In case you haven’t noticed, the smartphone has begun trickling down and replacing, for lack of a better word, dumb phones.
Case in point, the Huawei Ascend, which runs Android 2.1 and can be bought without a contract, i.e. unsubsidized, from Cricket for $150. The service costs $55 a month, including, well everything. Not too shabby, even Apple’s uber fanboi agrees.
Nokia has been pushing their devices into smartness too. Walmart now sells the C3 with prepaid GoPhone service for $80.
Maybe these aren’t the best devices, but for the price (and without the contract), these are some pretty serious options, especially the Ascend because it rocks Android.
The big question is will Apple counter or even care about losing the low end of the market.
History says no. Macs are content to exist on the high end of the PC market, creating an excellent, high margin business for Apple. Apple prides itself on building great products, which we’re led to believe costs more money, an arguable point, but sure.
For reference, the iPhone 4 is estimated to cost about $188, up a bit from $179 for the 3G S. Above and beyond the cost of the phone, Apple receives subsidies from AT&T for each unit, rumored to be at least equal to the phone’s cost.
So, it’s conceivable that Apple could go lower to compete, depending on the carrier subsidies. I suspect they could compete with the Ascend’s pricepoint, assuming a carrier would be interested.
But again, would they?
The iPhone undoubtably benefits from the perception that it is a high end, expensive device, but that perception has declined as iPhones have become more popular and less expensive. For instance, I paid $499 for the original iPhone, and today, a new iPhone 4 will set you back only $199, a new 3G S only $99.
So, yeah, Apple could do it and still make a profit.
I’ll bet carriers like T-Mobile would be interested in a low-end, prepaid, pay-as-you-go version.
The next logical question is does Apple need to expand down in the market to stop the market share bleeding, assuming that even matters to them.
I don’t think it does matter to them, frankly, given the hubris they show. From a business perspective, they can probably sail by for a few more years, printing money, possibly living off the bump a Verizon iPhone would generate (this time we mean it). Then what?
Another magical, transformative, elegant device?
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