Commentary

Smartphones: How Low Can They Go?

price cutIs $99 the new $200 when it comes to hot smartphones? With Verizon Wireless slashing the price on the BlackBerry Storm from $200 to $99 to better compete with the iPhone 3G, it begs the question. Apple surprised many in June when it cut the price of its existing iPhone in half to just under $100 when it launched the new iPhone 3G S. Analysts predicted the aggressive pricing move by Apple and AT&T would have a ripple effect on the market and the Storm's dramatic price drop appears to bear that out.

Launched last November as an alternative to the iPhone, the touchscreen Storm has proven popular in its own right, selling more than 1 million units and opening the door to follow-on versions. Information Week reports that a "Storm 2" is in the works that will offer beefed up hardware, a better touchscreen interface and WiFi. No word on pricing.

Will the Palm Pre from Sprint be the next to chop its $200 price in half? Before the Pre even launched, TechCrunch reported Palm was already working on a "Pre-like" device that would use the same WebOS operating system software but come in a smaller, candy bar size and at a price of $99. It would be the Pre's Mini-Me. Instead of cutting the price on an earlier model, Palm would simply launch a cheaper one.

So are smartphone prices headed to zero? Does the iPhone want to be free? It's hard to envision popular smartphones being completely subsidized since that would be an expensive proposition for the wireless operators providing service. And pricing on data plans has also been falling. But the cycle of new models launching with concurrent price drops on existing models may accelerate so new phones become more affordable within a matter of months rather than a year or more. Will $50 be the new $99?

1 comment about "Smartphones: How Low Can They Go?".
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  1. Jim Dugan from PipPops LLC, July 21, 2009 at 4:24 p.m.

    If you own the mobile device and you supply the broadband service, you are stupid if you don't get that mobile device into everybody's hands, probably for free or close to it, and make your money on the back-end - from the "monthly monitoring contracts" (think security sytems or the Dish - they used to give you the hardware) to anything that can be marketed from your platform.

    Think about it. If I put an iPhone into your hands for free, you're probably going to use it. Call that the first step.

    Now, in effect, you're using my phone and my service (I'm not giving you the phone if you ain't gonna use my service) and from now on, I control what you see on that little screen.

    Not that you can't go where you want, but I'm (the company) in control of the portal and, should, in effect, be in charge of my own platform and if I make it attractive and easy - search, too!

    Now, it's time to make money with advertisers using a system such as www.GripOffs.mobi, whereby, advertisers pay to create their own full-color mobile e-coupon with a barcode that the phone users redeem with the phone at the point of purchase.

    We put this right on the first page when you go online.

    70% of search is for retail.

    There's over 250 categories.

    We want lots of advertisers and lots of users.

    There's plenty of money to be made and everybody lives happily everafter.

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Mark Walsh can be reached at walsh@mediapost.com