Analyst: Increasing Competition Could Bring Lower iPhone Prices

Lonnie Lazar ()

rbc090220.gif

As the touchscreen smartphone market enters a more competitive landscape, Apple is likely to be forced to either lower its price on the iPhone or revise growth and margin expectations for the device, according to a comprehensive analysis of the growing sector released Friday by Royal Bank of Canada.

RBC analyst Mike Abramsky elaborated on research published earlier this month indicating Apple’s next version of the iPhone, expected by many to come to market later this year, will see much more robust competition from the likes of Google, Palm, Microsoft and HTC, none of whom had anything comparable to the iPhone until quite recently.

Among the options available to Apple aside from outright price cuts – which acting CEO Tim Cook has indicated the company is “looking into” – working with carriers such as AT&T on adjustments to the phone’s data plan offerings seems to be a likely strategy for increasing the value of iPhone as a choice.

Click on RBC’s handy chart above for a larger image and a comprehensive view of the current landscape.

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Via AppleInsider

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About the author

Lonnie Lazar

Lonnie Lazar is a writer-musician-web designer-attorney. He writes about Apple for Cult of Mac and Mac|Life, and about VoIP and telecommunications for Voxilla. Follow Lonnie on Twitter @LonnieLazar, join the Cult of Mac on Facebook, and find Lonnie's photos on Flickr.

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  • http://inletmedia.com Chris Peterson

    Its incredibly unlikely that they will drop the price on the Iphone. The same reasons were laid out by other analysts about the last round of macbook updates and there was no price cut there.

  • Zac B.

    Sense when does Microsoft make a handset? I guess technically your statement’s correct as they don’t have anything comparable to the iPhone but that’s because they don’t make anything like it. Now if you’ve included them due to their Mobile (crap) software OS, you should also include software vendors who have made fast, stable, animated and pretty replacements for that (crap) OS for 10 years now -> Spb Software.

    I only mentioned something because Spb deserves some credit. For almost 4 years I was forced to use WM 2002 and WM 2003 phones for work starting back in 2002. It was required to fill out some stupid forms. Spb saved my life with their flick contact manager (which honestly resembles the iPhone’s Contacts today) which was free and a great shell replacement. Admittedly, I check their site every so often to see what they’ve got going on. As usual, they are light years ahead of any other WM software vendor, however the look hasn’t changed much sense I was using it. I guess they were ahead of even their own time.

    Zac

  • Al

    The price of the IPhone is not the problem. The problem is the cost of the data plan. I want an Ipod Touch and I need a cell phone. Having them in the same case would be great. I would even switch to AT&T to do this. I simply will not commit myself to an extra $30 per month for the rest of my life. I would even pay an additional $100 to do this. Given the great success of the Touch I believe AT&T is forgoing many new customers with their current plan. Price the Iphone at $50 and I still would not sign on for the data plan.

  • Sean Peters

    As the touchscreen smartphone market enters a more competitive landscape, Apple is likely to be forced to either lower its price on the iPhone or revise growth and margin expectations for the device,

    Or maybe they could, you know, PROVIDE THE BASIC FUNCTIONALITY OTHER PHONES HAVE HAD FOR YEARS. Like video recording, bluetooth file transfer, cut & paste (seriously, WTF?), notes syncing with the desktop… I could go on, but you get the point. I think Apple has sold about as many phones as they’re going to be able to sell on the basis of coolness. To keep going, they’re going to need to pony up these basic features.

  • http://thewillseys.us/scott/blog scott

    I agree with All 100%. I don’t have an iphone not because of the cost – I have a 16 gig ipod touch. I don’t have an iphone because of the combined cost of the data and voice plans.

  • http://www.gearsandwidgets.com/ phoenix

    I disagree Sean: a number of other smartphones still don’t provide the basic level of usability and ease-of-use that the iPhone does, especially when it comes to integrating multimedia like music, video, and Web browsing. The internet on a Blackberry still looks like crap, and on Windows Mobile you’re still stuck with Mobile IE unless you’re lucky enough to have a version of other that supports Opera Mini, and even then it still looks like crap. Safari on the iPhone (or in my case, the iPod Touch) is the best mobile Web experience I’ve ever had, and I haven’t seen a smartphone that even comes close to it.

    Add to that the simple-but-functional Mail, the wealth of the App Store…I don’t think Apple’s at the point where they have to pony up more features or die – there’s a huge community out there making the iPhone more and more valuable every day by adding apps that do different things.

    That being said, I really do wish Apple would address those basic features, but I think the harping on them is more indicative of the Internet echo chamber at work than any real dissatisfaction by actual iPhone/iPod Touch owners and users.

    In any event, I think that if this new competition does anything, it would force Apple to broaden their base and offer the iPhone on more than one carrier – I still think that’s probably the most significant barrier to entry for a number of potential iPhone customers (like myself, so I may be speaking anecdotally) – the more smartphones out there that approach or surpass the iPhone in style and functionality on multiple carriers, the more Apple actually will have to pony up or die.

  • Jimmy

    I can afford the iphone even at $600. What I can’t afford is the data plan, which in my opinion is too out of this world. It’s highway robbery. If ATT wants to charge that, I am OK with it. I just won’t do business with them.

    Maybe ATT will get smart and lower their prices. Personally, I think people who want the iphone have the iphone. The non cool people like me would like one, but the ATT cost is the deal breaker. I can wait another year or two. It’s not like one MUST have a cell phone.

  • http://www.asasku.blogspot.com m

    I’m not interested in any of it.. I love the iPhone.
    But i can’t owned iPhone because applestore in my country are not selling it (unless i got it from the black market).

    Whats the hold up, Apple?..