Analyst: $99 iPhone Feasible, Would Spell World Domination
Analyst Charlie Wolf with Needham Research released a research note earlier today that Apple may be wise to slash the price of the iPhone down to $99. He suggested that the company has room to do so financially, and the new, drastically more affordable device would allow them to take control of the smartphone market.
He estimates the average unsubsidized price of the iPhone during the summer to have been $666, giving Apple a 50% gross margin on the device when balanced with the sale price and a hefty $450 subsidy from AT&T. He believes that that, combined with their dramatic growth in non-GAAP revenue (wiki) Apple would do good to decrease that margin to make the iPhone more affordable.
At this stage, he claims that a $100 price cut in the device would be a devastating blow to competitors, a prospect that seems all the more likely (if not somewhat unnecessary) since it’s already outselling all other smartphones in the US.