by Yukari Iwatani Kane
Apple Inc. halved the price of its
entry-level iPhone to $99 and rolled
out a next-generation model, look-
ing to sustain the momentum for its
popular smart phone amid the reces-
sion and fresh competition.
Apple also announced several new
lower-priced notebook computers
at its annual conference for software
developers, which kicked off Monday.
Chief Executive Steve Jobs, who went
on medical leave in January, didn't
make an appearance.
Toni Sacconaghi, an analyst at
Sanford Bernstein & Co., said Apple's
price cut shows the company is mak-
ing an aggressive move to "enhance
it's first-mover advantage" by getting
as many iPhone users as it can now
despite the cost. He said the $99 price
could increase iPhone demand by as
much as 50%.
Overall, Apple has sold more
than 20 million iPhones in the past
few years. The device, which has
become one of Apple's main growth
engines, has shaken up smart-phone
rivals such as Palm Inc. and Research
In Motion Ltd.
On Saturday, Palm began selling
a new smart phone called the Pre.
While the device sold well over the
weekend, analysts said sales weren't
as strong as for the iPhone when it
A Palm spokeswoman declined
to reveal first-day sales, but said the
company was "very, very happy" with
the Pre launch. "There's room for a
few key competitors, and we're very
happy that consumers see us a major
competitor," she added.
The Pre, which is initially available
only on Sprint Nextel Corp., will be
available to Verizon Wireless custom-
ers in January, said one person famil-
iar with the situation.
RIM, which has also been updating
its BlackBerry line of devices, declined
to comment on Apple's announce-
At Monday's event, Apple said it
was cutting the price of its entry-level
iPhone 3G, which has eight gigabytes
of storage space, to $99, down from
$199, effective immediately.
Apple also unveiled the new iPhone
3G S, which looks similar to existing
models but is faster and can cap-
ture videos. It will go on sale June
19 in eight countries, including the
U.S., France and the U.K. Prices start
at $199 for customers that sign a new
two-year service contract with AT&T
Inc. Prices are $200 higher for AT&T
customers who aren't eligible for an
Apple's iPhone 3G price cut will
make the market more challenging
for rivals, said some analysts. "These
are very aggressive prices," said
Richard Doherty, an analyst with
technology consultancy Envisioneer-
ing Group. He said the $99 model will
appeal to many consumers who don't
need state-of-the-art features.
Analysts said they are also watch-
ing to see if AT&T -- the iPhone's
exclusive wireless carrier in the U.S.
-- will cut its monthly service prices
or provide more flexibility in its plans.
The monthly plan is expensive for
many would-be users. According to
AT&T, iPhone users currently pay
more than $90 a month, on aver-
age, to make calls and access data.
AT&T declined to comment on
whether it plans to change pricing.
At Monday's event, Apple also
addressed the affordability of its
computers, by unveiling new laptops
with lower prices. While Apple cut some
prices by more than 10%, its MacBooks
are still priced at a premium to ma-
chines from rivals Dell Inc. and Hewlett-
Apple unveiled a 13-inch MacBook
Pro for $1,99, which is $100 less than
the current 13-inch MacBook. Apple
also cut by $300 the price of its super
slim, entry-level MacBook Air to $1,499.
In addition, Apple said a new operat-
ing system for its computers, called
Mac OS X Snow Leopard, will cost $29
for users of the previous version.
Apple executives, who haven't given
any updates on Mr. Job's health, didn't
comment on the CEO during the key-
note address Monday, which was led by
Apple's marketing chief, Phil Schiller.
A spokesman said Apple was "looking
forward to Steve's return at the end of
Last week, The Wall Street Journal
reported that Mr. Job's recovery was
Charlie Wolf, an analyst with Need-
ham & Co., said Apple is continuing to
shift more of the spotlight to the rest of
its executive team. "If there was going to
be a public comeback, it would've been
today, but Apple's playing a different
game now," said Mr. Wolf.
- Jun 15 Mon 2009 15:46
by Yukari Iwatani Kane