Despite ridiculous rumors of an $800 iPhone earlier this year, the iPhone 5, which was unveiled at Apple's media event in San Francisco on Wednesday, will start selling at the familiar $199 price point.
Apple will sell the new iPhone in two colors - black and white - and at a number of different storage capacities. The cheapest iPhone 5 will sell for $199 for 16GB, then $299 for 32 GB, and $399 for 64GB. For customers that want access to the high-speed Long-Term Evolution (LTE) network, Apple also sells 16GB of storage for $329, 32GB for $429, and 64GB for $529.
We originally expected Apple to sell the new iPhone 5 at the same $199 starting price as last year's model. In other words, we believed the new iPhone 5 price would start at $199 for 16GB, $299 for 32 GB, and $399 for 64GB. Since we believe Apple will also sell the new iPhone with LTE, we also believed Apple would sell those models for $329 for 16GB, $429 for 32GB, and $529 for 64GB. These figures were based off the difference between Apple's new iPad models with and without LTE.
In early August, online gaming site GameNGuide took a screenshot of a listing on Chinese auction site taobao.com of what it believed to be an iPhone 5, and cited that the starting price would be $800. However, that device mentioned in the auction listing was clearly fake -- its size, thinness, and even its smaller dock connector, did match up with rumors we heard and believed - and the price range seemed far too extraordinary. Some people really believed the iPhone 5 would cost anywhere between HK$5,088 to HK$6,688, or about $800 to $1,050.
There was no way on God's green earth Apple would price its next iPhone at $800, or anything close to that.
The first iPhones -- both in 4 GB and 8 GB models -- cost $499 and $599, respectively.
Three years later, after achieving a great deal of success with the iPhone, iPhone 3G and iPhone 3GS, Apple set the starting price for the iPhone 4 at $199 for 16 GB of space.
The last iPhone -- the iPhone 4S -- had the same starting price of $199, subsequently lowering the price of the iPhone 4 to $99, and the iPhone 3GS to $0.
Steve Jobs' plan was always to get Apple devices into the hands of everyone in the world. For this reason, and all the reasons above, we expected Apple would set the starting price of the iPhone 5 at $199. And that's exactly what happened.