Apple to drop iPhone price
In announcing the cut to $399 from $599, CEO Jobs says he wants to see them 'in a lot of stockings this holiday season.' The company also unveils a retooled iPod and other new products and services.
By Michelle Quinn
Los Angeles Times Staff Writer
12:53 PM PDT, September 5, 2007
SAN FRANCISCO — Apple Inc. today dropped the price of its most popular iPhone by $200, a declaration that the company plans to play aggressively in the cell phone market.
The 8 gigabyte iPhone will cost $399, down from $599, Apple Chief Executive Steve Jobs said. The company plans to phase out the 4 gigabyte version.
"Apple wants to be more of a legitimate player in the mobile market than people thought," said Gene Munster, senior research analyst for Piper Jaffray. "It will hurt them in profitability for the first few quarters but it will boost the demand for the iPhone."
Jobs said he wanted to "put iPhones in a lot of stockings this holiday season."
The company also unveiled an iPod that connects to wireless networks, as well as a slew of other music and video products and services that most likely will accelerate Apple's growing dominance in digital entertainment.
Jobs said Apple remained on track to sell its millionth iPhone by the end of this month. The product, a combination cell phone, Internet device and digital entertainment player, launched June 29.
Among the new line of iPods is a one called iPod Touch that, like the iPhone, operates via a touch-screen. Equipped with an Internet connection, this iPod will sell for $399 for the one with the most storage.
"We think this is going to set a lot of people's worlds on fire," Jobs said.
IPhone users will be able to buy ring tones for their phones from iTunes, and along with owners of iPod Touch they will be able to buy music from iTunes directly from the Internet, no longer having to first download to their home computers and then sync to the device.
In addition, Apple announced a partnership with the coffee giant Starbucks. People in the coffee stores will be able to see the song playing in the stores on their iPhones or iPod Touch devices and buy it.
"One of the most asked questions in Starbucks today is, 'What song am I listening to?' " said Howard Schultz, founder and chairman of Starbucks. The service will begin Oct. 2 in Seattle and New York and then spread to other cities. It will reach Los Angeles in February.
The announcements came after a week of speculation about what the Cupertino, Calif.-based company was planning to do next. Rumors, ranging from Apple adding the Beatles catalog to the introduction of a "Nano" phone, pushed up the stock.
Since it launched the first iPod in 2001, Apple has become the No. 3 music retailer in the U.S., behind Wal-Mart Stores Inc. and Best Buy Inc. Jobs said the entertainment market was rapidly evolving and that in 2006, 32% of all new U.S. releases were digital downloads, not on CD.
For the ring tones, available next week, Jobs said that iPhone owners would be able to pick from 500,000 participating songs. Customers will be able to buy the song for 99 cents and then spend an extra 99 cents to use the song for a ring tone.
Apple will begin selling video iPod Nanos later this week. The new video Nanos come in a 4-gigabyte version at $149 and an 8-gigabyte version at $199.
Both are heralded by this advertising line: "A little video for everyone."
