Monday, May 18, 2009, 06:15 am PT (09:15 am ET)
Repeat: AT&T may introduce $20 limited iPhone data planWith next-generation iPhone hardware and software around the corner, a new report is adding to claims that AT&T is mulling changes to its iPhone monthly service and data plans that could reduce the cost of owning an iPhone and help Apple grow its share of the smartphone market.
Citing people with knowledge of the company's thinking, BusinessWeek claims the exclusive U.S. iPhone service provider "is considering cutting the price of its monthly service package or offering a range of lower-priced plans."
Among the new offerings would be a $20 monthly limited access iPhone data plan that could make its debut before month's end. AT&T currently offers a one-size-fits-all $30 unlimited data plan as a mandatory add-on for iPhone subscribers, which helps push monthly services fees for those customers north of $70 with taxes and fees.
The remainder of the report is mostly speculative and goes on to suggest Apple could introduce a pre-paid or $99 iPhone to accompany reduced plans from AT&T in a bid to attract lower income consumers. It cites a survey indicating that 43% of existing iPhone owners make salaries in excess of $100,000, noting that this pool of wealthy consumers is quickly running dry.
"A cheaper plan, coupled with new and possibly cheaper iPhones, could give AT&T a larger share of the U.S. smartphone market," the report says. "And unless prices drop on other smartphones in AT&T's stable, those rival handset makers, such as Research In Motion could end up losing market share in AT&T's stores."
Claims of cheaper or tiered iPhone data plans, which the report also mentions in theory, aren't new. They've been thrown around for months by Wall Street analysts and researchers who've had the opportunity to sit down with members of Apple's management and probe them on their prospects for growing the iPhone's install base this year.
For instance, less than two weeks ago Cote Collaborative analyst and pricing strategist Michael Cote similarly predicted that there's a "strong possibility" AT&T would cut its entry-level iPhone plan by $10 to $59, saying that the announcement could come as early as next month at Apple's annual developer conference.
The move, which would theoretically shave 14% off the cost of owning an iPhone — dropping combined 2-year service fees to $1,640 from approximately $1,880 — would cater to consumers who may find Apple and AT&T's current offerings too pricey for their shrinking budgets.
In February, Kaufman analyst Shaw Wu similarly characterized current iPhone service plans as "too high" for the handset to have broad market appeal. He cited sources who said Apple and AT&T were therefore mulling a plan that would offer future iPhone customers the option of selecting from a tiered set of data plans rather than continuing to pitch the current $30 take-it-or-leave-it option.
A week later, Bernstein analyst Toni Sacconaghi sat down with Apple interim chief Tim Cook, chief financial officer Petter Oppenheimer, and marketing chief Phil Schiller, who similarly told him that the company was considering "different pricing/price points" for the iPhone this year, with Cook reportedly adding that he was "examining iPhone's business model" to see if there was room for other possible changes.
In its report Monday, BusinessWeek also noted that Apple may have greater freedom to mark down the price of its next-gen iPhones with the cost of touchscreens, the most expensive component, having declined by more than 30% in the past year.
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