Apple cell phones are much more cost competitive than they were a year ago. Sure, they are getting higher subsidies, but I don't think that's something that influences somebody's decision to buy a $99 iPhone 4 vs a $99 Droid phone.
The nice thing about iPhones is they carry a strong residual value too. I traded in my wife's ATT iPhone 4 for $270 to get a $199 iPhone 4S from Sprint. It cost me probably $70 to break the ATT contract early, so I basically came out even on the trade. I paid $99 for 2 iPhone 4 models for the kids, and $199 for an iPhone 4S for myself. By trading in all my old cell phones to Best Buy, they gave me $200 for all my used phones, so I only paid $200 net for 4 Apple iPhones last year. At $50 a iPhone, it was a great deal.
With iPhone's tiered pricing from $0 to $199 in the US and $0 for 3 year contracts in China for the iPhone 4S, I don't think the post paid consumer can possibly detect a price advantage to buying other phones at this point. I hope that once the iPhone 5 rolls out, everything will shift down in the pricing lineup. Put the iPhone 5 at $199, the 16 GB iPhone 4S at $99, and let the 8 GB iPhone 4 replace the iPhone 3GS for free.
If QCOM is projecting 30% LTE chips by the end of the year, there probably is no doubt the iPhone 5 will launch this fall. That would help avoid any letdown in sales growth for Apple all the way through 2013. |
