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

[currentinterest]

My guess is that if one has a contract with AT&T and no iPhone one simply has to agree to a new two year contract from the date of purchase of the iPhone to get the subsidized price. This is the same as the new customers. If this isn't the case, one can simply add a line for $9.95 per month and add an iPhone, switch numbers, then call after a month and discontinue the add a line. I did this once with another carrier. Each change results in a two year extension, but it was only a matter of a month.

 

[know-it-all5]

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.

Since the first gen iphone was supposedly unsubsidized, apple could have just as easily sold it for the same price (499 and 599) unlocked. They just didn't. It had nothing to do with price. If they were worried about price at the beginning, they would have let att subsidize the first gen phone.

 

[bigjohn]

Ok, so the most I'll pay is $474 ($299+$175). I can deal with it over the next few weeks. I'll just ask the trust fund guy for a little extra, he'll understand.

If they release an iPhone in November that is 32GB I just hope that since I waited and am paying the freight this time that I'll get treated better next time like current iPhone people are getting treated now.

This is what I get for wanting 3G on my timetable and getting the Blackjack last October.

 

[btcutter]

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.

You think AT&T is reading this forum and maybe they ought to call me an offer me some $$$ to help them with damage control. I think it's not difficult for they to not only appease the public by sticking to the $199/299 plan but ALSO pull more customers by 1) get people who have non-iPhone plans already with AT&T to upgrade and spend a load on data plan for minimum of two yrs. 2) pull in tons of people from T mobile and verizon. 3) move iPhone edge users to iPhone 3G and get more $$ out of them as well.

AT&T should be making out like a bandit. How much does the CEO get paid???

If they can't get this slam dunk gimme, all AT&T stock holders ought to sell their share because this is a grossly mismanaged company.

 

[bigjohn]

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

Perhaps, but we'll end up with twice as many problems with many more companies and this time the government will be one of them.

At least you'll have your iPhone while you're walking to work.

 

[lazyrighteye]

I seem to recall a similar amount of anxiety in the weeks leading up to the initial iPhone launch.
AT&T was tight-lipped.
We all knew what they had to say would make or break the launch. And they made it, IMO.
As soon as they announced $20 unlimited data, the lines began forming.

So, like last year, maybe we should wait until everything is out on the table before we flip ship.
Who knows?
AT&T has a HUGE oportunity here. And they know it.

 

[supmango]

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.

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.

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.

Nice multi-quoting. I would love some links to these Wall Street Journal and Forbes magazine articles you speak of (seriously, I want to know). As far as the 199/299 price not having a chance to be the unsubsidized price, what are you founding this on? If it is on the supposed $325.00 price estimate on the subsidy, I would argue it is still premature. The rest of you dialogue is mostly accurate, but does not give Apple license to mislead about the price of their device (the plan price does not seem to be in question, although that's the base of your rebuttal). Sorry, but it is Apple's job to set the price of their device (unless they want to go the way of the PC and become just a software company). It is AT&T's job to set the service price (which they seemed to do).

 

[btcutter]

My guess is that if one has a contract with AT&T and no iPhone one simply has to agree to a new two year contract from the date of purchase of the iPhone to get the subsidized price. This is the same as the new customers. If this isn't the case, one can simply add a line for $9.95 per month and add an iPhone, switch numbers, then call after a month and discontinue the add a line. I did this once with another carrier. Each change results in a two year extension, but it was only a matter of a month.

Interesting plan.

However, when you add a line don't you incur the terminating fee of that line if you received a subsidized phone???

I like to hear what others have to say about this plan of attack.

 

[arn]

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.

Actually, this isn't true. If a new iPhone comes out in 1 year, you will not be able to upgrade to it without breaking your contract or qualifying for eligibility. The only reason you can do it this time is because the original iPhone was an unsubsidized phone.

reference: http://bits.blogs.nytimes.com/2008/...ones-to-mass-market/index.html?ref=technology

Current iPhone owners can upgrade now, but then they’ll be locked in. Because the first iPhone was sold without an upfront subsidy, current users are welcome to buy a new $199 or $299 3G iPhone.

But there are catches. First, they will have to agree to the new $30-a-month data plan, replacing the $20-a-month plan associated with the first iPhone models. Also, they will then be locked into a two-year contract and, as with most subsidized cellphones, they won’t be able to upgrade to a new phone at a subsidized price until their contract nears expiration.

So if you think you may really want next year’s iPhone, you may not want to upgrade now.

arn

 

[pamon]

great reply arn... good article at the NYT... no one knows until 7/11

 

[mosx]

Speculation: While rumors have pegged AT&T's subsidy at $325, it seems very unlikely that the unsubsidized price will be this high ($199+$325). Historically, canceling your existing mobile phone contract for the typical $175 early-termination fee would automatically qualify you for any future subsidized phones. As a result, we suspect the unsubsidized pricing will be about the same as the early-termination fee (about $199+$175 for 8GB).

Thats a silly thing to say. $175 termination fee somehow means that AT&T is only subsidizing $175?

Then how do you explain all of those other phones that would go for $300+ at retail but AT&T sells for $100 or less with a contract?

Just because the termination fee is $175 doesn't mean that AT&T is subsidizing $175.

Just look at Apple's record for prices. I guarantee you this phone will be at least $200 more retail than the $199 and $299 price tags Jobs quoted.

 

[matticus008]

I would love some links to these Wall Street Journal and Forbes magazine articles you speak of (seriously, I want to know).

I'll give you one link, since all of them are a 10-second Google search away.
http://wsj.com/article/SB121305706681259335.html?mod=most_viewed_day

Take your pick of the others. I'll even give you a query: "iphone 3g subsidy site:wsj.com".

As far as the 199/299 price not having a chance to be the unsubsidized price, what are you founding this on?

Competing products sold in direct channels, and the fact that AT&T's CEO has talked about the decision to subsidize the second-generation iPhone. Regular cell phones cost more than $200, and smart phones are priced at or above $500. There's nothing magical about Apple that gives them the breakthrough power to reduce their costs to a third that of the competition.

Sorry, but it is Apple's job to set the price of their device (unless they want to go the way of the PC and become just a software company).

Exactly, and they did. $199/$299, conditioned on a service agreement. Subsidies, revenue sharing, or other discounts provided to them aren't part of the equation for the consumer. Many, if not most, of the products you buy every day involve money coming in from multiple sources and sold at different markups. That whole process is ordinarily transparent to the consumer, but people like to break out their x-ray glasses when they get their panties in a bunch over Apple products.

Then some of them get uppity on the Internet, because they've just "discovered" a "cause" to be outraged over...little do they know that it's not really news to the professional world. For example, just sit back and watch the newbies come out of the woodwork every time one of those horribly flawed "teardown" cost posts are published. This just in! Products are not sold at cost by businesses! Scandalous, really.

 

[carfreak12321]

What about other countries?

specifically Japan
where can we find information on pricing on the iphone in Japan?

i checked the japan softbank site and it has no information regarding pricing for the iphone

 

[arn]

Thats a silly thing to say. $175 termination fee somehow means that AT&T is only subsidizing $175?

Then how do you explain all of those other phones that would go for $300+ at retail but AT&T sells for $100 or less with a contract?

Just because the termination fee is $175 doesn't mean that AT&T is subsidizing $175.

That's not what I'm saying.

Point is if AT&T sells the unsubsidized iPhone for too high a price, people will just cancel their existing contract ($175 termination fee) and buy a subsidized iPhone ($199) for a total cost of $374 ($175 + $199).

This just means that AT&T can't price the unsubsizdized phone much higher than that regardless of what they are actually paying as a subsidy.

arn

 

[know-it-all5]

Actually, this isn't true. If a new iPhone comes out in 1 year, you will not be able to upgrade to it without breaking your contract or qualifying for eligibility. The only reason you can do it this time is because the original iPhone was an unsubsidized phone.

reference: http://bits.blogs.nytimes.com/2008/...ones-to-mass-market/index.html?ref=technology



arn

Forgot about that when I made that comment. Thank you for clearing that up. I do however think, some incentive will probably be given to people who have the 3g iphone to get whatever next iphone comes out.

 

[VDA]

what a cluster-you-know-what

LOL.....what a cluster-you-know-what this whole thing has turned out to be!!

One bizarre personal situation after one bizarre personal situation...everybody's got a different scenario on how it relates to their ability or inability to buy this product.

Granted this should have all been ironed out by AT&T and Apple on June 9th when the iphone 3G was announced. But for officials of two multi-billion dollar companies to openly admit there are still "unknowns" as far as the purchasing process goes is simply unacceptable.

Is this foreshadowing at work -- in the sense that the phone itself will also actually have "issues" after it's released?? One can't help but wonder!!

They should have just sold the phone at full retail price and been done with it!!

 

[baslotto]

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.

Church! THANK YOU! I'm sold!
Now back to ATT...

 

[irun5k]

Well, everyone complained about the fact that the iPhone wasn't "practically free" when it came out (since this is the precedence set by subsidization.)

So now, it is subsidized, not free, but pretty darn cheap in comparison. Like $200 vs. the original $600 (later, $400) tag on the iPhone 1.0.

It gets messy when you start getting things on the cheap, as you see now. IMHO I think $400 was not bad at all for an iPhone. I almost wish they only sold the things at Apple Stores for $400 (unsubsidized) so you could do what you wanted with them and not feel like you were selling your soul. Of course, this couldn't happen since they are locked to AT&T, even when you pay full price. Small parts of this deal with AT&T are technical issues (visual voicemail) and the rest of it is just business.

That's not what I'm saying.

Point is if AT&T sells the unsubsidized iPhone for too high a price, people will just cancel their existing contract ($175 termination fee) and buy a subsidized iPhone ($199) for a total cost of $374 ($175 + $199).

This just means that AT&T can't price the unsubsizdized phone much higher than that regardless of what they are actually paying as a subsidy.

arn

True, and one would *hope* that you'd get some kind of a break if you're actually a customer in good standing. So you can get a new 3G for $374 after breaking your contract, and signing up again- I don't think AT&T really wants people doing this so the price will probably be good enough to where a person doesn't have to. I'd go the cancellation route if I knew it would save me just $10. (part of it for the ten bucks, part of it to prove a point.)

 

[radiogod69]

I seem to recall a similar amount of anxiety in the weeks leading up to the initial iPhone launch.
AT&T was tight-lipped.
We all knew what they had to say would make or break the launch. And they made it, IMO.
As soon as they announced $20 unlimited data, the lines began forming.

So, like last year, maybe we should wait until everything is out on the table before we flip ship.
Who knows?
AT&T has a HUGE oportunity here. And they know it.

probably the best amount of sense I've read through this entire post!!! Though $20 pda data plan for 3g highly unlikely.

 

[Jowl]

Never though I'd say this but I feel for you people over the pond. AT&T are deciding whether you are 'good enough' to have an iPhone.

And a 2 year contract - is that standard? 2 years is a long time for technology. 18 months is long enough for me - I've always stuck to 12 months contract but I'm breaking this for the iPhone. At least O2 seem to have decent tariffs, a good upgrade plan and actually want current and new customers to have one!

 

[supmango]

I'll give you one link, since all of them are a 10-second Google search away.
http://wsj.com/article/SB121305706681259335.html?mod=most_viewed_day

Take your pick of the others. I'll even give you a query: "iphone 3g subsidy site:wsj.com".

Competing products sold in direct channels, and the fact that AT&T's CEO has talked about the decision to subsidize the second-generation iPhone. Regular cell phones cost more than $200, and smart phones are priced at or above $500. There's nothing magical about Apple that gives them the breakthrough power to reduce their costs to a third that of the competition.

Exactly, and they did. $199/$299, conditioned on a service agreement. Subsidies, revenue sharing, or other discounts provided to them aren't part of the equation for the consumer. Many, if not most, of the products you buy every day involve money coming in from multiple sources and sold at different markups. That whole process is ordinarily transparent to the consumer, but people like to break out their x-ray glasses when they get their panties in a bunch over Apple products.

Then some of them get uppity on the Internet, because they've just "discovered" a "cause" to be outraged over...little do they know that it's not really news to the professional world. For example, just sit back and watch the newbies come out of the woodwork every time one of those horribly flawed "teardown" cost posts are published. This just in! Products are not sold at cost by businesses! Scandalous, really.

Arn posted a link to a NY Times article indicating that the iPhone would not sell for less than $199.00. OK, so that seems to indicate that would not be distinguished as an unsubsidized price. Still seems pretty misleading of Apple if it ends up costing more to people in a current contract with AT&T. Although the qualifier "almost" was used by SJ in reference to the max price of 199 in the first 22 countries it will be released in. To me, this subtle disclaimer indicates perhaps there may be an unsubsidized price point. Likely undecided as already stated by others. Let me know if you find a "good" teardown cost post amongst all of the flawed ones when they show up. I want to make sure I really see how much money Apple is making here so that I can scoff at the scandalous nature of it all.

True, and one would *hope* that you'd get some kind of a break if you're actually a customer in good standing. So you can get a new 3G for $374 after breaking your contract, and signing up again- I don't think AT&T really wants people doing this so the price will probably be good enough to where a person doesn't have to. I'd go the cancellation route if I knew it would save me just $10. (part of it for the ten bucks, part of it to prove a point.)

Agreed.

 

[pilotzen]

In the end I like the fact that apple releases a product, maybe full with the knowledge that it ends up molding current business model, in this case Telcos and previously the digital music market, into totally new landscapes.

Of course the debate whether or not this is good, will last many, many more forums but i can't help but feel that apple, understanding the current telco model and its convoluted and greedy nature, are edging their bets on the telco model changing to revolutionise and evolve.

Maybe in their eyes telcos are the new record companies... Maybe they dropped the real pressure back on the telco by offering something the general public would/may clamor for, a mp3 player and 3g phone in 1 product for example , so much that the weight may force a change for the better.

I for one think that we may be witnessing a watershed moment not to dissimilar to when the ipod/itunes store bomb got dropped... and we all know how that changed and continues to change that particular industry

 

[BongoBanger]

I don't think Apple have moulded the telecomms industry in Europe, rather they've been forced to bow to the traditional model.

 

[28monkeys]

"If you don't qualify, there will be a higher unsubsidized price for the iPhone 3G which will be announced before July 11th. "


It is a big turnoff! So how much i 've got to pay for 3G iphone in Hongkong then?!

 

[freddiecable]

Wow - this is really cheap - if it ends up at this level! I will buy without a plan...so it fits me perfectly. Hope it will have the same level in Europe - but looking at rumours it will not. the price in sweden will probably be 300 USD + a monthly plan. In that case we will see a grey market still blooming.

"As a result, we suspect the unsubsidized pricing will be about the same as the early-termination fee (about $199+$175 for 8GB)."