iPhone: Pricing Strategies for Latin America

It has been almost a year since the launch of the iPhone in the USA and only a few months since its introduction to the European maret. In this short period of time we have seen AT&T and Apple play with the pricing of the handset. Pricing for the service itself has not changed except for an additional package not offered in the beginning. In contrast, the European market sales of the device have not lived to expectations which shouldn't be surprising considering the price of the handset.

The US and European markets offer interesting lessons for pricing the iPhone in Latin America:

• Both Apple and AT&T claim that the iPhone is selling in the U.S. up to expectations but overseas is a different matter. Everything seems to indicate the price is too high for the European market.
• Latin America is a low ARPU region but end users do not hesitate to buy high end devices. However, pricing the handset higher than a laptop is probably a big mistake.
• The number of users who are willing to pay for a high end handset in Latin America is reasonably large, but a successful strategy should be based not only on selling the HW but also on coming up with a voice/data plan that builds upon the handset's capabilities. Data ARPU in the region is stil very low (<20%>) and so far operators have failed to come up with a successful strategy to consolidate data and content revenue.

Latin America tends to be a market that is strongly influenced by status, hype and passing fads. Hopefully the launch of the iPhone won't be another checkmark in the long list of 'must have' services that we have seen come to the region but have failed to make a significant mark in operator's bottom line: Ringback tones, Instant Messaging, MMS. The iPhone represents a golden opportunity to boost data usage not only by those operators who get the exclusive, but also their competition.