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iPhone 3G Only Looks Cheaper



Apple has a history of carriage trade pricing, and, although it cost it the PC market, the policy was enshrined in the original iPhone. 

For the first time Monday Apple sorta kinda changed its tune, so to speak, and started chasing the mass market with an entry-level $199 iPhone 3G with 8GB of memory and $299 for a model with 16GB of memory, in either case a $200 price cut compared to iPhone 1.0, $300 cheaper than a year ago. 

The price cut isn’t really coming from Apple – at least in the US. It’s coming from AT&T, iPhone’s exclusive US carrier, which will be paying Apple subsidies to compensate for the price cut. 

Apple has forsaken taking a cut of the carrier’s monthly service fees, which will now be going up. 

AT&T plans to charge $39.99 a month plus $30 for unlimited data for a two-year contract. That makes the cheapest service plan $10 more for Internet access so users can kiss the savings good-bye. Business users get to pay $45 a month for unlimited Internet. 

AT&T says the new arrangement will cause an earnings hit of 10-12 cents a year for the next two years. It’s gambling on higher volumes in the mid-term. 

Outside the US the iPhone might be free in exchange for a commitment to a carrier. 

The dingus, destined to be sold in 70 countries through multiple carriers in some places, is supposed to hit the stores on July 11 backed by an iPhone Apps store, peddling Apple-approved third-party applications for a 30% cut of the proceeds. There could reportedly be a thousand apps available initially, a potentially important revenue generator for Apple. 

As expected, the new thinner-still iPhone includes built-in GPS, and thanks to ActiveSync widgetry licensed from Microsoft e-mail sent to and from this iPhone can be synched to corporate and home computers secured by deleting technology from Cisco for 99 bucks extra. This MobileMe service comes with 20 gigs of storage. 

iPhone will also support Office. 

Jobs said 35% of the Fortune 500 is testing the iPhone. 

Piper Jaffrey predicts that Apple will sell 45 million phones next year. Steve Jobs said Apple has sold six million iPhones so far. 

Being 3G puts its Internet access close to wireline class. It’s supposed to download data twice as fast as the original. AT&T can provide 3G in 280 US markets now, 350 by the end of the year. Better be in one if you’re going to buy the thing.




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