In business school, MBA students play a marketing strategy game where they launch imaginary electronics products, using phantom research & development dollars and marketing expenditures to position the products as high-end or low-end, to market to certain audiences, and then to change the price point to attract the maximum sales possible. It's a delicate game meant to emphasize how consumers value products; and how some will not purchase a product if it's too inexpensive; the low price devalues the item. It's a quest for the perfect price.Smartphones have been on that quest, with Apple Inc. (NASDAQ: AAPL) in the lead. No company seems to more attentively strategize its price points than Apple, and the iPhone has a storied history, first launched for $599 and $499 for the 8GB and 4GB models, respectively, followed swiftly by a $200 price cut for both products. Now the new 8GB iPhone 3G is $199 if you buy it with an AT&T phone plan (and $299 for the 16GB version).
In a research note yesterday, analyst Charlie Wolf of Needham Research said he'd done the analysis and Apple could safely sell the 8GB version for $99, a price point that, with the subsidy from AT&T, would protect its margins at 42.3% (I need to see the numbers on this), and certainly convince holdouts like me (the refurb Blackberry I use was free with the contract subsidy) that the iPhone is the thing. At this price, surely the game would be a landslide in Apple's favor. The iPhone is more beautiful, more useful, and has more geeky cred than the Blackberry; at $99, I agree that the market would be won and to the iPhone conqueror would be the spoils.
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Reader Comments (Page 1 of 1)
10-28-2008 @ 7:27PM
Willy said...
As people's BlackBerry contracts expire, there will be a mass exodus to the iPhone, at almost any price point. And at $99 -- it's a no-brainer.
10-28-2008 @ 7:52PM
lute said...
What's all the hoopla? So what if the razor only costs $99. How much does do the blades cost--the phone charges? Is everyone oblivious to the total cost? As long as DAD or the Company is paying for the phone charge, who cares?
10-28-2008 @ 8:10PM
Jon Kepler said...
Don't forget that Blackberry has its own touch screen phone coming out. I will never own an iPhone; too cheap, too common, and I tend to not play well with those in love with Apple products. I do not own a Blackberry as I feel they're also too common, but I may cave in one day as it is the phone used by all of my peers.
10-28-2008 @ 10:52PM
jeff said...
Apple has 3 of everything... except the iphone...so far.
3 pieces to the business model
1) Music
2) Computers
3) Phones
3 price points for the business lines:
Music
1) shuffle
2) nano
3) Classic/Touch
Computers/Laptops
1) MacBook
2) MacBookPro
3) MacAir
Computers/Desktops
1) Mac Mini
2) iMac
3) MacPro
Phones
1) intro phone ???
2) iPhone $299
3) pro phone ???
10-29-2008 @ 3:39AM
Jon Kepler said...
If Apple did release a "Pro" iPhone, I assume it would most likely come with a slide out keyboard. I'm not sure how many other distinguishing features it could really have.
10-29-2008 @ 8:16AM
TX CHL Instructor said...
I have an iPhone. It's sorta neat, but not enough so to justify standing in line, much less camping out overnight outside the AT&T store.
My next phone will probably NOT be an iPhone. I want something that is more useful, handles email more gracefully, and for which I can get software from several sources. Like the Palm Treo, for instance. I sorely miss some of the software that I ran on my old Palm LifeDrive.
--
www.chl-tx.com
10-29-2008 @ 8:33AM
Sandy said...
My son has an iphone and we are paying for his plan. Now that the G1 has come out he has asked when he can switch. We'll be happy to accommodate since the phone/data plan is considerably cheaper and the phone/applications are every bit as good.