CIBC research on Apple's iPod price move
Here’s the quick take from CIBC’s research team on Apple’s price chop. Looks like a clear-out special before the next product launch. I note that RIM is still charging $500 for the Rogers 8700, and it has been out for more than a year:
In news that could frustrate early adopters, Apple announced today that it is immediately cutting the price of its 8GB iPhone to $399 from $599. Apple is also discontinuing production of the 4GB version, but will continue to sell the handset while supplies last.
The price cut suggests the sales lull after the initial surge was stronger than anticipated and supports our channel checks, which suggested a drop in demand since mid-July. However, volumes could now improve as ASPs drop to be more in line with high-end handsets.
We see the quick price cut (after just two months) as unusual for an Apple product, although not atypical for a handset. With many handset vendors introducing high-end touch screen models in 4Q07, most of which include 3G, competition will be intense.
We believe the news supports our checks that suggested a 3G model could come in November, ahead of expectations. The news also illustrates the challenges in competing in the handset market. We don’t see material impact to OEMs and see the news as positive for Skyworks and RFMD.