Regarding iPhone Pricing

Jesper, in the midst of arguing that Apple would be better off selling unlocked iPhones:

It’s not even economically debatable if Apple could sell the same iPhone for under $500. Of course they could, with margins too.

I think this is debatable. Isn’t it possible that the iPhone is, in fact, a subsidized device? What if it costs close to or more than $399 to produce, and it’s in the monthly revenue sharing from the carriers that Apple makes its profit? For one thing, it would explain why Apple seems so determined to foil unlockers, including their decision to no longer accept cash and limit you to two iPhones per purchase.

Update: A little birdie tells me that prior to the credit-only, two-per-person limit, it was not uncommon for would-be resellers to walk into the Fifth Avenue Apple Store in New York with $50,000 in cash and walk out with 100 iPhones. Apple is turning these people away for a reason.

Update 2: The best evidence to the contrary — that iPhones might be profitable at $399 — is the $299 iPod Touch. I.e., if the iPod Touch is profitable at $299, then $100 extra for phone gadgetry sounds reasonable. I really don’t know what the answer is, I’m just saying it’s not clear either way.

Monday, 5 November 2007