Dave Gonigam

One of the hazards of blogging is something I experienced practicing daily journalism: The need to "feed the beast" pretty well assures that the level of quality will not be a rock-solid consistent affair.  With that in mind, allow me to correct my casual and ill-considered remark yesterday that the iPhone Index is, against all odds, looking up.

Believe me, it hurts to realize I misread an anecdotal economic indicator of my own invention, thinking that somehow Apple was bucking a poor economy.  But that's exactly what I did in my Monday morning wrap-up, basing my claim on a BBC article that, in retrospect, might well have been a paraphrase of an Apple press release.  Yes, iPhones now make up 20% of the U.S. smartphone market.  But in my rush to "feed the beast," I did not pause to consider if the smartphone market isn't as big as perhaps I thought.  How many Blackberries and Treos are actually floating around out there?

The answer — and the realization that the iPhone Index is just as sickly as it's ever been — hit me as I read the Financial Times account of Steve Jobs's latest dog-and-pony show for software developers and the tech media.

Apple is again slashing the price: An 8GB model that was $399 will now be $199 — and it will operate on the faster 3G networks that techies say it should have all along.  In addition, Apple is giving up on its scheme in which it collects a portion of wireless carriers' monthly fees for data services.  Now the carriers can keep those fees, and in exchange, they'll subsidize the cost of the handset, as they do with most other phones out there.  That's how Apple can manage to cut the price of an 8GB model from $599 at introduction a year ago to $199 now.   According to the FT:

Steve Jobs, chief executive of Apple, conceded that the iPhone needed to be “more affordable” to reach a wider audience. He said Apple had sold 6m of the phones since they went on sale at the end of last June, implying that sales had reached little more than 2m so far this year. A long way short of the 10m target he had set for 2008.

Ouch. 

In the future, I'll think twice before doubting my own long-standing theories.

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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