Why the $99 iPhone 3G Changes Everything

Apple just dropped a lot of news on us–new MacBooks with ultra-long battery life; a smarter, faster OS; and new iPhone software and a brand-new iPhone 3G S–but I don’t think anything will have a larger impact than the massive price drop on the iPhone 3G. It instantly changes the game for Apple’s competitors, and it will make devices that are not smart phones nearly irrelevant on AT&T’s network. Just look at AT&T’s lineup right now. As of yesterday, the Nokia E71x was the best $99 smart phone available for the carrier. And while it’s still compelling, a lot of buyers will now gravitate towards the $99 iPhone. Things get even stickier when you look at non-smart phones like the Samsung Impression. Sure, it has a cool OLED touchscreen and a physical keyboard, but $199 now looks like highway robbery. So what about the Palm Pre? $199 is a fair price for the Pre given that the 3G S costs the same, but a lot of people are now going to say I can get the iPhone for $100 less. Same thing goes for other competitors like the T-Mobile G1. $179 no longer seems like a bargain. I still think people will be willing to pay more for a BlackBerry, but don’t be surprised to see a price drop on devices like the Curve 8900 from $149 to $99. The bottom line is that $99 for an iPhone 3G is a breakthrough price point. And it’s officially the biggest competitor to the iPhone 3G S, which should scare the bejeezus out of everyone else.