Want to hear me say it? Fine. "The iPhone is too expensive."
But I don't believe it.
On one hand, Microsoft
I've found legitimate arguments against Apple's
Fair enough. Yet I'm still unconvinced that the Mac daddy has somehow goofed on pricing. Apple, unlike any other consumer electronics brand short of Bose, has implied permission to price its wares at a premium.
Remember the iPod mini? Instead of pricing the player at $199, as analysts and all of us Fools expected, CEO Steve Jobs and his team settled on $249. What happened? We bought anyway. And when the iPod nano debuted in September of 2005 with similar pricing? We bought anyway.
Why, then, is anyone surprised that Apple is demanding a premium for the iPhone? History says it would. And history further says that we'll buy. And buy. And buy. And buy. That's why Apple yesterday reported a 77% boost in first-quarter net profit.
Besides, the iPhone introduces innovations that make the Treo and Research In Motion's
Of course it does. Nevertheless, there's an excellent chance that you'll be able to buy an iPhone for less than $500. History says that, too. For example, Apple's iPod nano sells for as little as $149 today.
What's more, research from iSuppli shows that the iPhone, if built with common components, could sport close to a 50% margin. That's astounding. If true, Apple could profitably make deals to sweeten the appeal of the iPhone for carriers like Deutsche Telekom's
Is the iPhone expensive? Yes. But is that a mistake? No way. Instead, it's a deliberate strategy that, if history serves, is likely to do precisely nothing to dampen the enthusiasm of Mac addicts, who have the June release date for the iPhone already circled on their calendars.
Take a bite of related Foolishness:
- The iPhone is no longer an urban legend.
- Look back on Apple's 2006.
- Will Steve Jobs survive the backdating scandal? Should he?
- Apple is good! No, it's bad! You decide.
High tech. Biotech. Nanotech. Any tech. David Gardner and his Foolish band of analysts cover it all for Motley Fool Rule Breakers selection and they've unearthed six multibagger stocks in two years as a result. Want to find out who they are? Try the service free for 30 days.
Fool contributor Tim Beyers, ranked 1,343 out of more than 20,200 in Motley Fool CAPS, is a sucker for growth stocks and a regular contributor to David's Motley Fool Rule Breakers service. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile. Palm is a Stock Advisor pick. Microsoft is an Inside Value recommendation. The Motley Fool's disclosure policy is a rebel on Wall Street.