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Apple iPhone Price Dropping to $99?

<B>Apple</B> will launch an entry-level device at a lower price alongside an iPhone 3G performance upgrade in June or July, an analyst says.

What's next for Apple (AAPL) - Get Apple Inc. (AAPL) Report and its nearly ubiquitous iPhone touch-screen devices? How about a new model at the industry's magic selling price?

There's word that Apple is secretly planning to launch an entry-level iPhone -- one that will retail for just $99. Apple has usually announced and released its iPhones at the beginning of the summer season.

According to a research note by RBC Capital Markets, analyst Mike Abramsky said that Apple will launch the entry-level device alongside an iPhone 3G performance upgrade in June or July. He forecasts that a $99 iPhone could increase unit sales by as much as 69%. If you do the math, that could lift Apple's share of the smartphone market to as much as 19%.

According to the analysis, the $99 price point includes a $200 subsidy and would be based on a new


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"light" data plan costing around $15 per month.

But aside from the possible jump in market share, Abramsky adds that Apple would risk cannibalizing its own profits. He believes that Apple would have to sell three new $99 iPhones to replace the gross profits of one 3G iPhone. In addition to their smartphones, the new device could also affect sales of certain models of the iPod, which retail at similar price points.

To compensate for shrinking margins, Abramsky said that Apple might look to expand its distribution network, which would mean allowing more mobile operators to offer the device. Here in the U.S., Apple would have to create new versions of the iPhone that would work on


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Verizon Wireless

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separate 3G networks.

I expect we'll also be hearing about a truckload of other new 3G smartphone designs at next week's Mobile World Congress exposition in Barcelona, Spain. Big announcements are expected from


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and a number of companies introducing new


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/Android-based handsets. We'll be in Barcelona to bring you the latest news -- beginning on Sunday.

Gary Krakow is's senior technology correspondent.