Analyst: The $99 iPhone will increase sales twofold
The price cuts Apple (AAPL) announced Monday on the MacBook and iPhone lines are "significant" and surprisingly aggressive, writes Piper Jaffray's Gene Munster in a note to clients issued after the WWDC keynote was over.
Historically, he writes, a 50% cut in iPhone pricing has increased demand twofold.
He's referring to the last year's cut to $199 from $399. That price reduction was actually accompanied by a tripling of global unit sales (from 4.7 million to 15 million), but some of those sales were in overseas markets. U.S. sales in that period, he estimates, increased twofold.
The MacBook price cuts were more modest — between 5% and 15% — but make Munster "increasingly confident" in his near-term Mac estimates (2.2 million Macs in the third fiscal quarter; 2.4 million in fourth quarter, which ends in September).
The pricing on OS X Snow Leopard was even more aggressive; it's scheduled to ship in September for $29 (for current Leopard users), as opposed to the typical $129 operating system upgrade.
Munster says he's not worried about the impact on Apple's bottom line, however. He notes that when Leopard shipped in 2007, the Mac user base was about 23 million. Today Apple announced that its user base has grown to 75 million active OS X users.
Munster, having predicted that Jobs would return to Apple by the end of June and not before, claims he is not surprised that the CEO was a no-show Monday.
Apple's World Wide Developers Conference runs until Friday.
See also:
"ex ped: “Not at this time” says AT&T"
@ex ped:
So you'll agree with me, this reduction does not make it very cheaper.
Overall people will be paying around $1500 instead of $1600 over two years, if not more.
Honestly, there's something wrong with the way this news has been reported.
Even if iPhone is costlier by $100, I would rather be happy if data plan for iphone is cut to $10-$15 or so. But I doubt if AT&T will do that.
Posted By Jim, Chicago, IL : June 9, 2009 11:31 am
Can you tell what other phone/OS is available with $10-15 data plan and how usable is it surfing the web?
This is a classic "wishful thinking" analysis by an Apple admirer.
It reminds me of the transition to Intel, all the adulating world of media and analysts broke down in tears of joy and admiration as if it was a stroke of genius which no mortal wud have thot about excepthis Jobsness! But a rational analyst must ask herself, wat has changed since AAPL last determined the price of the price of the phone? Probably, not a lot, in terms of manufacturing costs, so AAPL just understands that "optimal" pricing has changed. If it is such a stroke of genius, why havent they priced the iThing at 99 smackeroos in the first place?
I am waiting until next year when apple signs on with verizon. At that time data plans and plans in general shoudl go down. ATT charges way too much for there data plans with the apple phones.
I think $30 for data plan is way too high. iPhone will be of no use without data plan and for 2 years contract
$30 (data plan per month) * 24 = $720 for 2 years on the top of your cell phone charges.
This is the only reason I will not go for iPhone. Other smart phones with Wi-Fi will do good because you can connect to free wi-fi networks at home, work, starbucks and many places without costly data plan.
Even if iPhone is costlier by $100, I would rather be happy if data plan for iphone is cut to $10-$15 or so. But I doubt if AT&T will do that.
I agree, people understand the high cost of hardware. The hesitation is strictly the high cost of very small amounts of data that should otherwise be fairly inexpensive. That paired with extensive contracts keeps many people at bay.
I think the initial cost of a smart phone – iphone or other – is only a small part of people’s hesitation. Most people balk at the high monthly cost and 2-year contract. Something needs to budge there.
Increase Twofold?? Not gonna happen unless they go with other service providers other than AT&T. AT&T network is slow, coverage is spotty and the person that would by a $99 8GB Iphone would probably rather have a pay as you go phone rather than the $70 to $100 plus monthly plan with a 2 year committment.