Analyst: Apple Should Drop iPhone Data Contract

If Apple dropped the costly iPhone data plan, the move could earn Cupertino $7 billion and create a bridge between the iPod and iPhone market, an analyst suggested Wednesday.

“Apple’s more than 100 million iPod users give the company a huge opportunity to capture significant market share in the mobile device market,” Sanford Berstein’s Toni Sacconaghi told clients.

By dropping the required $70 per month data plan, Apple would break out of the limited smartphone segment and open the doors to an iPod touch userbase worth $7 billion in income and $4 billion in profit each year.

The key is transitioning hundreds of millions of iPod users during a time when the digital music player concept is aging. The analyst proposed two alternatives: an iPhone “Nano” with a focus on music or an “iPhone Touch.” Both would jettison cell phone capabilities, as well as GPS support.

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