June and Apple's WWDC are approaching swiftly. Though we're still three-plus months out, reports of what Apple plans to announce are already taking shape. Morgan Stanley believes that new models are coming, and they'll be cheaper to buy and cheaper to own.
June and Apple's WWDC are approaching swiftly. Though we're still three-plus months out, reports of what Apple plans to announce are already taking shape. Morgan Stanley believes that new models are coming, and they'll be cheaper to buy and cheaper to own.Analyst Katy Huberty with Morgan Stanley thinks price is the largest single issue preventing more people from purchasing the iPhone. Not just the price of the device itself, mind you ($99 - $299), but the price of the mandatory AT&T service plans, too. The minimum monthly plan iPhone users can get away with comes in at $70. That's for 450 minutes ($40) and unlimited data ($30). That $70 price tag doesn't include messaging. With messaging and taxes thrown in, my monthly bill hovers around the $105 mark.
Huberty thinks that the iPhone's pricing schemes are set to change as soon as June. "We expect Apple to launch new iPhones in June that offer both a lower total cost of ownership and new functionality, potentially including gesture-based technology," she wrote in a note to investors Friday.
Interesting that Huberty says iPhones and not iPhone. Last year, Apple threw people for a loop when it introduced the iPhone 3GS at $199 and $299, and simultaneously dropped the price of the iPhone 3G to $99. The iPhone 3G's $99 price tag hardly breaks the bank. I don't see how Apple can go much lower with pricing on subsidized iPhones. (Unsubsidized models -- those that don't require a contact -- cost a lot more.)
The one factor possibly playing a role here is the iPad. The iPad, which uses much of the same technology, goes on sale in late March. "We expect Apple to ship its first iPad and announce additional content deals in late March to better than expected demand," Huberty wrote. "We see the iPad targeting the sub-$800 consumer notebook market which equates to 30M annual units just in the US (120M globally." It's possible that Apple has scored such good deals on components for the iPad, iPhone and iPod Touch that it is able to lower at least one of the cost barriers preventing people from picking it up: sale price.
I don't see how Apple can reduce the cost of ownership of a new iPhone if it remains with AT&T. When the original iPhone went on sale, adopters were able to get away with a plan consisting of $40 for voice and just $20 for unlimited data. That $20 fee rose to $30 in 2008 with the introduction of the iPhone 3G, and it has remained in place since.
Apple may have scored a great win for consumers by getting AT&T to agree to the same $30 monthly 3G data fee for the iPad, but I don't think that's going to help lower the cost for iPhone users. The only caveat would be new data plans with limits, such as 100MB for $10 per month, 500MB for $20 per month, and unlimited (nee 5GB) for $30 per month.
Since Apple has debuted new iPhones the past three Junes in a row, Huberty is not exactly going out on a limb to suggest that Apple will have new products ready by then. The devil, as they say, is in the details.
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