightfully so) that if Apple can do it, why can't they?
In the meantime, AT&T's price-lowering plans for the iPhone aren't solely intended to court new customers. AT&T is also hoping to entice its existing customers away from their other smartphones and to the iPhone, a device that makes much heavier use of AT&T's internet data plans. An AT&T analyst estimates that every iPhone customer spends about $90 each month in wireless data services, a figure that would more than make up for the lost-leader pricing of the new iPhone.
The $200 price AT&T is promising will almost certainly only be available to customers committing to a two-year contract - not a particularly new business model, but a proven, successful one. Locking customers in for two-years will go a long way towards helping the company reach its goal of milking more revenues out of each iPhone user each month.
While Apple competes with Research in Motion and Palm, AT&T is duking it out with Verizon and Sprint. Clearly a $200 discount on its most popular product seems to be a prudent move on their part in the wireless provider's never-ending battle to coming out on top.
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