Leap Wireless and Virgin Mobile are betting that users will pay $500 to $600 for an Apple iPhone, at full retail prices. AT&T thinks they will not do so. It is possible, perhaps likely, that the actual answer will be that some users will do so, but that most will not want to do so.
The answer obviously matters greatly for Leap (Cricket) and Virgin Mobile, as well as for all other mobile service providers that clearly would prefer to reduce the amount of money they tie up in device subsidies.
Leap Wireless has committed to buy nearly $1 billion of iPhones over the next three years that it hopes to sell at a partially subsidized price of at least $400 for the iPhone 4 and $500 for the iPhone 4S.
BTIG Research believes that $200 will continue to be reasonable price point for high-end phones, though. If that proves to be true, Cricket and Virgin Mobile might take a hit to earnings, and mobile service providers will have to figure out some other way to attack the subsidy problem.
Tuesday, July 3, 2012
Would You Pay $600 for an Apple iPhone?
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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