Adding fuel to the fires of iPhone speculation, Sprint Nextel on Tuesday hacked fifty bucks off the price tag of the current model, the iPhone 4S.
That could be a signal that the carrier is trying to clear out current inventory ahead of the launch of a fifth iPhone model. New launches have typically led the previous model's price to drop.
Sales of the iPhone in the last fiscal quarter were down to 26 million from 35 million in the previous quarter as fans hold out for the new model. Sprint needs all the help it can get to sell more iPhones: In the second quarter its total was 1.5 million sold, compared with AT&T's 3.7 million, and 2.7 million sold by Verizon Wireless.
"Apple has a reputation of tightly controlling its products' prices," said Neil Shah, a wireless industry analyst with Strategy Analytics. "This price-drop is a rare occurrence which signals that the demand for iPhone 4/4S has started to slow-down dramatically due to the rising anticipation for new iPhone."
The $149.99 price tag (with a two-year plan) for the basic 16 gigabyte model, and $249 and $349 respectively for the 32- and 64-gig models at Sprint stores could lure some who would rather save some coin than get the newest features on the device likely to come this fall. As far as timing, rumors have suggested the possibility of a launch event either Sept. 14 or later. Last year, the 4S was unveiled in October.
The next iPhone is expected to be a full refresh of the device rather than an upgrade like the 4S and 3GS. New features could include a larger screen and high-speed, long-term evolution (LTE) data, in addition to the usual improvements in screen resolution, the processor, and the camera.
Sprint only last year got to sell the iPhone, making it the third carrier to gain access to the world's top-selling single device, after Verizon Wireless broke AT&T's monopoly in 2010.
The price drop is another differentiation for the number three carrier, which also boasts in ads about offering the only unlimited data plan "with no throttling, no metering and no overages" for the iPhone -- although Sprint's $10 monthly premium smartphone charge can cut into savings.
Users Know the Cycle
"The price drop might help Sprint attract some new as well as existing price-sensitive users to upgrade," said Shah. "Furthermore, this might also help Apple to clear off inventory built up -- if any -- due to the slowing demand for its old models. However, the subscribers are also becoming more and more aware, and have started to keep track of Apple's iPhone introduction cycle."
Therefore, the discount may fail to lure many Apple fans who may be excited about the possibility of LTE and a new design, he added.
Given its overwhelming supply of apps, the iPhone is seen as the most data-hungry smartphone and a key reason AT&T and Verizon Wireless phased out unlimited plans. That will make an LTE iPhone a must-have item for millions of iPhone fans.
But that will also put Sprint at a disadvantage since it is only starting to roll out an LTE network, beginning this week in the San Francisco Bay Area.
"Sprint is . . . worried that it will lose new iPhone subscribers to either Verizon's or AT&T's comparatively broader and denser LTE network," said Shah.
Time will tell. Stay tuned.