WWDC Announcements: MobileMe and iPhone 3G

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Apple today announced two major things: MobileMe, their new service that replaces the old .Mac service, and the iPhone 3G.

As a replacement for .Mac, MobileMe offers enterprise features for the average user, with ability to push and sync content from their home pc to their iPod touch and iPhones. Also included is 20GB of online storage space. MobileMe keeps the same price as .Mac (at $99 a year) and will be available in July.

Available on July 11th, the 3G iPhone promises 3G speeds, (about 3x as fast as EDGE), GPS, and a lower price tag, starting at $199 for the 8GB version, and $299 for the 16GB version. The 16GB version is available in both black or white; with the 8GB version only available in black.

I find Apple's release of the iPhone at these price points interesting, as well as the timing of the release of the phone; while many were hopeful that today would be day, it seems that Apple instead chose to release it on a Friday past the 30 day return policy of the Apple Store and most cellphone contracts; this move seems to be aimed at attempting to avoid the customer service hassles which occurred when the original iPhone dropped in price 3 months after its initial release; those who have bought an iPhone within the last 30 days should return them now if they plan on upgrading.

The interesting thing about the price point is that given how cheap the new 3G iPhone is, it effectively destroys the market for the iPod touch, and those who will purchase the touch are those who don't want to deal with having a cellphone contract; at $199 for an 8GB and $299 for the 16GB iPhone, the 3G iPhone undercuts the hardware price of the 8GB and 16GB iPod touch by $100 dollars. Taken in a longer term view, with the $20 a month iPhone plan, an iPod touch user saves $380 over the lifetime of an iPhone user's contract, provided they do not care about being able to use Internet features on 3G.

At the $199 and $299 price points, I can see this new device dominating the higher-end cellphone market; the iPhone loses premium pricing to be competitive with the smartphones like the Sidekick, Blackberry, and Treo; whereas before the iPhone was clearly the most expensive smartphone available (at $399 and $499), there are now all sorts of options that are more expensive. The iPhone 3G isn't free, but the price cut is drastic enough to hurt the resale value of the current iPhone, it will be the gray market that reaps the most benefit from this move; in countries where unlocked iPhones are used, where EDGE and 3G doesn't matter, and where Apple doesn't have a carrier, the original iPhone will still fetch a premium.

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