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Apple execs rethinking iPhone pricing strategy for 2009


While the likelihood of Apple releasing new iPhones this year is all but certain, a discussion between analysts and Apple's top brass has also dropped clues that the iPhone's pricing may not be static this year.

Toni Sacconaghi of Bernstein Research mentions in a research note that a discussion with Apple COO Tim Cook, CFO Petter Oppenheimer and worldwide marketing senior VP Phil Schiller point both to an upgrade to the touchscreen device as well as to the possibility of "different pricing/price points" this year, with Cook "examining iPhone's business model" for possible changes.

Cook and Schiller in particular have teased a "very exciting" 2009 for iPhones.

What these possible price changes would entail isn't divulged by the Apple executives, although Sacconaghi is quick to dampen rumors of an iPhone nano or a similar low-budget cellphone. Without naming any one of the executives as a source, he gathers from his investigations that the company isn't presently chasing such a concept.

Any future iPhone, he says, will probably have at least a web browser and access to the App Store, the latter of which has Cook, Oppenheimer and Schiller particularly "bullish" about the iPhone's success as it gives Apple an advantage over rival smartphone makers.

The firm's leaders are also adamant that iPhones won't come with hardware keyboards. A fixed set of keys reportedly makes it harder to implement different keyboards, such as for different languages, and would also make it harder for third-party developers hoping to use their own custom control schemes. Using the touchscreen as the primary input improves Apple's bottom line by letting it ship what's essentially the same phone across many different regions, the executives say.

No matter the changes to Apple's iPhone pricing structure, such a move wouldn't be uncharacteristic of the Cupertino, Calif. electronics giant. Each year of the iPhone's existence has had at least one major price shakeup: the iPhone's maximum price fell from $599 to $399 in 2007, while the iPhone 3G in 2008 not only reduced this top price to $299 but switched the behind-the-scenes profit model from revenue sharing with carriers to a heavy device subsidy.

But the Apple TV's position is considerably less optimistic, Sacconaghi warns. After his talk with the senior staffers, he understands that Apple views "lots of barriers" for the networkable media hub and doesn't see it as a current business cornerstone like it does iPhones, iPods and Macs.

Not to downplay the company's prospects, though, the Bernstein researcher says the management team is maintaining an "unwavering" level of belief in its guidance for the January-to-March quarter even as it has no intention of cutting prices; the upgraded plastic MacBook is selling well but is still being outsold by its more expensive aluminum cousins, according to the executives, who also see a lot of headroom in computer market share.

While Sacconaghi doesn't make many predictions, he repeats frequent expectations of an iPhone in summer and also believes Apple may update the iMac in March.