Fourth generation iPhone to have a lower total cost of ownership?

By on Feb 26, 2010 at 5:14 PM
Rumor February 26, 2010

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In a note to investors, Morgan Stanley analyst Katy Huberty predicts that Apple will introduce a new iPhone model which will set a new standard for affordability. Huberty maintains that cost is the largest barrier to greater iPhone adoption and believes Apple will address this shortcoming during its next iPhone announcement expected at WWDC in June. Whether Apple can undercut the low $99 price point for the 8GB iPhone 3G remains to be seen, but Huberty’s prediction takes into account the total cost of ownership, not just the initial handset cost. Apple could potentially trim the overall cost of its handset by negotiating low monthly data rates with carriers as it did with iPad, reducing the length of the contract, eliminating any upfront costs like activation fees, or even offering the iPhone as a standalone device with the option of a prepaid plan as has been done recently with the SIM-only tariffs in the UK. The latter, of course, would only happen if hell freezes over if Apple and AT&T are willing to loosen their grip on the iPhone in the US. Then again, we’ve taught better than to take what analysts say as fact.

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  • http://KatieLawrence.com Katie Lawrence

    I can’t wait for the 4th iPhone!! I hope to has a front facing camera because with my current iPhone it is a bit hard!!
    :)

    • Lucas

      Wow, on a side note beautiful beautiful page of pics hun! :)

  • Howard stern

    Hey Katie wanna fuck ?

  • C

    Id have to disagree with this chart…

    1 – contract length should not be weighted 41%, its the same 2 years that all other major carriers use. I do understand that this is a deciding factor (if I dont like it, or unsure, im stuck for 2 years or termination fee) but not at 41% maybe more like 20%

    2 – hardware cost, again not a big issue considering $200 is not what it used to be!

    3 – service provider, this should be the highest percentage!!! everyone and there mother that did not switch to AT&T for an iphone is waiting for it to be released on another network!

    • me too

      I do not believe you’re looking at weighting. I read the chart as indicating that 41% of the respondents indicated contract length was an issue for them.

    • MrSmurf

      There is a catch with the contract, it is Apple’s policy but getting out of the contract isn’t as simple as other phones.

  • iBold

    I definitely would have to disagree with the HW cost side of things. It most definitely focuses around the monthly data plan. Getting someone to drop $99 or even $199 on a phone isn’t too terribly hard when you break down everything it can do. Hell, the Samsung Mythic (the iPhone Light if you will) is $99 after a $50 MiR in my market. The data plan is a big barrier as well as AT&T. I work for AT&T and love my company and service. I know we have issues, but in my area I very rarely have a 3G issue with any of my features and my phone always performs optimally and i’m only a 1.8 3G market.

    As a seller and future consumer of the 4th Gen, I would love to see the original iPhone plan on the 4th Gen. $20 Unl + 200 Msg, $30 Unl + 1500 Msg, and $40 Unl Both. If the iPhone would have launched at the price it is now with these plans it would have been and even bigger success. As a salesman I probably won’t make jack shit off this as far as commissions go .. but i really don’t care about that. I would love to see these plans return for the consumer as well as myself.

  • Cadillac Cowboy

    In no particular order, the lack of a physical keyboard, the poorusage times and the unavailability of “unlimited” data plans (such as those offered for BlackBerry products) are the main sticking points that would make it unlikely I would consider an iPhone, particularly with regards to the physical keyboard.

    After the events of the last few days however, during which Apple has removed over 5,000 “offensive” applications from the App Store (with no refunds or back-up process offered to customers whom already bought these “offensive” applications!), Apple has changed that, GUARANTEEING that I will NEVER buy an iPhone product…

    Yes it’s true,it is unlikely I’ll ever BUY an “iWobble” application, but I’m nearly 30 years old – who are Apple to say that I am not allowed to buy such an application because they feel it’s “offensive”?

    Add to that the fact that their definition of “offensive” applications is ONLY based on WHO is actually offering the content (Playboy, FHM, Sports Illustrated and a small number of other developers STILL have their erotic, “sexy” and/or mature/adult applications available!) and well, you can pretty much GUARANTEE I’ll NEVER buy an iPhone now!

    I’m a BlackBerry user and until a few days ago, I MIGHT have switched to an iPhone product (particularly if they started offering models with 64GB+), but after this? Heck no!

    • Steve

      The lack of physical keyboard is NOT a problem, as this chart clearly shows. If you use an iPhone for a week, you’ll see this to be the case. Previous touchscreen kb’s were plenty bad, but not this one.

      The applications removed from the app store are NOT deleted from customer’s iPhones. You don’t know what you’re talking about here, but please, do continue to rant about it.

      You sound like you’ve never interacted with a store before. Walmart doesn’t sell CDs with profanity in their lyrics. Do you avoid Walmart because “who the hell are they” to tell you what CDs you should buy? Or are you another internet hypocrite getting all worked up about things that don’t even matter, considering ALL THIS STUFF is available on the web through mobile safari anyway?

  • Eric

    If you can’t afford the $100 or $200 (or $300) for a smartphone, you probably don’t deserve one. Cellphones are obscenely cheap with the carrier subsidies as it stands now. It is not unreasonable for a smart phone to debut at $200-300 and I would certainly pay that for it. If you can’t afford a smartphone at that price, how do you expect to pay the monthly data charges?

  • pierre

    I have a G1 and an iphone. I use the G1 for voice and data and the iphone strictly for data. In the 9 months I have had the iphone I have racked up maybe 10 minutes of calls. I have to pay $40/mo for a voice plan I don’t even use. Add to that the $30/mo for data plus the text msg charges and taxes, fees and what not and my bill is close to $100/mo. I’d pay $40-50/mo for a straight data plan and no included minutes for voice calls. If ATT were to offer a data only plan for the iphone, i’d be all over it.

  • nooka

    “The iPhone’s current lack of background applications is one of its most glaring weaknesses ”

    Anyway here’s so far the complete official details for the iPhone 4G.

    As they say, “expect the unexpected”.

    • http://www.kleppinger.com Joel

      Your link is bogus. The “official details” are as follows:
      “I spoke to a source at Apple this morning, before the invite hit my inbox, who said the [January 27 iPad announcement] event would likely focus on three projects: The tablet device, iPhone 4, and a new round of iLife 2010 software. While we won’t see new iPhone hardware just yet, we will see the next-generation software.”

      That source was wrong. The event didn’t touch on the iPhone 4, so we have no clue what Apple is cooking up. I would be amazed if it doesn’t have multitasking, but Apple has amazed me to this point already so I wouldn’t put it past them.

  • @rellyonsmash

    people are still crying about physical keyboards in 2010? wow….just slit your wrist already and call it a day

  • Summerkand

    would love to see the original iPhone plan on the 4th Gen. $20 Unl + 200 Msg, $30 Unl + 1500 Msg, and $40 Unl Both.
    …WWW

  • ManChild

    Did anyone notice that the chart is from 2008? Surveys conducted this year point to very different adoption concerns.

    • Paula

      Why not use any of the free text-messaging apps. Unlimited text-messages for free. (And far more features than AT&T texting plans.)

      Not sure why anyone pays for texting.

  • Donald Hawkins

    As I read all this,
    I have to laugh at the people botching about data problems, voice issues, and other various iPhone complications. I mean who hasn’t had a rough day with their phone multiple carriers of all sizes and so forth. I mean I have yet to hear of a perfect carrier for any cell phone. As for my experience with the iPhone I have some bad days but for the most part everytime I want to make a call, send a txt, or browse the app store I do so just fine. I find most people tend to bitch about the iPhone cause when your at the top there’s envy and that’s just a simple fact. Not to mention I like that there’s some barriers to entry in life that often limits the douche bags that will pack the same device as you. I do think there should be some more customization for the device, but am I gonna cry about not really cause I have a life to worry about and that just ain’t at the top of it. I think the things apple should worry about adding to the device are better battery life, maybe oled screen, and flash for the camera. Anything else they would simply be a bonus in my mind. Now to the other carriers in the USA I wouldn’t bother and I have reasoning for that 1 as a company that makes a phone that is gsm standard why develop a new one that supports CDMA when the best carrier for that service bashes my main partner that has made me money, 2 if it ain’t really broken why spend money to try and fix it, and 3 it would be more profitable for apple to spend the money their making and implement their own wireless service and eliminate AT&T out of the equations.

  • tim

    I dont see why Apple just doesnt put a radio that can use CDMA and GSM like RIM just came out with. Then carrier compeition with the iPhone will bring down prices

    And as far as a fromt facing camera … not going to happen on a 3G AT&T iphone if they can barely handle the traffic mobile internet already

  • Patty

    85% of the people thought the iPhone hardware was too expensive to own?

    I paid *TRIPLE* the price for a Palm PDA without any phone, GPS, camera at all.

    My iPhone only cost $99.

  • Jane

    Why does the chart go from a *NEGATIVE* 10%… up to 110%????

  • Chris

    Cost isn’t even a minor barrier for i-phone adoption. They just picked the wrong horse. ATT hassles just aren’t worth having an awsome device like this. Get it on Sprint/Verizon and see what happens!

  • ~phel

    Once again I would like to point out that’s not my post. Thanks BG, this is getting fun (sarcasm)

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