New 3G

I’m sure you’ve already seen it everywhere but I’ll talk about it anyway, Apple announced today the new iPhone 3G, it’s even displayed on the canadian site! No price yet but according to Stevo they are enforcing a $199US price around the globe so we shouldn’t get screwed tooo much. They also list Fido as a sales point which hopefully means they’ll have a data plan to match, not just with Rogers. Of course, it remains to be seen if either one is available without the phone but let’s hope.

New features include 3G, GPS, a new form factor (they say smaller but it actually looks more profiled and thicker in parts) and a black backplate. It will also be syncing “over the air” using MobileMe which should be extremely useful.

Going back to pricing, the Nokia N95 is probably the closest thing to the iPhone feature wise and it’s selling for around $660US, making the new iPhone less than a third the price with, lets face it, a way, way, way better OS. The Nokia, and all other phones really, are something completely different from computers, they are now getting close to one by constantly evolving from the crap that all phones were not that long ago. The iPhone on the other is a very very small Mac with an (almost) complete personal computer OS, real browser, etc.

The most advanced phone is three times the price of the smallest computer that also features a phone. That’s nuts. I’d really love to know how the whole production chain works and which prices are involved. I’d also like to know how R&D figures into it. Overall I just can’t figure out how they can possibly sell all of that at that price when phones are at those other prices. Apple leverages the whole computer development? Phone makers are making loads of money? Apple selling at no profit? Mix of all that and more?

[Update] Seems the commenters were right and the iPhone is subsidized. AT&T won’t be making paiements related to monthly fees anymore, they’ll just pay lump sums on every sale. There will also be a penalty for phones not activated within 30 days and they are hiking up the data plan prices.

11 Comments

  1. The difference in price can be somewhat explained by the (new) iphone being subsidized. For example, Rogers/Fido/AT&T pay $399 to Apple and recoup the $200 difference through two or three year contracts. 40% of AT&T iphone users switched from another network, and although that probably won’t scale as well in Canada, the reduced price should bring the numbers close.

    That still leaves a $250 difference in price though, I suppose very thinner margins to be competitive in a new market for Apple helps, as does their cheap flash prices having secured them long ago thanks to the iPod.

  2. Where did you see that subsidee info? Haven’t heard anything about that anywhere.

  3. Macworld asked the same question, and gives a partial answer.

    For me, the most important part of the new phone is not the phone at all, but MobileMe. Part of the reason the mobile carriers have been dragging their feet with pricing etc. in Canada is that they really believe THEY should be the only ones who offer such services, and that they should meter the usage with per-message and other such pricing instead of open data plans.

    So Apple gives the carriers a big carrot (more traditional subsidy-based pricing structure) – while likely ensuring they still get a big piece of the overall spend in the form of MobileMe accounts. Rogers has been trying to offer similar services for years but they’ve always sucked. Now Apple is going to basically play chicken with the carriers – “here, make a ton of money, but forget all that nickel and dime service offerings you try and give customers true end-to-end data.”

    That, I like. It creates an environment that supports less interference by carriers.

  4. i’ve read that at least in the US, there are no subsidies anymore.

    what most people overlooked is the new Application distribution system. Apple is giving away the hardware in hopes of getting a cut for every downloaded app.

    basically it’s the video games business model. sell consoles at a bargain price, make money on software on the long-run

  5. There were never any subsidies anywhere for the iPhone. Subsidies are when the carrier sells the phone for cheaper (out of their own pocket) conditional to a contract. AT&T was not doing that, they were paying Apple for every new client and every subscription month.

  6. Patrick: From everything I have read, Apple will not be getting and revenu shares form AT&T from the usage of it. In order for them to actually make so money, the carrier will have to pay the price difference. That’s why you won’t be able to buy the 3G iPhone online anymore.

    If you look at Apple Store (US or Canada), you can only buy them at a physical store and they need to be activated on the spot.

    This is to ensure the carrier is getting the data revenu share they want and not subsidizing a phone that will potentially NOT be used on their network.

    L8r – Martin

  7. “Apple will not be getting and revenu shares form AT&T from the usage of it.” Agreed.

    I’m really not sure this is what’s called a subsidee. It would be if, for example, AT&T was still paying $400 and selling it for $200 but that’s not the case.

    Or do you believe they are paying Apple $200 when Apple sells an iPhone in their own store?

  8. Patrick: Yes under the cover I think that is what they do. ATT or Rogers or anyone else is paying for the price diff since Apple is now not getting any revenu share from the mobile usage.

    That is exactly why they can sell this phone at $199 and disturb the mobile market a lot.

  9. And also why you won’t be able to buy a 3G iPhone online. When you walk in the store, you will only be able to walk out with a 3G iphone if it is activated and connected on a data plan from the carrier of choice.

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