Here in the United States, buying an iPhone is pretty simple. You have one carrier, AT&T, which sells the phones one way: subsidized, with a 2-year contract.
“In the rest of the world, it’s not that simple. As many as 70% of all mobile accounts worldwide are pre-paid accounts — in which you buy the phone and pay in advance for a fixed number of minutes. In third world countries, the percentage is even higher; in South Africa, for example, 9 out of 10 mobile customers get their phones pre-paid.”
“The problem for Apple is that iPhones sold pre-paid are unsubsidized. In Italy, for example, Vodafone and Telecom Italia Mobile have already let it be known that pre-paid iPhones will cost 499 euros ($778) for the 8GB model and 569 euros ($888) for the 16GB. (link, in Italian) The cost of an iPhone 3G in South Africa is expected to be 7,000 rand ($877), which probably puts it out of the price range of most of the population.”
“In a report to clients on Monday, Piper Jaffray’s Gene Munster and his team address concerns on the Street (stemming from a June 10 report by Bernstein’s Toni Sacconaghi) that Apple might have trouble making inroads in the countries where pre-paid phones predominate — which is most of the nearly four score countries where Apple has iPhone contracts.”
“Munster acknowledges that early spot checks show carriers charging considerably more than $600 for pre-paid iPhones. But, he adds, “Our belief is the price will average out to $600 U.S. once there is global availability, and the phone is available at multiple carriers within a region.”
“The carriers have huge mark-up on the phones, because they don’t want to sell an unlocked phone,” he says. “They want to force people into contracts. If we are wrong, and the carriers sell for the phone for $800 US, this would be a negative for our prepaid units, with a slight offset as some may buy a contract instead of going prepaid.”
“In other words, he believes Apple (AAPL) will collect the iPhone sales revenue one way or another.”
Additional thoughts: Does anybody else find it a bit odd that the iPhone 3G is going to be more expensive in an impoverished country like South Africa, as apposed to a more affluent country like Italy?
While we would definitely expect an unsubsidized version of the iPhone 3G to be more expensive, yet these numbers don’t seem to accurately reflect their “soon-to-be-launched” surroundings.
Full article here.
