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April 4, 2008, 9:47 am

T-Mobile slashes iPhone price 75% in Germany

iphone.pngApple Inc. is not a company known for dramatic price cuts, even when it’s clearing inventory in advance of a new model.

So it was something of a shock to read on Friday morning that T-Mobile had slashed the price of the 8 GB iPhone from 399 euros ($625) to a surprisingly low 99 euros ($155).

There’s a catch, of course. Buyers at that price must commit to a two-year contract at 89 euros ($140) a month — something they may come to regret down the road.

T-Mobile is also offering a 29 euro ($45) per month package for buyers willing to pay 249 euros ($390) for the 8 GB phone. In other words, bargain hunters who want to save $235 on the purchase price of the iPhone may end up paying T-Mobile $2,280 more in monthly fees over the life of the contract.

The 16 GB iPhone still costs 499 euros and is available with a minimum 49 euro per month package. (link)

Apple’s (AAPL) European partners have been under pressure to lower iPhone prices to compete more effectively with RIM’s BlackBerry. They may also feel more pressure than Apple to unload their old iPhones before the new 3G models arrive; unlike U.S. Apple stores, which have been running out of inventory lately, the T-Mobile and the others seem to be overstocked.

“It remains puzzling that iPhone availability has been very scarce in Apple’s US stores, yet seemingly plentiful everywhere else,” writes Stanford Bernstein’s Toni Sacconaghi in a note to clients. “One explanation for this might be that because iPhone’s supply shortage came at quarter’s end, Apple chose to ship most of its iPhones to the channel, where units would be recognized as sold during the quarter, rather than re-building inventory in its US stores.”

“Apple is learning as it goes,” writes Piper Jaffray’s Gene Munster, who says the kinks in Apple’s distribution models have been compounded by “weaker than expected” sales in Europe.

“It seems as if this has led to Apple trickling iPhones into its U.S. retails stores, while T-Mobile and other carrier partners seek to drain their stock of iPhones ahead of a new model,” he writes.

There’s still no word from Apple when that new model will arrive, but it’s worth noting that T-Mobile’s sale runs from April 7 to June 30 — the one-year anniversary of the day Apple began selling the original iPhone.

It should be noted that German prices include sales tax (VAT), while US prices are quoted without sales tax. To American eyes, this makes the German prices look bigger than they actually are. I would suggest removing the VAT as you convert to US$. Then the iPhone price drop would be from €399 ($525) to €99 ($130), for example.

Posted By Tom Ross, Berlin, Germany : April 5, 2008 10:16 pm

Lol RJ.

Wishfull thinking on your part and good luck with that.

Posted By Nodack Phoenix AZ : April 4, 2008 11:18 pm

I’ve been waiting i Switzerland for one of these things for so long now it isn’t true. Evidently not selling them makes more money than not selling them the right way, in Switzerland and other, lessor, nations.

Anyways, I gave up long ago worrying about how much the iphone costs. If it is under 1000 USD, I want it. My big problem, the thing that has held me back, is getting shafted for data by the all powerful telecom monopolies.

The big story with the iphone is how much folks use it, and the data traffic demands. That reality will drive pricing in the mobile broadband market and, more importantly, it will drive advertising revenue to apple. And friends.

Posted By Nasty, Zurich, Switzerland : April 4, 2008 10:40 pm

To gms: The iPhone users are forced to get a data plan as well - owners of other phones are not. It’s completely fair to point that incremental cost out.

Plus, THERE’S NO SUBSIDY ON THE iPHONE, yet buyers still have to sign a 2 year contract and pay an ETF to get out of it. Keep claiming that people are being unfair pointing this stuff out, but there are elements to the iPhone contracts that are onerous compared to comparable smartphones.

Posted By Dan, Boston, MA : April 4, 2008 8:44 pm

How will that 79% “satisfaction rating” look when everyone that bought and iphone early (just as in the US) ends up getting screwed by yet another unexpected price cut of an apple product? My guess is the cult of early adopters signed on and then most of the real power users (jobless college kids excepted) figured out that the RIM machines are just much better.

Posted By RJ Manchester NH : April 4, 2008 12:23 pm

why is it when it comes to the iphone there is always comments on how much the two year agreement will cost? what service besides pay as you go offers a contract less than two years, with or without the iphone?

ex ped: In this case the cost of the two-year agreement attached to the 99 euro iPhone is relevant. Otherwise, you’re right.

Posted By gms_60613, chicago IL : April 4, 2008 12:19 pm

SoonerFan -

79% was VERY Satisfied. Need to add the Satisfied response as well - I imagine that will bring “approval rating” up over 90% (I have no idea the actual figure.)

This is very good news for Apple, as they will sell a lot more phones. I imagine that most of the cost is being born by T-Mobile. Telcos are used to making long-term investments. Getting that customer in-house is worth the price cut. (Remember THEY do not pay €399!)

My guess is that there will soon be a memory upgrade along with the 3G - maybe even before the 3G.

This also tests the “discount waters” to see how it goes. I think it is possible that Apple will not lower the price of base models (i.e. 16GB -> 8GB price, 32GB -> 16GB price) but allow discounts/rebates for signing up with preferred carriers. This way Apple get their income either way.

IMHO

Posted By jmmx, Portland OR : April 4, 2008 11:41 am

The biased reporting on both sides of the ditch are obvious. The proof is in the pudding…79% approval rating for the iPhone. It’s doubtful anyone will regret the decision to own one no matter how they go about obtaining it.

Posted By SoonerFan…Cedar Rapids, IA : April 4, 2008 11:11 am

“They may also feel more pressure than Apple to get rid of their old iPhones before the new 3G models arrive; unlike U.S. Apple stores, which have been running out of inventory lately, they seem to have plenty of iPhones in stock.”

Um, everything in Europe is 3G, and most in the US isn’t. The fact that there’s any demand for a 2.5G phone like this speaks well of the quality of the phone.

Posted By Dennis, Ft. Pierce FL : April 4, 2008 11:05 am

“something they may come to regret down the road” Talk about biased reporting. Don’t you think the consumer knows how much service they need?

With a 79% satisfaction rating, I doubt they will regret buying an iphone.

That being said, easy to see why they are running an incentive with their costs being much higher than in the US.

Toni should just give it up, he doesn’t have a clue whats going on. Of course the explanation is the iphone costs $399 in the US, much less than the $625 in Germany, so people buy it in the US and ship it around the world, thats why its sold out in the US and nowhere else. Apple underestimated how small this world is and how willing people were to do this.

Posted By Mike, San Diego, CA : April 4, 2008 10:58 am

no wonder there is a black market for US iphones. Who would pay 399 euros for a phone that cost $399 dollars

Posted By owen, bronx, new york : April 4, 2008 10:57 am

DAMN Elmer

Whey the little dig:

“— something they may come to regret down the road” ???

Polls show that iPhone users have extraordinary satisfaction ratings with (what was it) 79% VERY satisfied. Did you ever say that about a Blackberry purchaser? They also have high data rates to pay.

It is this kind of unnecessary, negative, unjournalistic off-hand, editorializing that gets people mad! - And in this case - Rightfully so.

It is either totally baseless in fact - or tautologically true. In either case - senseless.

ex ped: Fair enough. I’ve added a sentence to explain why they may regret it, and it has nothing to do with the quality of the iPhone.

Posted By jmmx, Portland Orygun : April 4, 2008 10:42 am

simply tmobile chose to carry some of the cost
it will happen here as well

Posted By ny-ny : April 4, 2008 10:13 am

-There’s still no definitive word when the 3G iPhone will arrive-

I would change to:

There’s still no definitive word when the 3G iPhones will arrive

Posted By Jim, Rotterdam, Holland : April 4, 2008 10:07 am
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Philip Elmer-DeWittSilicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
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