The iPhone Price Wars

The game is definitely on.

With Steve Jobs' introduction of the iPhone 2.0 at Apple's (Nasdaq: AAPL  ) recent developer conference, the wireless industry is once again off to the races to capture the hearts and wallets of consumers in the second half of the year. And this time, it's competing less on features and more on price.

The iPhone's initial release last June changed the game for top product developers like Nokia (NYSE: NOK  ) , Motorola (NYSE: MOT  ) , and Samsung as they explore new ways for people to interact with a wireless device. But now wireless phone makers have an even bigger challenge -- meet or beat the new iPhone's features and allure, all at a price below $199.

Nokia already has several media smartphones with the same features included in the iPhone. Other phones, such as the HTC Touch and Samsung's Instinct, sport slick touchscreens as well. But the expense of these phones will no longer make them viable. That's why Sprint Nextel (NYSE: S  ) has already stepped in and dropped the price of the Instinct to $130.

Research In Motion (Nasdaq: RIMM  ) has claimed that it's not worried about competition from Apple in its space, but the Canadian company is fiddling with its product line to include bold new versions of the BlackBerry. If it can keep new versions of its devices priced comparable to the new iPhone, it should fare well this year.

One newcomer to the new 3G iPhone era, though, may have a tough time: GPS maker Garmin (Nasdaq: GRMN  ) . Not only is the company taking its maiden voyage in the smartphone space after dipping its toes in just a few years back, but it now also finds itself in a cutthroat market in which most of its products are already offering navigation applications. Moreover, Garmin's devices have never been targeted for the low end of the consumer market.

The most amusing part of the new "low price" smartphone battle heating up is that the total cost of owning a new iPhone is actually higher when you consider the rate plans AT&T (NYSE: T  ) has for the device. So the trick is more about leading consumers to higher usage. As usual, while device makers will be killing one another for more market share, the carriers will all be winners in the end.

For more Foolishness:

Apple is one of many game-changing companies picked by the Motley Fool Stock Advisor service. To see all the stocks that have helped Tom and David Gardner beat the market by 41 percentage points on average, take a free 30-day trial.

Fool contributor Dave Mock considered entering the smartphone market, but figures it's a losing proposition now. He owns shares of Motorola and Garmin and is the author of The Qualcomm Equation. Sprint Nextel is an Inside Value selection, and Garmin is recommended in both Global Gains and Stock Advisor. The Fool's disclosure policy is better than low-price -- it's totally free.


Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 670242, ~/Articles/ArticleHandler.aspx, 10/21/2014 3:57:03 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement