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AT&T Considering $10 Drop in iPhone Monthly Plan Rates?

Thursday May 7, 2009 7:41 am PDT by Eric Slivka
TheStreet.com reports on comments from analyst Michael Cote suggesting that AT&T is considering reducing the basic monthly iPhone plan from $69 to $59 alongside an announcement of the next-generation iPhone at next month's Worldwide Developers Conference.

AT&T is considering a $10 price cut for the iPhone's monthly service plan when Apple introduces the newest version of the phone next month.

There is a "strong possibility" that AT&T will drop the entry-level price to $59 from $69, says Cote Collaborative analyst Michael Cote, an industry pricing strategist. The announcement, he said, will probably accompany the launch of the new iPhone on June 8, during Apple's World Wide Developers Conference.

Cote reports that iPhone sales through Wal-Mart have failed to meet expectations, giving Apple concerns about pricing barriers. While Cote does not see Apple introducing a lower-cost "iPhone nano" as has been rumored for some time, his comments indicate that AT&T is also recognizing the pricing difficulties and is willing to work to make iPhone contracts more affordable, thereby stimulating demand.

Recent sales success for Research in Motion's BlackBerry models, as well as increased competition from the upcoming Palm Pre and forthcoming touchscreen handsets from Nokia, are placing pressure on Apple to continue to find ways to generate new customers.

Finally, Cote points to an approaching "fashion milepost" for the iPhone, as popular phones and other gadgets tend to lose their appeal in their third year on the market, although Apple would certainly argue that continued innovations on both the software and hardware fronts should allow the iPhone to remain at the head of the pack.

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