Apple to allow subsidized 3G iPhone
June 8, 2008
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The new version of the Apple iPhone is set to be sold at significantly lower prices than the existing one, in a tacit acknowledgement by the US technology company that its previous sales strategy was not sustainable.
Apple has bowed to pressure from mobile phone operators and agreed they can subsidise the latest iPhone, expected to be unveiled by Steve Jobs, Apple’s chief executive, on Monday.
Telefonica SA is going to be the sole distributor of the iPhone in Spain, according to Thomson Financial News. And Thomson Financial has also said the device will be sold for under 100 euros. 100 euros is approximately $150 U.S. — and the 3G iPhone is going to be sold for less than that? How is that possible? Well, just as it would be in the U.S., through a subsidy by the distributor.
In the U.K., meanwhile, the 3G iPhone will cost 100 pounds with an 18-month contract, according to Macworld UK. That is approximately $195 U.S. — nearly identical to the rumored $199 selling price of the 3G iPhone stateside. There is also talk that the device could be given away for free in the U.K. if customers sign up for the most expensive contract — or, get this, if they trade in their first generation iPhone.
Analysts said AT&T, the US mobile operator selling the iPhone, could provide a $200 subsidy on the handset, enabling it to go on sale to consumers for $200 or less. The first version costs US consumers $399 because there is no subsidy.
Apple has accepted that the new iPhone should be subsidised in the US and western Europe by the mobile operators who sell it to consumers, according to people familiar with the matter.
The operators are willing to bear the subsidy costs because the iPhone provides them with revenue opportunities such as advertising.
Apple has also forgone a portion of the monthly revenue paid to the operators by iPhone users, said people close to the situation.
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