AT&T iPhone 3G $199/$299 Pricing Policy

[supmango]

Sure. New people need an incentive to switch carriers. Existing customers who are locked into a contract (and it's only customers under contract that this applies to) are stuck, unless they feel like paying the early termination fee, so AT&T has no reason to offer them a good deal. This is exactly the same way that every other carrier in the U.S. operates, so switching away isn't going to improve anything.

It is true that it won't improve anything. However IF (and this is a big if) everyone in a slave contract with AT&T who wanted a new iPhone 3G decided to cancel their current contract and not buy a new iPhone, they might actually feel that one. Still wouldn't do anything about the immediate situation, but it might make Apple rethink the scenario for future business relations with AT&T (yes I know about Apple's slave contract for 5 years with AT&T as well). Granted, none of this will happen because it would require the masses to THINK instead of taking it up the #$@.

 

[r3dko]

Lies?

There is one thing that I don't understand, well- the one thing that I really want to comment on--

When Steve Jobs came out and anounced the new iPhone.. I didn't hear any mention of subsidies, varying price points, and approvals. All I hear was that they are releasing it in 70 countries, and The new price is for ALL of the countries where releases are expected. If all this 'qualification' stuff is supposed to happen, then doesn't that make him a liar?

From a business standpoint, I understand the importance of subsidizing phones. I don't, however, see how things are going to work logistically. Unless Apple and AT&T are planning on merging within the next two weeks (not gonna happen), then they can't really pull all of this off in-store. It is against the law for AT&T to share customer data with anyone outside of the umbrella of the company, meaning that there is no way that an Apple employee can tell you about your AT&T plan. They can, of course, put up a site that provides a smiley face or a sad face depending on whether or not you qualify, but even that is on the line with regard to privacy and confidentiality laws. If an AT&T customer is turned away at the Apple store because of AT&T, and it's not done by a licensed AT&T rep, then take it to court! That will change the scheme of things fairly quickly.


As far as unlockers being the cause of the subsidies and new rules -- that is baloney. I know a guy that ships iPhones and other Apple products into Russia and Ukraine. Note- these countries are not on the list of approved nations. Does he buy them one by one and smuggle them in his luggage? No! At one time, he bought a container with 10,000 iPhones from the factory in China where they are made. This container passed through customs in China, as a licensed export, into Russia, where taxes and tariffs were charged. This container then was unloaded, and the phones distributed. Did he have to unlock 10,000 iPhones himself? Nope. Were they tied to AT&T? Nope. Did he do this without the knowledge of Apple?? Of course not. All this goes to show that Apple doesn't pay much heed to importers, exporters, unlockers, etc... They are all, in essence, already paying for the product ahead of time.

 

[know-it-all5]

Yep. If I decided that it was too expensive (as that scenario would up the price by $200 in addition to the extra cost of the plan) I wouldn't be getting a data plan for at least a year, possibly more. Lucky for them I really want the phone. There are many others that aren't going to make that decision.

Precisely... Average consumers are not you and me. We will buy the iphone, pretty much no matter what (though i don't know your current financial situation). The bottom line is your average joe, with an average income, who thinks the iphone is cool, will be turned off if because he isn't upgrade eligible, he needs to pay a bunch more for it.

No matter what happens, I am coming off a contract with sprint, and will get my iphone july 11th for 199 or 299 depending which one i choose. However, I really do feel for those that might get screwed by lousy business tactics that alienate loyal customers.

 

[arn]

All of the information posted indicating a price difference is all just speculation based on current models of AT&T's upgrade policy (which may or may not apply in this case). So, as I said before, no one really knows (or at least those who do aren't saying).

You are incorrect. Siegel said that there will be an unsubsidized price (see linked article). This will be a higher price (by definition).

arn

 

[btcutter]

It never ceases to amaze me how people never take into account how certain industries work before pissing and moaning about their own pocketbooks.

I just got a new phone in Jan from AT&T while waiting for the new iphone. Now I am not eligible for it but that'd be the case with ANY other phone. Why is this so hard to understand for people? At&T is not in business to give you money.

As for them paying anyones early termination fee to get them to switch to AT&T.. jesus h christ that's funny.

Problem is EXPECTATION. Most people including myself was expecting to pay FULL price much like the 1st iPhone......No problem....However, he came out and "shocked" the world by announcing $199 and $299 iPhone. He didn't say and AT&T didn't publish a memo at the time of announcement that there is a BIG ASTERICK behind his $199/299 pricing.
Again, AT&T and Apple created the expectation and now it's being changed. Of course, people are going to be PISSED off.

Like the article. Full price really can't be more than $175 or else people will simply terminate the contract and resign a deal OR just F@$#! AT&T/Apple.

I don't know who is at fault but I really think AT&T is really screwed up. they should have told the public about the difference in pricing immediately after Jobs announced the iPhone. Now they are creating outrage in the community. AT&T is probably trying to do damage control now. To maximize AT&T's long term profit, I would simply say stick to $199 and $299 pricing and if you did receive a subsidized phone within last two years, you will need to sign a THREE yr commitment instead of TWO (extra $360 minimum) and your early termination fee is now $300 (something like that). That should take care of EVERYONE.

 

[DimeTech]

Granted, we don't know what the unsubsidized price will be. these figures of 199+325 are getting thrown around because thats all the info we have now. but I find it funny that people will complain about an unsubsidized price, then talk about a ETF "trick". hellooooo. that means you will be paying almost 400 bucks for the iphone anyways. jesus quit being a new phone whore and wait for your upgrade price. I've been waiting with a ***** razr with verizon for 2 years to get an Iphone and finally my plan is up july 9th. thank you apple + att. lol

 

[zync]

I planned on getting my wife a 3G iPhone and upgrading myself from current iPhone. What pisses me off is that my wife got a Samsung phone just to get her by a year ago after her other phone died. It had a $50 - 75 dollar mail in rebate with it.

I might understand if she had gotten 150 or more off a PDA, but some POS phone and they want to possibly say 'No your not eligible for the subsidy price because you bought that POS phone last year and we saved you 50 bucks'.

I really hope they're not going play this chicken chit tactic.

That's what I did. My T616's little nubbin joystick was full of lint. Several attempts to clean it—including disassembly—failed. So I got tired of not being able to use most of the phone functions, so I went with a Samsung SYNC. Which wasn't the POS model, but it was supposed to hold me off for v2. Of course then there was no subsidy, so I didn't really care. Now there is and I'm annoyed. Really, I'm mostly annoyed that AT&T is making this so difficult. They knew for months, I'm sure, when Apple was going to announce this phone. They should have been ready from June 9th with pricing info and who's eligible for what. The way they're doing this is just retarded. At this point I don't care if I have to pay more I just want to know how much more I'm going to have to pay!

 

[know-it-all5]

You are incorrect. Siegel said that there will be an unsubsidized price (see linked article). This will be a higher price (by definition).

arn

The speculation needs to start shifting from if there will be an unsubsidized price, to what that price will be. Assuming that it may be inevitable, though I have no idea of how the logistics could possibly work, I feel like it would be a penalty, rather than an unsubsidized price. I feel like att will let ineligible users upgrade to a new iphone for maybe 25-50bucks extra. That addition would be sort of like a penalty for killing their old contract, but at the same time, they arent leaving att, and they are starting a new contract. Thus I think an additional 25-5o$ would be realistic. Anything over that would be inconceivable, and deplorable on apple and att's part.

 

[zync]

Haha, touche (hoping that was a "touche moment")

I will tell you one thing mate... we had one hell of a "back and forth." The truth is we won't know for a good while how good the subsidy was for att and apple. The reality is we may never know because, no matter what, this generation of iphone will sell better than its predecessor, due to world wide availability, and the added features of the 2.0 firmware.

It is funny how apple has kept their mouth quiet about it. I feel like there is a bomb to be dropped somewhere, by apple or att, that we will either love or hate. I'm sure these forums will be filled with whiners, whether its a good thing or bad thing.

True on all counts. Apple has probably kept quiet for two reasons: 1. It's Apple and 2. They're getting their money's worth by making AT&T look retarded. It's like AT&T is still working on figuring it out and we're getting notes from their whiteboard as it comes out, and consequently none of it makes any sense.

 

[know-it-all5]

Problem is EXPECTATION. I don't know who is at fault but I really think AT&T is really screwed up. they should have told the public about the difference in pricing immediately after Jobs announced the iPhone. Now they are creating outrage in the community. AT&T is probably trying to do damage control now. To maximize AT&T's long term profit, I would simply say stick to $199 and $299 pricing and if you did receive a subsidized phone within last two years, you will need to sign a THREE yr commitment instead of TWO (extra $360 minimum) and your early termination fee is now $300 (something like that). That should take care of EVERYONE.

I think that is a fairly good suggestion. Instead of it being a 3 years though. Why not just add 2 years to whatever their current commitment. Think about it, by getting the subsidy on your last phone, att essentially payed you for 2 years. If you are still in that two years, you owe them whatever time you have left on that contract. If you want an iphone, they can pay you (via the subsidy) for two more years of contractually obligated service. Thus you fulfill your obligation, and att doesn't lose. You sort of lose by being tied down to att longer, but at least you pay a cheaper up-front price for the iphone 3g.

 

[ilflyya]

Wow...

Strictly going off rumor...

Steve Jobs told me in his Keynote that I could get the iPhone for 199 or 299. So is AT&T making Steve Jobs a lier? If this is true, that I, a "would be" new customer, that has to pay some other price for the iPhone, well then they can keep it! I'll go without for a while and listen to the groans of everyone when my first iPhone has 32+ GB, and is 4G!

You know, my Lan line never made me this upset...

 

[know-it-all5]

True on all counts. Apple has probably kept quiet for two reasons: 1. It's Apple and 2. They're getting their money's worth by making AT&T look retarded. It's like AT&T is still working on figuring it out and we're getting notes from their whiteboard as it comes out, and consequently none of it makes any sense.

That is precisely it. And that is the reason why jobs gave NO details about how the pricing "really" worked out at WWDC. He gave the price. That is it. Apple is obviously letting att work out all the kinks now. All these rumors and statements by att associates and even execs are all premature "cover our ass statements." Like you said they are probably sitting in front of a white board as we speak. All the info, like what Siegel said, was probably true at that moment. They needed to tell the consumers something. They did. The reality is they gave us a bunch of half truths, with nothing really definitive. The definitive stuff will come in a couple weeks.

 

[zync]

Precisely... Average consumers are not you and me. We will buy the iphone, pretty much no matter what (though i don't know your current financial situation). The bottom line is your average joe, with an average income, who thinks the iphone is cool, will be turned off if because he isn't upgrade eligible, he needs to pay a bunch more for it.

No matter what happens, I am coming off a contract with sprint, and will get my iphone july 11th for 199 or 299 depending which one i choose. However, I really do feel for those that might get screwed by lousy business tactics that alienate loyal customers.

Unless it comes in at $799 unsubsidized, I should be good. Then it's really a matter of principle and not principal

I don't know who is at fault but I really think AT&T is really screwed up. they should have told the public about the difference in pricing immediately after Jobs announced the iPhone. Now they are creating outrage in the community. AT&T is probably trying to do damage control now. To maximize AT&T's long term profit, I would simply say stick to $199 and $299 pricing and if you did receive a subsidized phone within last two years, you will need to sign a THREE yr commitment instead of TWO (extra $360 minimum) and your early termination fee is now $300 (something like that). That should take care of EVERYONE.

That's the smartest plan I've seen yet, but they probably won't do it. Either they won't figure it out or they'll be too stupid to implement it.

I'd go for that in a heartbeat. Especially since there's not much else I expect to need on a handset for years to come.

 

[supmango]

You are incorrect. Siegel said that there will be an unsubsidized price (see linked article). This will be a higher price (by definition).

arn

We will see in the end. I haven't seen any information that would debunk the idea that perhaps the 199/299 price IS the unsubsidized price. Seems unlikely? Perhaps, but cannot be proven (to my knowledge) at this point. That might make it mesh better with what SJ said in his keynote address. I have never read Information Week, I am sure it has some reliability but I don't really know from personal experience. Maybe this will make me a believer in the source that seems to have the exclusive piece of evidence that there will be and unsubsidized price.

Edit: I see the information on the $325.00 subsidy (seems sketchy). Still not convinced that the unsub price is more than the announced price. This would make a little more sense and maintain my faith in what is announced by the CEO of Apple.

 

[zync]

I think that is a fairly good suggestion. Instead of it being a 3 years though. Why not just add 2 years to whatever their current commitment. Think about it, by getting the subsidy on your last phone, att essentially payed you for 2 years. If you are still in that two years, you owe them whatever time you have left on that contract. If you want an iphone, they can pay you (via the subsidy) for two more years of contractually obligated service. Thus you fulfill your obligation, and att doesn't lose. You sort of lose by being tied down to att longer, but at least you pay a cheaper up-front price for the iphone 3g.

I was wondering about that one. It's even better, and actually better for AT&T if you just signed a contract. For me right now I'd be even with either idea.

That is precisely it. And that is the reason why jobs gave NO details about how the pricing "really" worked out at WWDC. He gave the price. That is it. Apple is obviously letting att work out all the kinks now. All these rumors and statements by att associates and even execs are all premature "cover our ass statements." Like you said they are probably sitting in front of a white board as we speak. All the info, like what Siegel said, was probably true at that moment. They needed to tell the consumers something. They did. The reality is they gave us a bunch of half truths, with nothing really definitive. The definitive stuff will come in a couple weeks.

It feels good to agree.

 

[know-it-all5]

I was wondering about that one. It's even better, and actually better for AT&T if you just signed a contract. For me right now I'd be even with either idea.

The reality is, although I think I have an intelligent idea, I sill cant see a way to fit this into selling iphones at an apple store. Where will an apple store be able to playa around with all the nooks and crannies of your att contract. Its one thing, if you just activate a simple contract at an apple store, but once it gets past that, I begin to wonder how possible it is.

For example:

Let's say joe shmo has a wife who has junky phone and joe has a junky phone, and they have a wonderful att family plan. Joe Shmo and his wife are both not due for upgrades. Joe Shmo wants an iphone, so he goes to an apple store and buys one (whatever the price). He needs them to activate it, replace it into his att family plan, and add data, and also deal with whatever repercussions of him not being due for upgrade.

I am confused just reading over this situation. How is some apple store clerk gonna deal with att's business???

 

[mambodancer]

I'm a bit confused as to when the subsidy came about, also. After I saw the keynote I assumed it was going to be the same sale method as iPhone 1, just cheaper.

Yeah, remember all the people saying how the Gen 1 iPhone was subsidized? That never made sense to me and I knew they didn't know what they were talking about.

Let's go back to the original plan where the phone is more expensive but there aren't any of these stupid games for AT&T to play. Can't wait for Apple's exclusive with that company to end!

I'd love to see Apple do a one finger salute to AT&T and all the other phone companies and start their own mobile service.

That's the smartest plan I've seen yet, but they probably won't do it. Either they won't figure it out or they'll be too stupid to implement it.

I'd go for that in a heartbeat. Especially since there's not much else I expect to need on a handset for years to come.

Yeah, except now you are locked into a 3 year plan with a 2nd Gen iPhone when you just know they're will be at least 2 gens of upgrades during the life of your contract.

What's gonna happen when 3rd gen comes out with voice dial, better camera and video, etc., etc.?

 

[know-it-all5]

Yeah, except now you are locked into a 3 year plan with a 2nd Gen iPhone when you just know they're will be at least 2 gens of upgrades during the life of your contract.

What's gonna happen when 3rd gen comes out with voice dial, better camera and video, etc., etc.?

you will be perfectly fine, because when you are upgrading from an iphone, they dont add on to your old contract, they just give you a brand new one, and void your old one at no charge.

 

[ruinfx]

apple messed up by going in to business with att in the first place. the original iphone should have been sold by apple unlocked, but i guess they didnt have enough confidence that consumers would be willing to pay over $500 for a cell phone. judging by their focus on price in the keynote id say they still hold that belief. its a shame.

 

[matticus008]

We will see in the end. I haven't seen any information that would debunk the idea that perhaps the 199/299 price IS the unsubsidized price.

It's all over the Internet in professional reporting. Check out Forbes and WSJ if you must. Given that even a relatively conventional Samsung flip phone sells for $299 direct, it's patently obvious that the iPhone is subsidized. For comparison, HTC, the major manufacturer of Windows devices, sells most of their models in the $500-800 range.

Carrier locking and subsidies are the only reasons that prices that low can be achieved under current market and technology conditions.

Seems unlikely? Perhaps, but cannot be proven (to my knowledge) at this point.

If you're looking for "proof" in the form of an original invoice specifying the amount of the subsidy, good luck. I'm not aware of that information being published for any handset from any manufacturer.

There is no chance, none whatsoever, that $199/299 is an unsubsidized price.

That might make it mesh better with what SJ said in his keynote address.

It meshes fine. He said it would be $199 worldwide with a two year carrier agreement. The particular and complex details of pricing arrangements, total cost of ownership, optional features and their impact on pricing, and plan details do not make for a good presentation. Presentations for the public are all elevator pitches and 10-word answers.

You have to draw the line somewhere. You don't list TCO on a pricetag. You say, look, we're taking $199 plus tax from your wallet now. Last week, we were taking $399 plus tax from your wallet. It's AT&T's job to cover the plan prices and terms. It's the power company's job to explain their rates to you about how much it'll cost to charge the device. It's the bank or treasury's job to explain what's going on with the dollar and why index costs are increasing and purchasing power is decreasing, leading to a double-hit against your bottom line. All of that is separate.

Apple's involvement stops at the four corners of the device. It can't reasonably be expected to work any other way.

 

[know-it-all5]

apple messed up by going in to business with att in the first place. the original iphone should have been sold by apple unlocked, but i guess they didnt have enough confidence that consumers would be willing to pay over $500 for a cell phone. judging by their focus on price in the keynote id say they still hold that belief. its a shame.

Um... they did have the confidence. When the iphone came out it was sold at 499 and 599 price points.

 

[winterspan]

This is how it's always worked people

they are going to lose a lot of customers over this. me, for example.

Yes, it is likely that AT&T is going to screw over its current customers like they have done for a very long time.

Wait, so current AT&T customers who have been with AT&T for less than 2 years get treated worse than people who have never been with AT&T? That's some bulls***.

Anyways, I really don't understand all the outrage and complaining. AT&T, just like EVERY OTHER cellphone company in the United States operates this way. When you sign up for new service, you'll receive a new mobile phone that is provided at a discounted price in return for agreeing to a certain contract period. When the contract period is finally up, they'll offer you an equipment "upgrade", which entitles you to another discount on a new phone, since the original subsidy has been "payed back" by fulfilling the terms of your contract. This equipment subsidy, which in the United States is usually around $100-$250, is the reason for the fee associated with getting out of a contract early. Without the fee, people could sign up for service, get a high-end phone for the discounted price, cancel the contract and sell the phone for profit on ebay.

In regards to AT&T and the iPhone 3G, There will most likely be a few different scenarios depending on your situation.

1) If you are an existing AT&T customer who received a discounted phone on your current contract, then you have not yet "payed off" the subsidy. Therefore, you will most likely NOT be eligible for a discounted "upgrade", and will most likely have to pay the full price of an iPhone 3G.

2) If you are an existing AT&T customer who initially received a discounted phone, but have fulfilled the original contract, you are most likely eligible for a discounted "upgrade". This "upgrade" enables you to get a new phone at a discounted price, and that will most likely include the iPhone 3G for $199/$299.

3) If you are an existing AT&T customer *who bought an iPhone* when they signed up, you will most likely be eligible for an "upgrade" and thus the $199/$299 iPhone 3G price, since it is believed the ORIGINAL iPhone was *NOT* subsidized. In other countries, it appears some carriers are offering a free or cheap upgrade to the new iPhone 3G by trading in your old one.

This is all just speculation based on current AT&T policies with other phones. Maybe they will also help out current AT&T customers who are NOT eligible for an "upgrade" by letting them have the $199/$299 iPhone 3G price if they extend their contract another 2-years pass their existing ones.. It's all speculation until we see an official press release.

How is it BS? That's how the industry works! Carriers subsidize phones to attract new customers, and then lock them into a contract to guarantee that they'll be able to recoup their losses and actually make a profit. Or did you think that phone you got a year ago had an actual value of $50?

I don't know why people are so upset about this. Expecting to be able to get a new phone at a subsidized price without having first fulfilled your existing contract is kind of ridiculous. The exception is of course original iPhone owners - since AT&T didn't subsidize that phone, instead paying Apple a month revenue sharing sum, I'm sure they're anxious to get people off of that contract and on to one that doesn't require monthly payments to Apple.

It never ceases to amaze me how people never take into account how certain industries work before pissing and moaning about their own pocketbooks..

Wow, finally some rational voices among the bitching and moaning...

This is one more reason why there should be no lock-out from a carrier a user wishes to use for any particular phone. I should be able to purchase, straight-out an iPhone and use it on a carrier of my choice, even if that carrier can't support every feature of the phone.
Someday, I hope an American customer can do this without a hassle.

Call your congressman. Unfortunately (IMHO), the USA operates a much more Laissez-faire form of capitalism than other, more progressive countries, especially in Europe. In this ideology, any regulations or legislation are seen only as a "hindrance" to business, and they should be allowed to pretty much do whatever they want. This of course only holds until corporate lobbyists want legislation passed that protects business monopolies and makes it difficult for new competitors to enter the market. One of the reasons Europeans have better and more competitive mobile phone markets is because many individual countries and the EU mandated that telecom should only use GSM/UMTS networks, instead of the hodgepodge we have in the USA. It's better now, but we still have two major network technologies being used, and since a cell phone can only run on one of them, it makes it more difficult to switch to the carrier with the better deal, and competition and therefore consumers suffer as a result.

 

[Burgess07]

I say we get everyone on the forum to email sjobs@apple.com with the exact same subject title (to get his attention) and tell him to get AT&T to release all of the details.

 

[know-it-all5]

Call your congressman. Unfortunately (IMHO), the USA operates a much more Laissez-faire form of capitalism than other, more progressive countries, especially in Europe.

And that is why we should vote Barack Obama for president. All of our problems with crappy companies like att will be solved.

 

[ruinfx]

Um... they did have the confidence. When the iphone came out it was sold at 499 and 599 price points.

if they had to go with a carrier to get the price to 499/599 just think what it would have cost if apple had sold it unlocked originally. then again nokia sells smart phones for more than that and people buy them.