A $99 iPhone after subsidy will be released in June or July of this year according to RBC analyst Mark Abramsky via Alley Insider. Citing “checks”, Abramsky says that the $99 price tag would come from fewer features rather than an iPhone nano or a model lacking multitouch. Likely features that would be cut include 3G connectivity, GPS, camera resolution, and unlimited data in tandem with cheaper usage plans. He goes on to predict that Apple could sell 20-30 million cheaper iPhone’s, boosting its smartphone market share to 20 percent.
The only reason Apple would make a move like this is if it wanted to grab market share. But that would require lower profit margins, and that’s not a normal Apple move under Steve Jobs. I don’t think that the company will release a $99 iPhone in the United States, Canada, Europe or any other region currently carrying it for $199. I do think that Apple would release a phone with fewer features in developing countries where Nokia dominates. A company doesn’t have to sacrifice profit margins where it has none to begin with.
Take India for instance. The 3G iPhone’s release there last year was an absolute disaster. And admittedly price wasn’t the only issue–distribution and marketing were awful. But what about a $99 iPhone effectively marketed to rural India. The Wall Street Journal yesterday reported that figures released later this month will likely show 11 million new Indian mobile subscribers in January, mainly from rural areas. Poor farmers are willing to spend 20 percent of their average US$1000 annual earning to purchase a mobile phone and service plan. Now imagine Apple’s global market share should it tap into this 1.2 billion market effectively. Obviously I’m just I’m guessing without all the numbers and Apple would have to create an extremely low-cost device that could be sold at a profit sans subsidies, but it seems possible.
I’d be more inclined to agree with Abramsky’s prediction that an updated 3G iPhone will be released in the United States, etc., this June or July. At the same price point, but with video support, a better camera, more storage, and hopefully background application support, this makes a whole lot more sense. And with manufacturing costs cheaper this year than last, Apple should be able to keep similar profit margins.
We’ll have to see. In my humble opinion however, any country currently paying $199 for an iPhone won’t be paying $99 for a lesser model anytime soon.