Decline in iPhone Prices: Trends and Analysis

In a recent post on the NYT’s Bits blog, Matt Richtel discusses the impressive sales figures of the iPhone. According to analysts, the device is selling at such a high volume that Apple can afford to sell the iPhone at a loss and still profit, thanks to the rebates Steve Jobs has offered to early buyers.

This strategy isn’t really a shocker—Apple is well-equipped financially to handle such promotions. More importantly, this shift signifies Apple’s transition from focusing primarily on computers to diving deep into the mobile phone sector.

Here, the strategy is to offer the hardware at a competitive, if not low, price and recoup the costs through subscription services. According to Richtel’s source, AT&T likely contributes about $360 per iPhone in subscription fees over the life of a two-year contract.

This arrangement suggests that the cost of the iPhone could decrease even further. Earlier estimates had already put the manufacturing cost of the iPhone at under $300, and production costs have likely fallen since then.

It’s conceivable that Apple, or even AT&T, might eventually offer the iPhone for free with a service contract to attract more customers. While this scenario is unlikely to occur by this Christmas, another price reduction could be on the horizon soon, as Apple gains more experience and efficiency in iPhone production. Within the next year, it’s possible we might see a no-cost iPhone on the market.


Linda is a dedicated writer for TUAW, bringing insightful and engaging content to Apple enthusiasts. With a deep understanding of Apple products like the iPhone, iPad, and MacBook, Linda offers readers valuable tips, reviews, and news updates. His articles reflect a genuine love for technology and a commitment to keeping the Apple community informed. Linda’s clear and approachable writing style makes complex topics accessible, ensuring that every reader can stay up-to-date with the latest in the Apple world.