Apple Says iPhone Worth Premium Price

Apple’s chief operating officer Timothy Cook compared the iPhone to other cellphones on the market, responding to recent claims that the iPhone is too expensive:

A lot of people pay zero for a cellphone. Guess why. That’s what it’s worth.

This will be a big piece of the Apple story for years to come. If we offer something that has tremendous value, that is sort of this thing people didn’t have in their consciousness – it was not imaginable – then I think there’s a whole bunch of people that will pay $499, $599.

Cook also said Apple believes it will sell at least 10 million iPhones this year.

I agree that the iPhone is very much unlike, say, a Motorola RAZR that you pick up for free with a 2 year contract. $499/$599 is pricey but I think a lot of people will be willing to pay that price – at first – for new, sophisticated technology. What do you think?

Survey Says iPhone too Expensive

In a U.S. study of 379 people, most of whom own iPods and are familiar with the iPhone, respondents said they are not willing to pay $499/$599 for the iPhone, but would go as far as to switch mobile phone providers if the price drops.

Here’s the breakdown of responses:

  • 26 percent of respondents said they’re likely to buy an iPhone at some point
  • 6 percent of this 26 percent said they’d pay over $400 for it
  • Only 1.8 percent of all respondents said they’re willing to pay $400+ for iPhone
  • 38 percent of all respondents said they would be willing to spend over $200
  • 58 percent of non-Cingular customers who were very likely to purchase an iPhone said they would switch from their current mobile provider

Will the iPhone price drop? Apple introduced Apple TV and said it would debut at $399, but it actually hit the market at $299. Some analysts say the iPhone price will drop, but it may happen only after early adopters grab their iPhones at $499/$599.

iPhone Price to Drop

iPhoneAnalysts expect the price of the Apple iPhone to start dropping soon after the device is released in June. iSupply senior analyst Andrew Rassweiler predicted a “$229.85 hardware and manufacturing cost and a $245.83 total expense, yielding a 50.7 percent margin on each unit sold at the $499 retail price.”

Apple will initially sell their iPhone units at $499 and $599 to take advantage of the “must-have” buzz surrounding the release, Rassweiler predicted. Price cuts, he said, are inevitable.

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