Apple is planning to launch an entry-level iPhone that will retail for just US$99 this summer, according to a report by RBC Capital Markets analyst Mike Abramsky. In a research note seen by Cnet News, Abramsky said that Apple will launch the entry-level device alongside an iPhone 3G performance upgrade in June or July this year.
He forecasts that a US$99 iPhone could increase unit sales by as much as 69%, which would lift Apple's share by 19%. According to the analysis, the US$99 price point includes a US$200 subsidy and would be based on a 'light' data plan costing around US$15 per month.
However, Abramsky adds that Apple would risk cannibalising its own profits as it would need to sell three US$99 iPhones to replace the gross profits of one 3G iPhone. The phone could also affect sales of Apple's iPod, which retails at a similar price. To compensate for shrinking margins, Cnet News quoted Abramsky saying that Apple might look to expand its distribution network, which would mean allowing more mobile operators to offer the device.