How Will $99 iPhone Impact Phone, Music Businesses?

Our US correspondent muses on a world with cheap iPhones

The Apple iPhone has been a game changer since day one. So it's to be expected that the phone would transform the competitive landscape if it were to hit US$99. And I'm not just talking about the handset landscape.

Consumers would clearly win out in a $99 iPhone scenario. Even if the phone had reduced functionality (really, when did you last use all of the features in your phone?), it would ultimately get the powerful general capabilities and broad features of the iPhone out to mainstream audiences. So long as you get the basics -- the full, app-enabled iPhone operating system, the multitouch screen, the music player -- many users may not miss the GPS, or a better camera. For that matter, many would probably be willing to sacrifice 3G connectivity.

Presumably, enthusiasts will benefit from a $99 iPhone, too. Why? Because Apple will be forced to give the second-generation iPhone 3G a beefier set of new features, to make it appealing vis-à-vis the low-end offering. Let's face it: Beyond iPhone 3G's faster 3G radio, GPS, and a few cosmetic and light design changes, it wasn't a dramatic change from its predecessor.

So, who gets squeezed in a $99 iPhone 3G world? Well, Apple, for one: the company's iPhone profit margins will likely take a hit -- a hit that may, or may not, be made up for in sheer volume. More critically, at 99 bucks, suddenly iPhone is an attractive alternative to a dedicated MP3 player. Of course, there's the pesky issue of the service contract, but if priced right, service providers should find interested consumers interested in a middle ground between the class act of iPhone 3G and the lower cost model.

Why? Because most people use a cell phone, no matter what. When the cost delta narrows between a low-end iPhone and competing cell phones, more people are bound to consider it as a viable alternative. That means that music-centric cell phones will also get the squeeze: Phones like the Sony Ericsson W380i and other music phones will have to struggle to find an audience. They'll be going up against the Apple iPod juggernaut.

I wouldn't want to be one of those phone companies when Apple drops the price on the iPhone.

Join the PC World newsletter!

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Melissa Perenson

PC World (US online)

Most Popular Reviews

Follow Us

Best Deals on GoodGearGuide

Shopping.com

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest Jobs

Shopping.com

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?