SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

What’s Up With Those Cheap iPhones?

Posted by Bob Warfield on April 21, 2008

Jonathan Richards at the TimesOnline hit Techmeme with his article wondering what happens to the unsold iPhones when the cool new iPhone arrives with 3G.  Apparently a number of companies have overstock on these units (meanwhile Apple stores made sure they ran out!).

Richards muses that the stores may yet make back whatever they lose discounting the older model (stores are slashing up to 1/3 off) to get rid of them due to monthly service fees.

I have a different theory relating to these and already bought iPhones.  I was talking with a friend about it the other day.  I saw he had an iPhone and asked if he was going to upgrade when they came out.  “Absolutely, as soon as I can get one,” he responded.  Me too.  Then I said, “And there’s a line of folks in my family waiting to get their hands on mine.”  Me too, sez he.  We then proceeded to agree that when we’d gotten new phones in the past, we typically chucked the old working phone in a drawer and forgot about it.  Previously, nobody wanted our “last year’s model.”

Aha!

This is interesting.  The older iPhones could wind up converting a whole new audience to the iPhone that never would’ve spent the money before.  Not surprisingly, this would be awesome news for Apple.  Remember, they get revenue from services who legitimately provide contracts for iPhone service.  That’s why they fight the unlockers so hard.  Now they’re going to get incremental revenue from phones they’ve already sold.  The people trading up will want to keep their old phone number, and the hand-me-down new owners will need to get a new service contract for the phone.

It’ll be interesting to see how this plays out.

One Response to “What’s Up With Those Cheap iPhones?”

  1. […] SmoothSpan Blog wrote an interesting post today on What’s Up With Those Cheap iPhones?Here’s a quick excerpt I saw he had an iPhone and asked if he was going to upgrade when they came out…. Remember, they get revenue from services who legitimately provide contracts for iPhone service….I have a different theory relating to these and already bought iPhones….” Aha! This is interesting. The older iPhones could wind up converting a whole new audience to the iPhone that never would’v e spent the money before…. […]

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