June 10, 2008, 4:58 PM — Apple has priced the new 3G (third-generation) iPhone at the sweet spot of demand and will likely ship 18 million of the handsets this year, said an analyst that covers the contract manufacturer responsible for producing the device.
"The higher expectation on the 3G iPhone reflects attractive prices and a broader distribution channel (availability at ~70 countries)," wrote Jenny Lai, analyst at CLSA Emerging Markets, in a report. "The newly added white color for the 3G iPhone also bodes well to consumers," she added.
Apple's pricing strategy follows the example of Motorola's original Razr, said Lai. Once the price of the Razr dropped to US$200 near the end of 2005, sales of the device took off.
Apple's new iPhone is $199 for a version with 8G bytes of storage, and $299 for twice as much storage. The price squarely hits the sweet spot for consumers, said Lai.
She expects the new handset to be in short supply when it launches on July 11 due to a shortage of some key mechanical components, but those issues should be fixed by the end of that month.
Lai covers Apple's contract manufacturing partner for the iPhone, Hon Hai Precision Industry, the world's largest contract electronics manufacturer. IPhone sales could count for as much as 10 percent of Hon Hai's revenue if volumes meet Lai's targets, she wrote.