For some months now, rumors have swirled about Apple Computers being poised to take on the low cost phone market by releasing what amounts to a broken iPhone for a mere $99.
If the rumors are to be believed, Apple's new $99 iPhone will sport primarily 2G specifications with some limitations as are indicated on the chart below.
This information is simply speculative and is primarily used as a comparison for the possibility of two new iPhone's expected this summer. The idea of having a sub $100 iPhone is intriguing, however let's look some pro's and con's of just such a device.
Pro's: The concept of having a cheap iPhone is to tap into lower income market's such as pre-paid devices and also to make an impact into emerging markets in other countries. This could make sense if that was actually Apple's goal, but so far they have denied wanting to make such a device. Apple could very well take over in the lower cost arena and sell millions more iPhone's at this new lower price point and firmly establish their dominanace.
Con's: Creating such a device could create a backlash that dilutes standard iPhone sales and cheapens the brand name and device reputation. The sucess of the iPhone has more to do with its abilities well beyond a basic phone device. I predict a general disinterest in such a phone and it's well known that people overseas are willing to pay large sums of money for iPhone's being sold used online. The demand for a super cheap iPhone just does not seem to be a cause right now. The current $199 price is really the sweet spot for consumers which is why the sales of the iPhone increased dramatically after the introduction of iPhone 3G.
I am still of the mind that no such device is seriously being considered by Apple any time soon. The same way that Apple does not sell super cheap laptops and computers. Apple is a premium brand and has enjoyed a huge sucess despite their often high prices. In fact, I am sure that if a new iPhone does debut this summer, it will have more options on it, not less. The only option of a stripped down phone may be to offer it to other carriers besides AT&T, but I find that to be unlikely due to solid legal contracts between the two companies.