The iPhone Clearance Sale
By
Dave Mock
April 7, 2008
|
When Apple (Nasdaq: AAPL) and carrier partner AT&T (NYSE: T) dropped the price of the iPhone in the U.S. last year, more than a few consumers got their knickers in a twist. Then again, Steve Jobs did this scarcely two months after launching the coveted device and soon offered $100 refunds to recent purchasers who felt jilted.
The outrage may not be quite the same in Germany, where exclusive local carrier Deutsche Telekom (NYSE: DT) gave locals five months before knocking the price of the eight-gigabyte version down to 99 euro, or $155. Deutsche Telekom's T-Mobile is offering the cheaper iPhone, bundled with a premium two-year contract priced at a minimum of $139 per month.
The new price is a marked departure from the $624 that the eight-gigabyte version used to cost, and the "cheap phone, pricey contract" offering more closely resembles sales practices in the U.S., with carriers such as Sprint Nextel (NYSE: S) and Verizon (NYSE: VZ) subsidizing high-priced handsets in exchange for contract commitments.
Seeing the iPhone discounted significantly at this point is not a big surprise, as many industry watchers expect an updated, third-generation (3G) iPhone to launch soon. Many consumers in Europe have balked at buying the current version, especially considering that a Nokia (NYSE: NOK) N-series with faster broadband data capabilities could be had for far less. With other leading smartphones from Samsung and Sony Ericsson similarly offering more browsing speed for less, it's hard to argue that the slower iPhone is worth a premium.
While some have speculated that the price cut is intended primarily to boost sales, I don't buy it. True, Apple wants to sell 10 million iPhones by year's end. To reach this goal Steve Jobs has been courting carriers in Japan, China, and, most recently, America Movil's (NYSE: AMX) Telcel subsidiary in Mexico to launch the device.
But while I'm sure Germans with the more American "pay-for-it-later" attitude will pick up the iPhone with its new pricey string attached, it also makes sense that T-Mobile would want to clear inventory in preparation for a new generation of iPhones. Of course, it's all speculation at this point, but Apple has been pretty deft at marketing the iPhone to maximize sales so far, and I expect more of the same going forward.
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