Palm, Motorola seen most hurt by iPhone price cut
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Apple Inc&#39;s hefty iPhone price cut  pits it in direct competition with handsets from Motorola Inc  and Palm Inc, which are struggling to convince Wall Street they  can turn around their aging brands.
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Treo smartphone maker Palm Inc.   could bring a buyer a decade's worth of digital  assistant design and mobile phone know-how, but at a hefty  price for a company no longer viewed as cutting edge.
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Handheld computer maker Palm Inc.   PALM.O on Thursday posted lower first quarter net income as   costs rose and the company began expensing stock options, but   the results topped Wall Street forecasts.
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The controversy around Apple's iPhone price cuts seems suspiciously calculated.
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Palm Inc. and Research In Motion Ltd. reported starkly different earnings, but the two major smart phone makers both face intense scrutiny from Wall Street about whether they'll withstand competition from Apple Inc.'s iPhone.
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(InfoWorld) - Consumers aren't willing to pay what AppleÂ may ask for theÂ iPhone, but if the price drops they'll switch their mobile service to AT&T in order to get it, according to results of a survey released Thursday. Online market research firm Compete Inc. surveyed 379 people in the U.S., most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report. The iPhone is a combined music player and cell phone that Apple plans to start selling in the U.S. in June. Among the 26 percent of respondents who said they're likely to buy an iPhone, only 1 percent said they'd pay $500 for it. WhenÂ Apple introduced the iPhoneÂ in January, it said it would cost $500 on the low end. Forty-two percent of those who said they're likely to buy the phone said they'd pay $200 to $299. The iPhone will be available only to subscribers of Cingular Wireless, now part of AT&T. In a blow to the operator's competitors, 60 percent of those in the survey who said they were likely to buy the phone said they'd switch their mobile operator in order to get it. While the iPhone has been discussed as a competitor to other handsets like Research In Motion's BlackBerry, the two serve very different markets, said Andy Neff, an analyst at Bear Stearns who participated in a conference call to discuss the results of the study. "Even though there's talk about this as an alternative to RIM, it's not a corporate product," he said. Instead, the iPhone is an indication of a broad shift toward smartphones and the emergence of niches within the category, he said. The analysts were split on what price they think the device will ultimately retail for. Operators recently haven't been discounting phones in the similar price range as the iPhone, said Phil Cusick, an analyst at Bear Stearns. However, Apple has been known to announce a product with one price and ultimately sell it for less. Apple TV, for example, was expected to cost $399 but sells for $299, he said. The phone may start out around $500 because early adopters will pay that, said Neff. But pricing will likely drop by $100 to $200 to target the mass market, he said.
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What companies should have learned from the alarming iPhone price cut.
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Apple Inc. CEO Steve Jobs apologized and offered $100 credits Thursday to customers who shelled out $599 for the most advanced model of the iPhone this summer, only to have the company unexpectedly slash the price $200 in a push to boost holiday sales.
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Apple and Motorola earnings disappoint the Street fueling fears that consumers will continue to decrease spending.
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Apple Inc. CEO Steve Jobs apologized and offered $100 credits Thursday to customers who shelled out $599 for the most advanced model of the iPhone, only to have the company unexpectedly slash the price $200 in a push to boost holiday sales.
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Motorola's mobile-phone business recorded a $138 million loss in the third quarter, with handset revenues declining by 36 percent to $4.5 billion in comparison with the year-earlier period. Nevertheless, Motorola executives remain upbeat about the ailing unit's prospects for returning to profitability, noting that substantial progress has been made during the quarter.
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(InfoWorld) - Apple CEO Steve Jobs Thursday afternoon responded to a flood of complaints from existing iPhone owners over Wednesday's $200 price cut by promising the company would issue a $100 credit to anyone who bought an iPhone before the change. "I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of iPhone by $200 two months after it went on sale," Jobs said in a statement posted to the Apple Web site. In the open letter addressed to "all iPhone customers," Jobs defended the price cut, saying "now is the right time to do it. iPhone is a breakthrough product, and we have the chance to 'go for it' this holiday season." He also echoed -- albeit in more circumspect language -- comments made Wednesday in an interview with reporters from USA Today in which he told disgruntled owners "that's what happens in technology." "There is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever," Jobs said Thursday. "This is life in the technology lane." But he tacitly acknowledged that Apple had stumbled. "We need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price," Jobs said in the letter. "Our early customers trusted us, and we must live up to that trust with our actions in moments like these." All current iPhone owners with the exception of those eligible for other rebates -- people who purchased an iPhone in the last 14 days, for example, can return it for a refund, minus a 10 percent restocking fee -- will be issued a $100 credit good either at Apple's own retail stores or its online shop, said Jobs. Details were not available, but he promised they would be posted to the Apple site next week. "We want to do the right thing for our valued iPhone customers," he concluded. "We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple." Apple's change of heart was in reaction to the overwhelmingly negative comments that iPhone owners posted to the company's own message forums -- and forums at other Web sites --Â  starting just minutes after the price change announcement Wednesday.
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Palm Inc.  cut its  second-quarter profit and revenue forecasts on Monday, blaming  a delay in shipping its new Treo 750 smartphone in the United  States.
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Nokia and Motorola, who dominate the  low-cost mobile phone segment, could feel the pinch after  Vodafone's  deal to buy cheap handsets from Chinese  handset maker ZTE .
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(InfoWorld) - AfterÂ canceling its controversial FoleoÂ product and continuing to struggle with a shift away from the personal digital assistant market, Palm warned on Wednesday that its upcoming earnings report could be weaker than expected. For the quarter ending Aug. 31, Palm will lose $0.01 per share or break even, the company said. Earlier, the company had said it expected a loss of $0.01 or a gain of $0.01 in the period. That compares with a gain of $0.35 per share in the same quarter last year. Palm also narrowed its revenue forecast to between $359 million and $361 million, instead of the previously expected $355 million to $365 million. Palm will release its quarterly earnings report on Oct. 1. The company is facing challenges as it changes its business from one focused on PDAs to one that specializes in smart phones. Earlier this month, Palm announced it wouldn't ship the Foleo, a companion product to itsÂ Treo smart phone, as planned. When the device was announced, analysts said it would be too expensive and wouldn't offer valuable features. Palm said it decided to focus instead on its own software platform that is due out in 2008 or 2009.
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Struggling cell-phone maker Motorola Inc. said Thursday it is considering separating the handset unit from its other businesses in an effort to snap a deep slump that has followed its meteoric success with the Razr.
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While most iPhone owners couldn't wait to try out their pricey new gadgets, a few raced to break them apart.