[GoDucks]

When Apple introduced the iPhone earlier this month, one of the few things people could find to complain about was the price tag. At $499 for the 4 Gig model and $599 for the 8 Gig model, Apple justified the pricing by comparing the total amount you would have to pay for another Smart Phone or BlackBerry today plus the price of an iPod Nano. Still, however you justify it, $500 is a lot of money to pay for a device that also ties you into a two-year voice and data contract (potentially at $60 - $80 a month.) I don't think that Apple will ever sell the iPhone as announced at these price points.

If you want to see the number crunching behind the following, you can review it here:

http://torants.blogspot.com/2007/01/...hone-just.html

Apple as a company is extremely protective about new product announcements. They hate to announce something until they are ready to and like to ship products as quickly as possible after announcing them to keep the competition playing catch-up. In the case of the iPhone however, Apple had to announce the product almost six months before it plans to ship the product due the need for Apple to get FCC approval for the iPhone. This gives the competition 6 months to study the iPhone and add features and functionality to their existing products before Apple even gets out of the gate. Steve Jobs would not have been very happy about that.

I believe that when Steve Jobs announced the iPhone earlier this month, he did so with a few tricks up his sleeve. He knew that as soon as he announced the iPhone that the competition would begin to develop copycat models at similar price points. I believe that the competition will spend the next few months developing these products only to see Apple lower the price points of their iPhone to $299-$349 for the 4 Gig model and $349-$399 for the 8 Gig model. This would keep the competition scrambling (and potentially losing money if they develop a phone based on an expectation of selling it for $500-$600 and are forced to immediately lower the price to $299-$399.

I also believe that the iPhone will never ship with 4 Gigs and 8 Gigs of memory. When Steve Jobs compared the price of the iPhone to a current smart phone plus an iPod Nano, he compared the price to iPod models that will be almost a year old by the time the iPhone ships. Assuming that the iPod Nano memory doubles again this fall at similar price points, the iPhone could very well ship in 8 and 16 Gig models at the price points I've outlined above. Taking this a step further, Apple enjoys some of the best (if not the best) pricing in the flash memory market due to their huge purchasing power. Why not use this to their advantage to crush the competition in the iPhone space and ship the iPhone in 16 and 32 Gig models. The competition could not come close to matching Apple prices in these configurations and Apple would have a huge advantage.

If you're the president of Nokia or Palm or RIM and you're planning to compete with a $499 4 Gig iPhone and then weeks or days before the official launch you find out you're actually competing against a $299 8 Gig iPhone, you have to think it ruins your day!!

I believe that Apple can and will surprise us with the final specs and price points for the iPhone and in doing so, set themselves up to meet and surpass the sales targets that Steve Jobs outlined during his MacWorld keynote.

[drewcifer]

Interesting but I think this is definitely a stretch. We haven't seen Apple do any of this tricky stuff in the past. It also seems very unlikely that they would announce it at a higher price than they actually plan on selling it for.

[Wiskedjak]

Steve had better hope the presidents of Nokia, Palm, and RIM don't read the MacNN forums

[icruise]

Given that there's 5 months until the iPhone ships, I guess it's possible that the specs could change a little bit, but there's no way that a company like Apple would announce false prices or specs just to "fool" the competition. If they could sell it at a lower price with more storage, you can be darned sure that they would say so.

[Eriamjh]

Apple does have a huge disclaimer on their web site, so there is no guarantee that the phone will have exactly the same specs as announced.

Plus, there are other rumors that Apple has not disclosed everything about the iPhone that there is to know.

Steve has impressed us before. There has to be more, otherwise the fanfare around the launch will be short lived.

[mitchell_pgh]

I don't think a "$299 8 Gig iPhone" is even in the realm of possibility.

Apple is going to cash in on the "WOW" factor for a while. There is no logical reason to price cut and feature upgrade an item people are already excited about.

[SirCastor]

I think there's room for growth, but I don't think it's going to change in the storage space. the major reason is that the iPhone has already gotten tremendous press with these stats. Changing something like the memory included is going to create confusion.

[TAZ]

The $499 and $599 prices are pretty competative with today's PDA phones out there. Treo 700 goes for $549-$649 depending on where you buy and most of the others are in the $400-$600 range. The only price change I would not be surprised about is a Cingular subisdy when you sign a contract. As for memory, 4 and 8 gigs are more than enough when compared to the 2 gig that current phones max out at. There is a point at which you just have way to much crap on your phone, and also a point at which you begin to canibalize iPod sales. Considering that iPods are still Apples cash cow so to speak, I doubt that they are ready to sacrifice those sales just yet.

[amazing]

iPhone is clearly a cash-cow that Apple will milk for as long as it can. It's the Ferrari of phones, not the VW Beetle, which is why Jobs devoted so much Keynote time to it. The "wow!" factor has generated huge amounts of buzz which will translate into sales.

Just remember that Apple as a company is dedicated to generating money...

[SirCastor]

Unfortunately The buzz I think would have been far more valuable if the iPhone had been released that day. But with 6 months of counter-hype, and a technically unapproved (and therefore incomplete) device, I'm concerned that the iPhone is going to be the victim of too long of a wait.

As for competitors, I don't think we're going to have to worry. There's not enough time to come up with something remotely competitive.

[iREZ]

apple has done some tricky business with changing the price on something...well not really. remember the mbp? originally announced with lower specs than actually shipped.

[MattJeff]

i also worry about the long wait hurting iphone sales.

[kmkkid]

I doubt any hardware specs will change. As soon as the FCC Accepts the device, mass-production will ensue, meaning you can't just change specs in the last minute of production. Prices may fall, sure. But I bet Apple already factored in the price fluctuations by the time the product ships. I wish you were right, but you probably aren't.

[Dazed]

I will wait for a 3g version of this phone. I cant bring myself to spend this much money on a phone that will almost be out of date when its released.

Give me 3g and more memory (8gb is pathetically small) and then i may give apple my business.

[SirCastor]

Originally Posted by Dazed 

I will wait for a 3g version of this phone. I cant bring myself to spend this much money on a phone that will almost be out of date when its released.

Give me 3g and more memory (8gb is pathetically small) and then i may give apple my business.

Pathetically small for what? For a phone it's huge. For a handheld, it's huge. Comparing to the leading smartphones around, which average around 64MB of memory, 8 Gigs huge. For an iPod, it's not huge, but it's the top of the line for a Nano, which is a very popular product.

Considering the application, 8GB is hardly "pathetically Small"

[TAZ]

Originally Posted by Dazed 

Give me 3g and more memory (8gb is pathetically small) ...

8Gb being pathetic is a stretch. Nothing, phone wise, comes close to having that much onboard storage available. My guess is that by the time it is released, nothing will still come close. Now the lack of 3G; that is pathetic.

[Scott-G]

Originally Posted by GoDucks 

When Apple introduced the iPhone earlier this month, one of the few things people could find to complain about was the price tag. At $499 for the 4 Gig model and $599 for the 8 Gig model, Apple justified the pricing by comparing the total amount you would have to pay for another Smart Phone or BlackBerry today plus the price of an iPod Nano. Still, however you justify it, $500 is a lot of money to pay for a device that also ties you into a two-year voice and data contract (potentially at $60 - $80 a month.) I don't think that Apple will ever sell the iPhone as announced at these price points.

What if the first 18 months of that contract was free?

AT&T to give away 1.5 years of service to iPhone buyers? - Engadget

[icruise]

They've already denied that.

[Dazed]

Originally Posted by SirCastor 

Pathetically small for what? For a phone it's huge. For a handheld, it's huge. Comparing to the leading smartphones around, which average around 64MB of memory, 8 Gigs huge. For an iPod, it's not huge, but it's the top of the line for a Nano, which is a very popular product.

Considering the application, 8GB is hardly "pathetically Small"

Its too small for a video ipod. If much of the emphasis of the presentation wasnt on how cool a video ipod it was then youd be right, 8gb is enough for most peoples music. but for video its too small.

Also can someone tell me if this 8gb is shared betweeen the app/music etc or is the 8gb for the ipod only ?

The real deal breaker for me is the fact its not 3G meaning it will be out of date soon after its released (if not before, depending on how quick the networks can roll out their 3g support).

[icruise]

It is pretty small for video, true, although I think Apple is positioning it more as a replacement for a nano + a phone, and not for a full-sized iPod (Steve Jobs actually made this comparison in the keynote). Hopefully we'll get touchscreen versions of the full-sized iPods sooner than later.

I don't think we have official word on whether the OS shares the space used for music and video storage, but if it does then the actual sizes are about 500MB less than we thought.

[QualleyIV]

Originally Posted by drewcifer 

Interesting but I think this is definitely a stretch. We haven't seen Apple do any of this tricky stuff in the past. It also seems very unlikely that they would announce it at a higher price than they actually plan on selling it for.

I agree that it is interesting conjecture. And, while I do see your point that we haven't seen the type of trickery that GoDucks is suggesting, per se, we also don't see that many Apple products announced six months in advance of their ship date. But, that pattern could be changing since we have two recent and notable exceptions--AppleTV and Leopard. Of course, we've seen significant waits between OS announcements and releases before, but don't forget about the "secret" features that were withheld this time around. As far as I remember, we haven't seen that before (of course, I guess that depends on what actually ships). Also, don't forget about the demo of AppleTV months in advance of its release. In that case though, you have a product that really didn't change much from its initial announce.

The way I see it, it's probably a toss up at this point. If there's one thing that we should know about Apple by now, it's that SJ is on a mission and that mission just might involve a little slight of hand if it's necessary...

[MattJeff]

i dont believe that it will change much, i do think there will be more "Apps" on the phone and maybe a slight bump in power/umph.

[bobolicious]

And perhaps it will ship on superbowl sunday? :>

[Appleman]

What I do not understand is the lack of people talking about the roaming factor.
I do not know how it works in the States, but here in Europe it works country specific:
Contract with Vodaphone France? Fine but as soon as you go to Germany you start roaming with Vodaphone Germany, etc. Roaming is something like taking the wallets of the people and holding it upside down as long as they are calling over your network...
As I travel quite a lot worldwide, I need a phone which is simlock free. I carry several sim cards of different countries with me instead of several phones. What would be great would be a phone with multiple slots for simcards and you choose which one to use. I would love to pay a couple of hundreds more for simlock free than paying this amount for roaming year in year out.

But hey let see what the deal will be in Europe at the end of 2007...only roughly a year to wait...

Back to the topic: Apple will do what Apple wants to do. FCC approved doesn't mean they cannot bring in the 16-32 GB memory modules. My SE P910i came with an 64MB (wow-factor! ) and I could upgrade the card later myself to whatever fits.
So no doubt about that possibility. And money wise they can do a lot as well.

I'll wait a year...

[PubGuy]

FCC approval is on the RADIO portion (actual cell phone feature) of the device, not the other features. They can add or change programs all they want, memory, etc and the same FCC approval applies. If they change the hardware RELATED TO THE ACTUAL PHONE ONLY, then they would have to get new FCC approval.

[jamiec]

Originally Posted by drewcifer 

Interesting but I think this is definitely a stretch. We haven't seen Apple do any of this tricky stuff in the past. It also seems very unlikely that they would announce it at a higher price than they actually plan on selling it for.

Apple pulled some trickery like this just this past fall. They announced new versions of the video iPods -- and also dropped the prices by $50, forcing Microsoft to scramble to match it (and delay announcing Zune prices in the process).

[lookmark]

The biggest question is whether a data plan will be *required* to use the iPhone.... and just how much the data plan will be.

That alone will decide whether many, many people buy the iPhone, or pass.

I strongly doubt that iPhone will debut at anything less than the price Apple announced, btw.

[icruise]

Originally Posted by jamiec 

Apple pulled some trickery like this just this past fall. They announced new versions of the video iPods -- and also dropped the prices by $50, forcing Microsoft to scramble to match it (and delay announcing Zune prices in the process).

How is that trickery? They reduced the price of the new models compared to the old models, but they never said that those iPods would sell for the higher price. People just assumed they would.

[Waragainstsleep]

Most people seem to be forgetting that Apple are busting the mobile phone business model with the iPhone. They have generated enough hype with the iPhone to give them the required clout to get away with this. Nokia et al have been churning out gadgets from ordinary phones to communicators, PDAs, the n-gage etc etc for years. Most if not all have been subsidised by the networks at some point. Why should the networks change things now? There have been a number of exclusive handsets available only on specific networks (for a limited time at least) in the past. None have been as eagerly anticipated as the iPhone. And no matter how good they make the copies, none will have the Apple logo on, and none of them will sell as well.

The interesting part of the announcement is the reason for the early release they give. My PowerBook has an FCC code printed on the bottom, I'm guessing without looking that my iPod, iBook, PowerMac and Xserve will have one too. I think the rumoured early release might be more likely than an upgrade of the first model. If they release the iPhone exactly as announced in June, no-one will be disappointed and many will pay up happily at the announced price points. If they are early, people will be even more pleased to pay up since they don't have to wait any more.

[Cubester]

Interesting set of opinions here, and mostly mature voices, for which I'm grateful.
I have to say 8 GBs seems to me to be a very small capacity for an ipod/phone/video player/etc. I'm a devoted fanboy, but my 30 GB ipod is just about enough for me, and that's only the mp3s, no vids at all.
The price is a bit sky high; when functions are combined, components see multiple uses and manufacturing costs are reduced. The estimated cost breakdowns found on the net support this.
Lack of 3G, no unlocked, no SIM cards, tied to Cingular...all factors against purchase for many otherwise hopeful iPhone owners
So yes, perhaps the greatest phone ever, but should be priced competitively, bigger capacity, needs latest technology, unlocked, free choice of carriers.
On a more positive note, I can't wait to see what the hidden killer app is. Remember there was one button missing.

[TheMacMan]

Originally Posted by drewcifer 

Interesting but I think this is definitely a stretch. We haven't seen Apple do any of this tricky stuff in the past. It also seems very unlikely that they would announce it at a higher price than they actually plan on selling it for.

Yes the did. They introduced updated iPods with more capacity and less price just before the Zune launched. At which time, Micro$haft was forced to lower it's price on Zune. They are now losing money on each unit they sell. Apple does play politics very well!

[::maroma::]

I predict more software apps and features than was presented when it ships. No hardware changes and no price changes. If they were to surprise us with one hardware upgrade than was announced, I would hope for either 3G or higher capacity.

[ebrunn]

Originally Posted by Cubester 

no SIM cards

um, it has a sim card slot

Even if it had the 3g, people would be bitching because they dont get the Cingular 3g in their area. People like me.