updated 06:25 pm EDT, Fri June 6, 2008
iPhone subsidy in US?
Apple will likely allow carriers to subsidize the sales of the iPhone, but will lose a portion of the monthly revenue, a new report claims. Supporting previous reports of an expected carrier subsidy in the UK, The Financial Times says that the iPhone is set to be sold at significantly lower prices in both the US and Western Europe -- perhaps as much as $200 lower than the price of the current iPhone (available for $399 in the US). The move, the report claims, is a "tacit acknowledgement by the US technology company that its previous sales strategy was not sustainable," although may have been a necessary for Apple to hit its self-created 10 million iPhone sales target for the calendar year, the report claims.
Citing sources familiar with matter, FT claims that Apple has accepted that the new iPhone should be subsidized by the carriers in the US and western Europe. In addition, analysts told the publication that AT&T, the exclusive carrier in the US, could provide up to a $200 subsidy on the device, bringing the final cost below $200 and closer to other smartphones (most of which are already subsidized). The cost of an iPhone may even be cheaper, as some analysts predict Apple will continue to sell the current version of the iPhone.
The predicted carrier subsidy could help stimulate sales in Europe, where sales have lagged behind projected targets: Britain, Germany and France sold a combined total of 330,000 iPhones by the end of December, when sources had predicted between 500,000 and 600,000. Analysts earlier this week said that the price of the UK iPhone could drop to as little as £100 with the release of a new model.
Interestingly, the report claims that mobile operators are "willing to bear the subsidy costs because the iPhone provides them with revenue opportunities such as advertising," although it's unclear how the advertising will be displayed to consumers. The current iPhone has no display advertising mechanism for operators.