AT&T Raises Subsidized iPhone 3GS Price to $0.99

Since no one has figured it out yet.

Taxes.

Ever wonder why you need to pay taxes on giveaways/free cars/contest winnings?
Thats why its not free.

dfnj123 said:

Still free at Apple Stores, Radioshacks, Best Buys, Targets, Wallmarts, etc...

AT&T corporate stores are going to be the only people to lose anything because of this...

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Sure. If you're at the AT&T store and they tell you it's $0.99 you're going to leave, get in the car and drive to the Apple store....

thezoostation said:

Because it comes off as spiteful more than anything else. Everyone is talking about how the average consumer can surely afford .99, but conversely giant motherf-ing ATT can afford .99 as well. This comes across as taking someone's ice cream and then licking it once before giving it back. It basically feels rude. "We agreed to a free pricing structure, we let Apple tout it as a free pricing structure, but now we're gonna tack on the measly sum of .99 because we're ATT and we can." If ATT had a history of doing what's right for the consumer and not engaging in petty pricing games, I suspect people would be more likely to be ok with it. However, ATT has a history of engaging in very anti-consumerist behavior just because they can. They've earned the ill will that is directed at them.

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Well, first, I guess we have different ideas on the meaning of evil. I think it's a little strong to describe a phone company, but I don't want to split semantic hairs - so we'll just leave the word "evil" alone.

As far as "doing right for the consumer" - companies are in the business of making money. (I am not decrying or defending this, just stating a fact). You're suggesting that there are nice ways of doing this, and rude ways of doing this. But at the end of the day - they exist to take money and provide goods or services. I'm not sure I agree that making me feel good about giving up my money is anything more than an effective marketing tactic - but,IMO, it is no more good or evil than a company that just takes the money without any such concerns. In the confidence game it's called "cooling the mark". After conning somebody out of their money, they make mark feel like they haven't been hustled. It's the car salesman telling you that you just made a great deal - you feel good, but they still got your money.

ebyron said:

Understand i am FAR from being an accountant, but it was discussed not too long ago on TWIT.

This is likely be to be in accordance with the Sarbanes Oxley accounting laws.

At it's most basic level, if something OF VALUE is given away for free the company technically has to account for that value as a loss on their balance sheet.

If anyone understands these laws more please feel free to chime in.

Eliot

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No difference in accounting. It isn't worth $.99, so you still take a loss when receiving that amount. I don't know what they are doing.

I'm not a SOX expert, but I am an accountant. Could be a recognition timing issue with some part of SOX, I suppose.

Delete

Why? Because eff you, we're the phone company, we don't care.

The only reason I can think of is that AT&T saw sales of the other phones they offer for free drop dramatically, thus ticking off other phone manufacturers. This is probably their way of evening the field.

I think I read a news article today saying there will be an AT&T Thanksgiving sale where smartphones will be $0.01. I guess they want those phones to be cheaper the iPhone or if they are including the iPhone, then they need to be able to actually lower the price for the "sale."

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)

I work at AT&T, This is being done to help prevent fraud as the .99 cents cannot be billed to your bill. It must be charged to a credit or bank issued debt card. Fraudsters are using stolen identities to steal these handsets ....been an issue since they went free

Metcury46l said:

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)

I work at AT&T, This is being done to help prevent fraud as the .99 cents cannot be billed to your bill. It must be charged to a credit or bank issued debt card. Fraudsters are using stolen identities to steal these handsets ....been an issue since they went free

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You don't have this problem with any other $0 handsets?

Metcury46l said:

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)

I work at AT&T, This is being done to help prevent fraud as the .99 cents cannot be billed to your bill. It must be charged to a credit or bank issued debt card. Fraudsters are using stolen identities to steal these handsets ....been an issue since they went free

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Of course, that makes sense, too.

CylonGlitch said:

There has to be a legal reason they are doing it, otherwise they wouldn't.

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I bet it has something to do with the contracts now with the other carriers. Maybe there was a legal dispute because AT&T still had an advantage being able to offer a free phone, when others couldn't. Therefore they were forced to change the price. Now it is not 'free' or something of that effect.

Ramsos said:

What I would like to know is how much the Sales taxes are on it. my 32gig 4S was $299.00 but $365.00 out the door.

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In CA itd be a bigger deal since the unsubsidized price for a 3GS is $350 so you'd really pay like $30-33 for the phone, which is still a great deal. In Seattle where I live, it'd be $1.10 for the phone since we don't pay tax on the full price like they do in CA.

But seriously, if you complain about paying $1 and some cents for a phone that used to be free for a month, then you probably shouldn't even have an iPhone.

Mad-B-One said:

Is that what you missed when you read my post?

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No, I read your whole post. I still fail to see how either free or $1 implies any ongoing obligation more than the other.

Vendrazi said:

You don't have this problem with any other $0 handsets?

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I imagine there isn't as much of a grey/black market for, say, a Palm Pixi as there is for an iDevice.

anubis said:

Ding Ding Ding! We have a winner!

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So are you saying they were in violation of SarbOx until now? And all their other free phones are magically different?

This is an outrage !!!!!!!!!

100% increase is unacceptable !!!!!!!!!!!

pavelbure said:

This is an outrage !!!!!!!!!

100% increase is unacceptable !!!!!!!!!!!

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This is an outrage !!!!!!!!!

Math failure is unacceptable !!!!!!!!!!!

dfnj123 said:

Still free at Apple Stores, Radioshacks, Best Buys, Targets, Wallmarts, etc...

AT&T corporate stores are going to be the only people to lose anything because of this...

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Is 99 cent going to stop you? I'd go to the closest store, between gas and time, I doubt you'd save money if the AT&T store was closer, but you opts to drive further.

just not free

My suspicion is that they make a larger margin on android phones than they do on iPhones. By making the iPhone $.99, it moves off of the free phone offerings. They'll still move plenty of them, especially if people are asking for it, but it wont cannibalize the android sales.

I dont buy the taxes scenario ( they've clearly got that situation under control for all of the other free phones ) or theft explanation ( there are plenty of valuable android phones ).

phillipduran said:

It's probably some account mumbo jumbo stuff. They were probably QQ'ing that they couldn't add the sales of a bunch of items at $0 to determine numbers information.

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I'm certain it is accounting related. I think AT&T wants to recognize revenue in some way that a free price forbids. Since they are getting so much traction on the iPhone 3GS, perhaps they need to collect some amount of revenue for recognition purposes for their next quarterly earnings report.

HarryKeogh said:

I'm guessing this was just done to avoid some conflict in their software or just make some accounting cleaner.

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Multiplying 3,000,000 units sold times $0 kept freaking out the Accountants when the total was 0...3,000,000 times 1 is a much better number

Nicky G said:

Maybe they experienced a Y2FREE bug with $0 orders.

Or maybe Sarbanes Oxley accounting rules? Like how Apple used to have to charge something for OS updates, before they changed their accounting practices?

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This looks to be correct. It is almost certainly accounting related. AT&T does not want to show the loss in their Q4 reporting. They want to show it as revenue and increased contract renewals and new subscribers.

Ramsos said:

What I would like to know is how much the Sales taxes are on it. my 32gig 4S was $299.00 but $365.00 out the door.

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That's for the privilege of living the California dream. Other states don't do that.

Remember how Apple used to charge for iPod Touch updates to new iOS versions and no one could figure out why when they didn't do it for iPhones? Jobs eventually gave a vague accounting reason, and I suspect a similar could possibly be the case here.

However, since AT&T didn't say that, nor did they charge a price from the start, it's probably a change in marketing strategy based on sales data they've generated thus far.

.99 has been at the end of most dollar amounts of anything being sold for decades because people tend to respond to it more. If their 3GS sales were not as big as they wanted, their marketing team might think assigning a value to it will help. Of course, they know they could be wrong, so I'm sure they're prepared to drop the price if need be, but I doubt they'll need to.