How much is AT&T paying so you can get a $199 iPhone?

According to analyst Yair Reiner, about $325 per 3G iPhone.

AT&T has admitted that with the new $199 iPhone, they will only earn about 10-12 cents per unit sold, but it might just be worth it if it means more consumers will purchase an iPhone.

Moconews reports that AT&T’s head of mobile, Ralph De La Vega claims that $199 is the new ‘sweet spot.’ True enough, once Motorola’s infamous Razr dropped its price from $500 to $199, handset sales doubled. Seems like the smartphone market is going the way of $200 a handset.

With more consumers owning an iPhone, that means more subscribers to AT&T. Also, with a cheaper iPhone more users will spend time downloading and using applications and other Value-Added Services, increasing ARPU. AT&T is being quite bold by putting all that faith in the iPhone’s mass consumer appeal, but time will tell whether their move was a smart one.

AT&T back to basics

This article had me at “easy-to-use oversized buttons”. What a brilliant idea. I mean, to a lay person today’s mobile device can look extremely complicated and be somewhat intimating. Although the novice wireless population is low, they do exist and they are a potential customer. AT&T going back to the basics is showing the novice consumer that that they have not been forgotten. What a perfect gift idea for an older relative - mom, dad or a grandparent, who would like to have a mobile device that is easy to use. I would definitely buy my 75 year old aunt one of these!