Apple, Inc. (NASDAQ: AAPL) released some new software and hardware products a few days ago, and at the same time lowered the price on the standard iPhone to $99 with a two-year contract with AT&T, Inc. (NYSE: T). Considering that the very first iPhone was released at the $599 price point with that same two-year contract almost exactly two years ago, one has to wonder how Apple has lowered the subsidy-priced iPhone in the U.S. to such a low level while retaining decent product margins.The first iPhone pricing model wasn't priced with a heavy AT&T subsidy, but all subsequent price points were. Have iPhone material costs and marketing costs really gone far down to allow Apple to continue lowering prices? It makes sense to lower product prices in today's economic environment, but then again, Apple is famous for squeezing its suppliers to get the best (and constantly-lowered) material costs, which allows it to maintain margins but lower street prices on its products. Sounds a bit like a Wal-Mart Stores, Inc. (NYSE: WMT) strategy, doesn't it?
Apple's shares have done nothing but rise in 2009, even in the face of an economic recession. Apparently, the company know how to work financial magic as shrewdly as its marketing and product design prowess. Apple's design process may actually help on margins while bolstering its design perception to the best it can be.
It seems odd that only Apple either thinks this way or can actually get its hardware manufacturer partners to work this way. but it does. Think Apple just designs ultra-cool hardware products? It also makes sure it has plenty of margin to pad its pockets as well.
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