Roger Entner, Head of Nielsen’s Telecom Research and Insights, does a nice job highlighting implications of the $99 iPhone 3G.
The new $99 price point for the iPhone 3G completely changes the value proposition of every handset at every carrier in the US. Some observers have commented that the $99 price point “kneecaps the Palm Pre,” but the kneecapping does not stop there. The dozen or more Google Android handsets that are being launched in the second half of the year will have prices that either make them look non-competitive or extremely margin-challenged. Actually, any device over $49 looks outright overpriced, and the feature phones in general have become a commodity.
This greater user base also means added incentive for developers to create apps for the iPhone over other platforms. When I wrote about the Pre back in March, I had anticipated a new iPhone release to match the Pre but hadn’t fully considered the impact of a $99 phone. The going just got tougher. I’m still long on the idea of a feature phone leader (LG?) buying up Palm to sell through existing distribution channels and markets otherwise less available to Palm.
