You are repeating some canards. Apple did not drop the price of the iPhone because sales were flagging. Apple announced their sales projection of a million iPhones sold in the first full quarter was achieved 20 days early.

Secondly, AT&T had later reported that the iPhone is it's number one mobile phone seller. This is quite unusual for a model that was just introduced.

Thirdly, it is not unusual in the US to lock a phone to a mobile server. In fact, most mobile phones are sold that way.

Fourth, AT&T had more more reasons that merely garnering publicity for its acquisition of Cingular. AT&T was getting its head handed to it by Verizon. AT&T needed a very popular mobile phone. Since most of AT&T's investments was in aging land lines, they need a path toward a wider market.

Fifth, Apple never does anything the same old tired way that every else does. The Smart Phone market had become stagnant. Apple intended to shake up the Smart Phone Industry, which it has. Only 5 percent of mobile phone users own Smart Phones now. If Apple could solve the reasons for why people were not moving to Smart Phones, then it could take over the market like it did the iPod. Ease of use is Apple's standard; as is flexibility and a better user experience.

The Smart Phone market is ripe for the taking. Apple will force the manufacturers to compete. Too bad that they aren't used to that and Apple is.

Thanks Louis for your posting.

I would like to make some clarifications on your posting for your and everybody´s consideration.

First of all, the posting in based in my opinion and my knowledge of the telecom market, not in canards. The price drop has been deeply discussed and my opinion it was done because sales were not upt to the REAL expectations. Moroever, it generated a lot of controversial and Apple had to compensate the user that had already purchased the phone (something you would agree, it is very unusual).

Even if the sales of a device are great, and again I agree it has been the case for the iphone with AT&T, it might turn out to be a bad business for your company in the mid and long term.

In my opinion again, it will not be a good business for AT&T for they have agreed on sharing the revenue generated with the phone with the supplier and have agreed to configure the phone up to Apple. In other words, they have opened a very dangerous gate that might lead in the future to lower magins, pressure from other manufacturers to do the same (the next one is going to be Nokia) and lose some of the control that a telecom company must have of their customer base.

Needless to say that the move has been great for Apple. As you say, they have entered the market in a different way (something I promote again and again in this forum). This will make other manufacturers to rethink the way they do business and accelerate the launch of new models (please check other posting I have written about the i-phone).

This will surely expand the Smartphone market. However, I am not sure what will happen and who will be the winners and loser after the shake.