Will Apple Have to Lower iPhone Prices Soon?

When Deutsche Telekom's (NASDAQOTH: DTEGY  ) T-Mobile agreed to carry the iPhone, it did so in a unique and particularly troubling way: without offering a subsidy.

To be fair, Apple (NASDAQ: AAPL  ) shares have taken a beating recently for any number of reasons. Analyst downgrades. Reports of tepid iPhone 5 demand in China. The company's failure to pay a special dividend. By comparison, the T-Mobile deal shouldn't mean much.

Yet investors seem to fear that AT&T (NYSE: T  ) , Sprint Nextel (NYSE: S  ) , and Verizon (NYSE: VZ  ) will follow T-Mobile in abandoning subsidies, leading to steep cuts in iPhone prices, lower margins, and (gulp) declining profits.

Are price cuts in the works? What about lower profits? Fool contributor Tim Beyers answers these questions and more in the following video.

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  • Report this Comment On December 19, 2012, at 1:43 AM, ConstableOdo wrote:

    "Investors seem to fear..." because one carrier decides to do away with subsidies. There is no evidence that other carriers will follow suit. Suppose consumers prefer subsidies because they don't want to pay higher up-front costs. If so, that carrier will be left out in the cold. Sure, anything can happen, but I think these so-called investors are like frightened rabbits, jumping at every little motion. I honestly think Apple needs to weed out those investors who are always dumping Apple stock long before things ever happen.

    If investors really think they can find better companies than Apple to invest in, then let them do so. I'm sure it's those greedy hedge fund managers who are always shifting their money around for quick profits and having little concern for anything else. I hope they get burned.

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