Sunday, May 2, 2010

4th Gen iPhone 4A to borrow iPad pricing model

If you read any news from the technology world you know there is a war going on. On one side is Apple and on the other is virtually everyone else with the exception of Microsoft who do not have any pieces on the board yet. I also have to mention RIM, who barely support the web browsing at all (4% of the trafic in US), let alone Flash, but RIM sells 1/4 of the smarthphones on the planet. OK, so not everyone.

I am talking about whether Flash will sidelined into a niche web technology or whether it will continue to widely used on websited and one day adopted by the iPhone OS produces from Apple. Ops, Steve spoiled the answer to the second part already. Besides who on the iPhone cares about Flash? We all use the Web trough iPhone Apps and to a lesser extend webapps.

This summer when Adobe allegedly finally releases Flash 10.1, everyone with Smartphone OS will be tooting Flash support in order to stand against the market dominance of Apple.

What can Apple do to counter this pro Flash marketing push comming this summer. If the Droid Ads from last Fall are any indication, Apple better be prepared. I think they are doing all the right things:
  • releasing a magical device at a breakthrough price, aka the iPad
  • working on the 4th biggest and best update to its iPhone OS
  • working on a awesome new iPhone hardware as spoiled by Gizmodo
There is one last thing Apple need to do when it introduce the new iPhone with the new iOS 4:

Borrow the iPad 3G pricing and carrier service subscription model.

OK, here are the factors that will influence next iPhone pricing favorably:
  • Apple uses superior manufacturing process, let expensive raw materials and more components produced by the company to keep the hardware price the same while dramatically increasing capability.
  • By adopting the iPad 3G on device contract management, Apple can reduce the price of servicing the device.
  • First software update is free while consequent ones are paid by the customer. Previously Apple needed to factor in the price of 2 year free updates in to the price of the phone.
  • The iPhone brand is well established and Apple has working relationships with many carriers in the word. Introducing a new device will not be as costly.
  • The iPhone is starting to have some serious competition and Apple needs to lower its profits to the level of the other products that it offers. Just like it did with the iPad.
Overall, while the Nokia surprised many by releasing the price if its new flagship N8 as $430, Apple may just as well offer a much superior device at the same price point with no contract. If carriers were to subsidize that using todays formulas, we could see the new iPhone 4A being offered this summer for $29 with affordable two year contracts.

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