Cingular: The iPhone Price Is Right

Cingular Wireless believes the price is right on its new $499-plus Apple Inc. (Nasdaq: AAPL) iPhone, and expects the new device to help increase its business after the launch in June.

Some commentators have questioned the high price of the iPhone. At $499 for a 4-Gbyte device and $599 for an 8-Gbyte model, it easily tops most of the smartphone offerings that will be its main competition.

Cingular, however, believes that the device is "absolutely priced right" for the audience it is targeting. "I am not at all concerned," says Glenn Lurie, Cingular's president of national distribution.

"Most of you in this room are probably going to be carrying a cellphone," explains Lurie. "Most of you will have a smartphone –- a BlackBerry or a Treo -– and most of you have an iPod in your bag or suitcase."

Cingular's claim is that the iPhone can replace all three.

Nonetheless, questions remain over how much influence, if any, Cingular has over iPhone pricing and feature developments. "It's an iPod, so Apple sets price points," Lurie stated after a few questions about whether the carrier could cut the price of devices over time.

The operator has an exclusive deal to distribute the iPhone in the U.S. and stressed it had worked closely for two years with Apple on the iPhone project.

Apple, however, has control over some issues that would normally be the domain of the wireless operator.

For instance, Cingular couldn't tell Unstrung why Apple had chosen to launch an EDGE-enabled device, rather than one that'll run over its faster UMTS network, which would seem to make more sense for such a high-powered device. "You'll have to ask Apple that," a Cingular rep told us.

The computer vendor is predicting it will sell 10 million iPhones by the end of 2008. Cingular stressed, however, that this figure incorporates sales from the other non-U.S. carriers that will sell the new Apple device.

"I think other carriers are going to be interested," dead-panned Lurie.

Branding should be easy. Cingular will have its name and -– eventually -– the AT&T Inc. (NYSE: T) logo on the phone's screen. It won't be embossed anywhere on the device, however. This is highly unusual in the U.S. mobile market, where branding is everything. Apple should have a slightly simpler job launching the device in Europe and Asia using screen-only branding, however.

It's not yet clear whether Cisco Systems Inc. (Nasdaq: CSCO)'s newly announced lawsuit against Apple will change any of Cingular's launch plans. (See Cisco Files iPhone Suit.)

— Dan Jones, Site Editor, Unstrung