Who gets hurt most by Apple's entry into the $250-$400 mobile phone market?
In a 36-page report to clients issued Monday, a Credit Suisse team led by Kulbinder Garcha took a close look at the iPhone's price elasticity -- Econ 101 jargon for the question: "If I lower the price of my widget, how many more will I sell?"
Garcha et al.'s focus is the iPhone 3GS, which Apple (AAPL) last month began offering to its partners for an ASP (average selling price) of $325, allowing the likes of AT&T (T), Vodafone (VOD) and Rogers (RCI) to give it to customers at subsidized prices ranging from $0.99 to $0.00.
It also marked Apple's entry into what Credit Suisse believes is the sweet spot for mobile phone growth -- the $250-$400 (to carrier) price range, where Apple's competitors do most of their business.
How does this change the competitive landscape? According to Credit Suisse:
On Monday, Credit Suisse lowered its price target for RIM from $30 to $20.
Its price target for Apple is $500. On Friday, when Garcha et al. wrote their report, Apple was trading at $374.94 with a 9.6 forward P/E they found "compelling" given the rate at which Apple's earnings are growing. The stock closed Monday at $369.01.
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