AT&T rivals seen driving down cost of iPhone service
Tough macroeconomic conditions are causing wireless carriers like Sprint and T-Mobile to become more aggressive with pricing of their monthly service plans, a move which could ultimately help drive down the cost of owning an iPhone.
In a report published Monday, Kaufman Bros analyst Shaw Wu compared the trend to that of DSL and broadband pricing, which has fallen considerably over the past several years.
"It used to cost $50 per month for access and now there are many plans for $15-$20 per month as well as faster tiered pricing," he said. "Customer adoption of broadband accelerated as pricing dropped."
While top tier providers AT&T and Verizon have yet to follow their smaller rivals with similar reductions, Wu thinks it may be only a matter of time before they do, or at least consider implementing several more tiers of internet data pricing.
"Sprint's Boost Mobile unit now offers a $50 plan that includes unlimited talk, messaging, web, and walkie-talkie while T-Mobile is test marketing a $50 unlimited voice plan and $25 more for unlimited data/Internet," he wrote. "This compares to $130 for both AT&T and Verizon for unlimited voice and unlimited data/Internet."
The analyst cites high service plan pricing -- as opposed to hardware pricing -- as the cause for slowing iPhone sales and reduced smartphone adoption in general. And while he acknowledges that Sprint and T-Mobile aren't catering to the majority of smartphone customers, he believes their "lower prices will likely help them participate more in this secular trend and cause AT&T and Verizon to also lower prices in response."
Going forward, Wu said any reduction in service plan pricing at AT&T and Verizon would be seen as a positive that should help smartphone adoption remain healthy despite the troublesome economy.
For the current quarter ending March, Wu is 'erring on the conservative side' and modeling Apple to sell approximately 3 million iPhones. However, his supply chain checks suggest the Cupertino-based company could actually sell anywhere from 3.25 to 3.5 million of the handsets.
In recent weeks, several Wall Street analysts have combined to suggest that some of the biggest news surrounding the next generation of the iPhone will be pricing. Wu cited his own sources as saying that Apple and AT&T are discussing the possibility of offering customers more data plan options, while Bernstein's Toni Sacconaghi came away from a chat with Apple interim chief Tim Cook believing the company is looking into "different pricing/price points" for the next-gen handset itself.
On Friday, RBC charted over a half-dozen emerging iPhone competitors as yet another reason why Apple and its wireless partners may inevitably elect to trim the cost of owning the touch-screen handset.
In a report published Monday, Kaufman Bros analyst Shaw Wu compared the trend to that of DSL and broadband pricing, which has fallen considerably over the past several years.
"It used to cost $50 per month for access and now there are many plans for $15-$20 per month as well as faster tiered pricing," he said. "Customer adoption of broadband accelerated as pricing dropped."
While top tier providers AT&T and Verizon have yet to follow their smaller rivals with similar reductions, Wu thinks it may be only a matter of time before they do, or at least consider implementing several more tiers of internet data pricing.
"Sprint's Boost Mobile unit now offers a $50 plan that includes unlimited talk, messaging, web, and walkie-talkie while T-Mobile is test marketing a $50 unlimited voice plan and $25 more for unlimited data/Internet," he wrote. "This compares to $130 for both AT&T and Verizon for unlimited voice and unlimited data/Internet."
The analyst cites high service plan pricing -- as opposed to hardware pricing -- as the cause for slowing iPhone sales and reduced smartphone adoption in general. And while he acknowledges that Sprint and T-Mobile aren't catering to the majority of smartphone customers, he believes their "lower prices will likely help them participate more in this secular trend and cause AT&T and Verizon to also lower prices in response."
Going forward, Wu said any reduction in service plan pricing at AT&T and Verizon would be seen as a positive that should help smartphone adoption remain healthy despite the troublesome economy.
For the current quarter ending March, Wu is 'erring on the conservative side' and modeling Apple to sell approximately 3 million iPhones. However, his supply chain checks suggest the Cupertino-based company could actually sell anywhere from 3.25 to 3.5 million of the handsets.
In recent weeks, several Wall Street analysts have combined to suggest that some of the biggest news surrounding the next generation of the iPhone will be pricing. Wu cited his own sources as saying that Apple and AT&T are discussing the possibility of offering customers more data plan options, while Bernstein's Toni Sacconaghi came away from a chat with Apple interim chief Tim Cook believing the company is looking into "different pricing/price points" for the next-gen handset itself.
On Friday, RBC charted over a half-dozen emerging iPhone competitors as yet another reason why Apple and its wireless partners may inevitably elect to trim the cost of owning the touch-screen handset.
Comments
LOL, I need to hurry up and put mine on ebay.
The iPhone price will stay the same its the monthly service plan charges that 'should' drop.
God, $200 is NOTHING when you figure that the service will cost NO LESS than $1,680 over 2 years, and that is before cell plan taxes.
I just don't see a price cut to $100 for the phone making that much of a difference.
BUT-a voice and data plan that included some sort of texting (400?) for $50 per month per line WOULD BE THE "KILLER APP" for adoption.
From what I can see the American pricing is a rip off, especially as Americans seem to have to use their minutes when people call them as well as when dialing out (I could be wrong here)
Roll on competition worldwide, bring those prices down!
I have to say that I find O2's pricing in the UK really reasonable, I am on the £35 a month contract (around $50) which gives me the unlimitted internet and a fair amount of calls/texts.
From what I can see the American pricing is a rip off, especially as Americans seem to have to use their minutes when people call them as well as when dialing out (I could be wrong here)
Roll on competition worldwide, bring those prices down!
You are not wrong-we pay for incoming and outgoing calls.
...Americans seem to have to use their minutes when people call them as well as when dialing out...
That is correct. Pretty stupid, huh?
I'd love to see the service costs go down a little, but I'll believe it when I see it. "Should" means nothing when it comes to Apple and lowering prices :-P
Alternatively, they're somewhat stuck. The cost of the equipment is much higher than what they're selling the individual phone for. Could they basically re-release the current phone (which now costs less than it did a year ago) at a lower cost (both individually and for the service)? Sure. But people expect a newer, better phone. Newer, better equipment costs more money. So unless you want Apple to lose money on each phone sold, I'm afraid there's not much that can be done.
From what I can see the American pricing is a rip off, especially as Americans seem to have to use their minutes when people call them as well as when dialing out (I could be wrong here)
You're not wrong, but the difference is that USA cell phones have local numbers, so people calling your cell phone from a regular phone don't pay an arm and a leg for it, unlike in the UK where cell phones have special high rate numbers. In essence the cost of calling a cell phone is put on the cell phone owner rather than the person initiating the call.
We also tend to get more included minutes in our plans than people in the UK, from what I've seen, although I may be wrong on this.
Every time I see one I'd love to, but it's just not happening. I'll keep trucking along with my old Treo 700p.
You're not wrong, but the difference is that USA cell phones have local numbers, so people calling your cell phone from a regular phone don't pay an arm and a leg for it, unlike in the UK where cell phones have special high rate numbers. In essence the cost of calling a cell phone is put on the cell phone owner rather than the person initiating the call.
We also tend to get more included minutes in our plans than people in the UK, from what I've seen, although I may be wrong on this.
Well for $50 I get unlimitted internet, 600 minutes to landline or cell and 500 text messages, don't know how that compares with you guys but I bet it's better.
For AT&T to drop the plan of the iPhone I think that other touchscreen smartphones have to start showing up on other carriers as major threat and have these lowered plans attached to them. While there are some potential contenders in the works none of them have yet to be released in the US as of yet. Once they are released they will have to gain some momentum and affect the sales of the iPhone--which may be hard considering a new model should be released come June/July--before AT&T would even consider dropping the data plan on the iPhone.
Like I said before, service pricing is the only reason I don't have an iPhone.
Me too!
I can afford the phone, it's the following $4000+ between my wife and I that is a bitch.
-Clive
Well for $50 I get unlimitted internet, 600 minutes to landline or cell and 500 text messages, don't know how that compares with you guys but I bet it's better.
It sure is better. For $80 on AT&T I get data, 400 mins (incoming and outgoing, so you can basically halve that compared to the UK) and 200 texts. Total rip-off.
And since I don't have a land line, I don't 'benefit' from cheaper local calls to mobiles.
It sure is better. For $80 on AT&T I get data, 400 mins (incoming and outgoing, so you can basically halve that compared to the UK) and 200 texts. Total rip-off.
And since I don't have a land line, I don't 'benefit' from cheaper local calls to mobiles.
There is also nights and weekends and rollover minutes.
That is correct. Pretty stupid, huh?
I wouldn't say it's stupid. The cell companies servers and towers are still being utilized when your receive a call. Perhaps archaic and certainly unusual for the EU, but it's just the way business and competition evolved in the States. Like roll over minutes, data plans, free long distance, etc., perhaps one day one company will try to compete by allowing unlimited incoming calls and others will feel need a follow suit to compete.
I wouldn't say it's stupid. The cell companies servers and towers are still being utilized when your receive a call. Perhaps archaic and certainly unusual for the EU, but it's just the way business and competition evolved in the States. Like roll over minutes, data plans, free long distance, etc., perhaps one day one company will try to compete by allowing unlimited incoming calls and others will feel need a follow suit to compete.
Yes, but they are already receiving payment for the call from the one who places it, do your landlines work the same way, do you have to pay to receive a call from someone else?
You are right, it's certainly an idea that would never work here, no consumer would accept it.
There is also nights and weekends and rollover minutes.
I hardly use it for nights or weekends. And I'm not often left with roll-over minutes.
While top tier providers AT&T and Verizon have yet to follow their smaller rivals with similar reductions, Wu thinks it may be only a matter of time before they do, or at least consider implementing several more tiers of internet data pricing.
Unfortunately, customers are fleeing those companies for ATT and Verizon, so I'd say the market has spoken - as a whole the market prefers the great coverage and devices that the bigs have to the low prices and whatever trade offs come with Spring and others.