Why the iPhone price HAD to drop

I’d like to throw a few more thoughts into the iPhone price reduction discussion. Scott Moritz isn’t the only one on the web questioning iPhone sales numbers after today’s price drop.

John Gruber rightfully labels Moritz as “Jackass of the Week,” but I think even Gruber’s strong analysis is overlooking something.

While certain component costs are surely reduced thanks to part sharing with the iPod touch, I doubt this would justify the $200 price plummet.

The iPod touch is the still key, though. an 8GB iPod touch retails for $299. It features every slick element of the iPhone, namely the great music and web browsing interfaces, but simply omits the phone, camera and related software.

(I see an application like Maps as more phone-related than anything else. And don’t forget, thanks to Safari on the iPod touch, other maps can be accessed via WiFi when needed.)

The iPhone has sold well at $599 because to get all those flashy features, it was the only package available.

So now ask yourself, “How much is a cameraphone worth?”

If the answer doesn’t match the $300 difference between an 8GB iPod touch and an 8GB iPhone with previous pricing, then you’ve just figured out why the iPhone price had to drop today.

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Couldn't the answer to your headline be that it was just too damn expensive?

September 6th 2007, 9:09 a.m. by Stu Schaff
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If they were pushing inventory to its limits for much of the two months since launch, then it's hard to say it was "too expensive."

Too expensive for many people? Sure. But for everyone? Clearly not.

September 6th 2007, 9:27 a.m. by Ryan Berg
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My guess. They made back the money from the outrageous R&D costs associated with all the new technology involved.

Now they can sell it with their $50 "step-up" zones without worries about losing money on a risky product.

September 6th 2007, 9:49 a.m. by Kristofer Baxter
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There's also a second product now contributing to that R&D recovery. The iPhone need not carry all the burden.

September 6th 2007, 9:55 a.m. by Ryan Berg

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