Unless you’ve spent the past week living in a cave you’ve no doubt heard about the 3G iPhone announcement from Apple’s Worldwide Developer Conference (WWDC) last week. I’m not going to get into all of the new features introduced to the next version of the iPhone because they’re insignificant compared to the new iPhone pricing structure.
Apple’s Time-Tested Market Skimming Strategy
Market skimming is a pretty basic pricing strategy:
Apple has done this for all of their products historically; most notably was the original $599 iPhone. Remember all of the whining that occurred when Steve Jobs lowered the price to $299?
Job’s mistake with the original price drop was doing it too soon -
after all, his customers were willing to pay $599 just to be one of the
cool kids with a shiny new iPhone a few months prior to the price drop.
However, the announcement of the new 3G iPhone brings with it an entirely different strategy than the original iPhone announcement.
Apple’s New Groove: Market Penetration
Market penetration is yet another basic pricing strategy:
Currently Apple does not have much in the way of Smart Phone market share compared to product lines offered by RIM (BlackBerry) and Palm (Treo.) The results of recent ChangeWave surveys indicate this:
The new 3G iPhone, which includes important business features such as access to Microsoft Exchange, is going to roll out on July 11, 2008 with a price tag of $199. This means that the iPhone’s price will be roughly equal to that of any new Treo or BlackBerry unit; in some instances the iPhone is actually cheaper than the alternatives.
The new, low price and the addition of key enterprise features means two major things for Apple:
This time Apple is setting its price low and its volume high, gunning for the common man instead of the zombie fan.