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.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Melissa Perenson

PC World (US online)
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

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.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?