Apple Could Drop iPhone to $99, Destroy Competition

Oh those crazy analysts. Always making predictions and playing fast and loose with our emotions. Consider, for instance, the latest tidbit from Needham Research’s Charlie Wolf. According to Wolf, it is well within Apple’s power to offer the 8GB iPhone at the very attractive price point of $99, after contract subsidy.

This would see iPhone pricing on par with Blackberry’s Pearl and Curve, favorite handsets of first-time smartphone owners. Were Apple to offer its own “gateway drug,” so to speak, they could expect to see their sales double or even triple, according to Wolf. Considering the numbers they put up in their most recently disclosed financial reports, this would obviously amount to a substantial market share grab.

The numbers, says Wolf, would enable Apple to still make a 42.3% profit on each handset hold at the $99 price point, owing to the heavy subsidy provided by AT&T in the U.S. and the manufacturing cost of each device as of this past summer. Not to mention the fact that Apple has some breathing room in terms of their cash on hand, as disclosed at the conference call last Tuesday.

$99 dollars enters into impulse buy territory for many consumers, and would also help prepare the company to weather economic woes. Combined with an aggressive promotional campaign, the sub-$100 price point could give traditional handsets like the RAZR a run for their money, as long as consumers are aware of the significant feature upgrade they’re getting for the extra cash. Getting people to turn away from free devices and towards the iPhone would also likely require more decreases in data subscription rates. Or they could market the phone without the data option, and wait for consumers to decide on their own to upgrade their subscription once they realize how much functionality they stand to gain.

If you haven’t already, would you take the plunge for $99?