Steve Jobs Phone Home

After a story surfaced yesterday that Apple had placed an order for 12 million music-playing cellphones with Hon Hai's Foxconn (the same company that manufactures its iPods), speculation about an upcoming Apple phone has gone through the roof. But due to the weirdness of the cellphone business, which uses extreme hardware subsidies to ensnare customers in lengthy contracts and get them to use expensive add-on features, the hard thing is figuring out how Apple will sell such a phone, if it is to exist.

I think Jupiter analyst Ian Fogg has the right idea (from Leander Kahney's latest column):

"The most likely scenario, as Jupiter analyst Ian Fogg has pointed out,
is that the iPhone will be a stand-alone device that will accept astandard SIM card. You'll pop the SIM card out of your current cellphone and plug it into the iPhone. It'll be just like buying anunlocked handset from Asia, except you'll buy it at an Apple storeinstead of on Craigslist.

"An iPhone with no provider strings attached would be better for theonline iTunes store than selling tunes over the airwaves, as some cellcompanies are trying to do."

Ifthis scenario is right, Steve Jobs is betting that people would ratherpay $300 or so for an iPhone than accept a free or nearly free(subsidized) phone from a cellphone provider. This is goingto have to be one heck of an iPhone.

Couldn't Apple make a deal with a cell provider to subsidize the iPhone and lower its upfront price? I doubt it – cellphoneproviders have their dander up about selling music OTA (over the air)
from their own stores; if the iPhone takes off, they can kiss that ideagoodbye for the next few years anyway, so they're not likely to bedoing Apple any favors in the cellphone arena.

(Concept image from 21talks.net)