Why the iPhone is a ripoff
I love whiz-bang technology. I love it so much that when MP3 players first came out, I bought one as a voice recorder for business interviews when all my reporter counterparts were still buying reel-to-reel mini recorders or digital recorders with a one-tenth the memory and no file-manipulation capabilities. And, I love my cell phone because I can send and receive messages in a meeting, take photos on the fly, shop on it and perform Google searches no matter where I am—and it was free with my cellular service plan. So why would I ever pay $500 for a cell phone? I don’t think I’m alone here.
Market research firm Isuppli Corp. today released a research report stating that the iPhone will generate more than a 50% gross margin for Apple—nothing unusual for them. That basically means that Apple is pocketing $250 for every iPhone it sells. Compare that with the average gross margin of 10% to 20% for handsets and you’ll see where Apple is really relying on fan loyalty to gouge.
In a recent interview, Steve Ballmer chortled when asked about the iPhone. Not that I would normally take anything seriously that a Microsoft executive would say about an Apple product, but in this interview posted on YouTube, he makes two very good points: 1) $500 for a phone is outrageous when you can get the same features on another cell phone for less than $100; 2) The iPhone has no keypad, so it’s not business/text-message friendly.