Contract and Subsidy Issues for iPhone Users Looking to Upgrade to iPhone 3G S

[Fluffy Bunny]

AT&T Income

What everyone fails to ask is how much does the iphone cost Apple to produce and what is their margin of profit and how much does ATT make from a two-year contract. Before we argue over the prices of subsidized and unsubsidized phones. We know it costs apple $173.00 to make the iphone 3G. We should start from here. Could anyone do the numbers? Or is there a website that has more information about this?

Well, per their annual report for 2008, AT&T's income is approximately 10% of revenue. If the base iPhone plan is $70 per month (excluding $10+ in taxes thanks to the government - now that is something to get angry over), AT&T would make $7 per month off of the base plan. Now the 10% income margin for AT&T includes the local and long distance business, which have been around for about 140 years, so the cellular profit margin is probably below 10%, or less than $7 per month.

 

[jrichard012]

I'm really pi**ed at AT & T

I was told by ATT this morning that they assign preferences to customers depending on how valued their past history is. This coincides with reports on customers buying a certain combination of first and second generation iPhones and thereby being "allowed" to buy the 3G S at Apple's stated retain cost at different intervals relative to their contract.

I told the ATT rep that I had it with them. We have two landlines, two iPhones plus their fastest GSL I/Net connection. Never been late on monthly payments. My specific situation is that I can upgrade to the new phone this December but will have to pay full retail and sign in to another two year contract. This will never happen as I plan to bypass the 3G S and wait a year to get the next one. Plus, when Apple partners with Verizon, I'm outta AT & T.

 

[Chupa Chupa]

What we should expect, however, is a little bit of transparency from all involved regarding what the end consumer cost will actually be. That transparency is lacking here, and Apple takes an equal share of the blame for that, if not the lion's share of said responsibility in this particular case.

See: http://store.apple.com/us/browse/home/shop_iphone/family/iphone?mco=MTE2OTU

How much more transparancy do you need. The price is right on the store's product web page: (2) Requires new two-year AT&T wireless service contract, sold separately to qualified customers...For non-qualified customers, including existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G, the price with a new two-year agreement is $499 (8GB), $599 (16GB), or $699 (32GB). (Italics and bold added for emphasis).

 

[point665]

I was there for the launch day of the original 1st gen iPhone... Bought two of them (neither for me as I was still living in Europe at the moment) and those two were never upgraded to 3G models. Yesterday I ordered the 3GS models for those accounts, $199 each - no problem. When I moved to the States back in November of 07 one of the first things was my iPhone purchase and I never took advantage of purchasing a 3G model. Yet over 18 months later and Apple/AT&T charged me $399 to upgrade (I was on the phone for hours with both...)

So basically: purchased 1st gen iPhone in late 07 and now had to pay $399 (same as 3G purchasers)... Funny how I never took advantage of the subsidized pricing of the 3G when I could of but now a year later cannot take advantage of the 3GS at subsidized pricing.

Owell...

 

[Shin3r]

Is it me or are Yanks not used to the real world? IF YOU TAKE A CONTRACT OUT FOR A PHONE, THEN THAT PHONE IS LIKELY TO BE SUBSIDISED BY THAT CARRIER (simply they have paid for your phone so you will sign up to a contract), THEY HAVE TO RECOVER THAT COST (it is a business..... surprise!) at the end of your contract you can get a NEW contract THEN MOAN SOME MORE (after getting your phone cheap in the first place?!?!). XX

except AT&T changes the rules whenever they want, like making you sign a contract even when the phone isn't subsidized, and doesn't count that towards anything later on.

 

[NAG]

See: http://store.apple.com/us/browse/home/shop_iphone/family/iphone?mco=MTE2OTU

How much more transparancy do you need. The price is right on the store's product web page: (2) Requires new two-year AT&T wireless service contract, sold separately to qualified customers...For non-qualified customers, including existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G, the price with a new two-year agreement is $499 (8GB), $599 (16GB), or $699 (32GB). (Italics and bold added for emphasis).

That would be great if it was true. Maybe you should actually pay attention to what people are saying before you berate them for their perceived ignorance. You might find ignorance is a shared trait.

 

[michelle21]

I was told by ATT this morning that they assign preferences to customers depending on how valued their past history is. This coincides with reports on customers buying a certain combination of first and second generation iPhones and thereby being "allowed" to buy the 3G S at Apple's stated retain cost at different intervals relative to their contract.

I told the ATT rep that I had it with them. We have two landlines, two iPhones plus their fastest GSL I/Net connection. Never been late on monthly payments. My specific situation is that I can upgrade to the new phone this December but will have to pay full retail and sign in to another two year contract. This will never happen as I plan to bypass the 3G S and wait a year to get the next one. Plus, when Apple partners with Verizon, I'm outta AT & T.

The upgrade pricing (any upgrade) is detailed on the att support page. It appears to be all based on your monthly total. plans totally more than 100.00 on the primary account get the better deal. Finding the info is like looking for Waldo...

 

[jrichard012]

Would be nice if they gave us the exact formula because so far that doesn't explain the whole thing. It only seems to be a tiny factor.

Geeze, if that's the case, then I should get the phone at Apple's stated retail next week. We spend $230 a month for two iPhones, two landlines and the fastest GSL. AT & T is slinging the bull to us.

 

[dizzy13]

Would be nice if they gave us the exact formula because so far that doesn't explain the whole thing. It only seems to be a tiny factor.

It seems like a bigger factor to me. I'm trying to collect more data on the monthly bill to upgrade date.

So far it seems the $90-95 range (which is probably the average iPhone bill) is 17 months into contract.

My bill at $110 is 12 months into contract.
My line 2 on the family plan at $40 is 20 months into contract.

My guess for the cheapest iPhone 3G plan (not in family plan) of $70 would be 18 months in.

Geeze, if that's the case, then I should get the phone at Apple's stated retail next week. We spend $230 a month for two iPhones, two landlines and the fastest GSL. AT & T is slinging the bull to us.

They break it down for each line. So I'm sure you main line can upgrade 12 months into the 2 year, which would be July 12th if you bought the 3G on launch day.

 

[michelle21]

Geeze, if that's the case, then I should get the phone at Apple's stated retail next week. We spend $230 a month for two iPhones, two landlines and the fastest GSL. AT & T is slinging the bull to us.

No, on a family plan there is a primary account I believe, and that primary account must be more than 100.00 before any taxes or additional fees.

It gets grey here, but I guess they consider the fees for the other phones addons and don't get figured into the equation.

Overly complicated... I think.

 

[streboRekiM]

Here's an idea... instead of punishing the faithful, why not offer those who aren't qualified an option to extend their contract. I have 14 months left on my contract and in exchange for getting the new phone, I would gladly extend it to 38 months.

 

[NAG]

Geeze, if that's the case, then I should get the phone at Apple's stated retail next week. We spend $230 a month for two iPhones, two landlines and the fastest GSL. AT & T is slinging the bull to us.

I'm of the opinion that there is an equation, but it is a borked equation that allows some people with a certain set of features to upgrade much faster than they should be able to. In other words there error isn't that we're not able to upgrade faster but that some people are able to upgrade before they should.

I'm completely fine and completely willing to just wait for the 2010 iPhone. I just want to know why there is such a huge variation in eligibility time.

 

[Chupa Chupa]

I was there for the launch day of the original 1st gen iPhone... Bought two of them (neither for me as I was still living in Europe at the moment) and those two were never upgraded to 3G models. Yesterday I ordered the 3GS models for those accounts, $199 each - no problem. When I moved to the States back in November of 07 one of the first things was my iPhone purchase and I never took advantage of purchasing a 3G model. Yet over 18 months later and Apple/AT&T charged me $399 to upgrade (I was on the phone for hours with both...)

So basically: purchased 1st gen iPhone in late 07 and now had to pay $399 (same as 3G purchasers)... Funny how I never took advantage of the subsidized pricing of the 3G when I could of but now a year later cannot take advantage of the 3GS at subsidized pricing.

Owell...

That's wrong since the 2G was unsubsidized. I'd bump it up the chain to someone who knows what they are doing and knows the dif b/t a 2G and 3G. You are are eligible for a $199/299 iPhone if you didn't get a 3G and the phone you are trying to upgrade is a 2G. You just have to sign a new contract. Worst case just go to a store and get it fixed.

 

[babyj]

So basically: purchased 1st gen iPhone in late 07 and now had to pay $399 (same as 3G purchasers)... Funny how I never took advantage of the subsidized pricing of the 3G when I could of but now a year later cannot take advantage of the 3GS at subsidized pricing.

Not sure about the US, but in the UK O2 were very clear that the discounted price for the 3G for customers with 1st Gen iPhones was for a limited period only (about 3-4 months after the 3G launch). After that you were locked in for the remainder of your contract with no subsidised upgrade price. It might have been harsh but they couldn't have stated it any clearer.

 

[jrichard012]

The upgrade pricing (any upgrade) is detailed on the att support page. It appears to be all based on your monthly total. plans totally more than 100.00 on the primary account get the better deal. Finding the info is like looking for Waldo...

Actually, if this is the case, our $230 monthly hit should qualify me for an Apple suggested retail of 199 or 299 next week. I cry bull on AT & T.

 

[dizzy13]

Here's an idea... instead of punishing the faithful, why not offer those who aren't qualified an option to extend their contract. I have 14 months left on my contract and in exchange for getting the new phone, I would gladly extend it to 38 months.

Yeah, I thought of this. I've been with at&t since they were at&t wireless (then cingular and now att). I doubt they would do that though b/c chances of someone leaving early would increase, increasing their risk.

 

[NAG]

Not sure about the US, but in the UK O2 were very clear that the discounted price for the 3G for customers with 1st Gen iPhones was for a limited period only (about 3-4 months after the 3G launch). After that you were locked in for the remainder of your contract with no subsidised upgrade price. It might have been harsh but they couldn't have stated it any clearer.

I don't believe AT&T is doing it like that. Sucks for O2 first gen iPhone users, I guess.

 

[xoph3]

See: http://store.apple.com/us/browse/home/shop_iphone/family/iphone?mco=MTE2OTU

How much more transparancy do you need. The price is right on the store's product web page: (2) Requires new two-year AT&T wireless service contract, sold separately to qualified customers...For non-qualified customers, including existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G, the price with a new two-year agreement is $499 (8GB), $599 (16GB), or $699 (32GB). (Italics and bold added for emphasis).

Fine print is transparent? You might want to tell folks like CNN about such things. Tell me how this sort of news story, which again I argue is caused by Apple carelessly flaunting an end customer price point that they ultimately do not decide, is transparent as to the true price of the device?

http://www.cnn.com/2009/TECH/06/08/apple.iphone.wwdc/index.html?iref=newssearch

Yes, I am smart enough to do my homework, I know the bait and switch tactics of the wireless industry all too well. But again I ask, why doesn't Blackberry or anyone else directly publicize any sort of pricing at all in their advertisements or launch announcements? So as to maybe avoid the angst we see now, even in this highly informed customer forum?

 

[Peace]

After all is said and done the end result is the end result.

People that purchased the iPhone 3G have to wait if they want the $199 price.

This very fact will hurt sales of the 3GS for both Apple and AT&T..

They get what they deserve.

Simple.

 

[michelle21]

It seems like a bigger factor to me. I'm trying to collect more data on the monthly bill to upgrade date.

So far it seems the $90-95 range (which is probably the average iPhone bill) is 17 months into contract.

My bill at $110 is 12 months into contract.
My line 2 on the family plan at $40 is 20 months into contract.

My guess for the cheapest iPhone 3G plan (not in family plan) of $70 would be 18 months in.




They break it down for each line. So I'm sure you main line can upgrade 12 months into the 2 year, which would be July 12th if you bought the 3G on launch day.

How can you consider landlines and dsl into that equation, we have those too, but they are not on the wireless plan... am I missing something I should know.

By the way, off topic. two weeks ago I had no less than 5 att people come to my door trying to get me to swith to uverse. When I asked why 4 more after I told one no, I was told well we really don't track what houses we visit.

Funny thing is , a few months earlier I had similar visits.

And you think the iphone thing is a mess???

 

[alawatsakima]

I love apple but they really need to get it together especially with this phone thing. I bought the first gen and left my great verizon service for the terrible att service, I upgraded to the 3g even though the features really didnt warrant an upgrade because I love apple and now they add things and services that they knowwwwwwwww should have been avaible at least on the 3g and apple and att have the nerve to say I not only have to pay more bu extend my cotract. Not to mention I got screwed on the whole firewire macbook deal. I keep follwing apple but boy a little consideration/respect would be nice

​

This is the kind of attitude I don't understand. Yes, the original iPhone lacked MMS. Yes, every other phone on the market has had MMS for the last 10 years. But let's try this on for size: How many web browsers support MMS? In the computer world, those protocols are cumitively known as "SMIL," and Safari is the first browser to support it. And as soon as Safari got that capability, iPhone got MMS. I wonder why Apple invested that money into R&D to develop SMIL if NOT for the iPhone? Where did that R&D money come from if not from the iPhone? I submit this: They gave us a great phone 2 years ago. I am thankfull for it. Why isn't that good enough for everyone else?

 

[dgonzalez201]

Full Freight

I paid full freight for mine today, with a bit under a year gone in my two year contract. Of course, I also dropped my iP3G last week and watched it get run over...thus my need for a new iPhone. I bought at the AT&T store locally; they told me that I could pick it up on the 19th between 7a-10a without waiting in line. After 10a, you apparently have to wait with everyone else.

 

[tomegun]

I didn't read through all the comments, but I'm wondering about my situation. My wife and I got iPhones in July and we paid $499 (I think). Isn't it correct that $499 wasn't the subsidized price? If so, why would we get treated as if we paid the subsidized place?

Besides all that, I'm not sure I'm going to get the phone anyway. This is the first phone I've had where I still like it a year later and I might just wait until we are out of contract - I'm not really sure what benefit there is to being out of contract.

 

[gentleman00]

Simple supply and demand. Apple can charge WHATEVER they want. But YOU don't have to buy it.

If fewer people demand the product, it will be on SALE or discontinued.

Simple economics.

I don't think it is so simple. They have done a good job with the supply side of things, but a lousy job in raising the demand for a product that is not so revolutionary.

 

[michelle21]

This is the kind of attitude I don't understand. Yes, the original iPhone lacked MMS. Yes, every other phone on the market has had MMS for the last 10 years. But let's try this on for size: How many web browsers support MMS? In the computer world, those protocols are cumitively known as "SMIL," and Safari is the first browser to support it. And as soon as Safari got that capability, iPhone got MMS. I wonder why Apple invested that money into R&D to develop SMIL if NOT for the iPhone? Where did that R&D money come from if not from the iPhone? I submit this: They gave us a great phone 2 years ago. I am thankfull for it. Why isn't that good enough for everyone else?

Again , people have different reason. And the iphone is about the only smart phone that doesn't have mms.

However there are other technologies that you can bring into play now with the iphone that will make MMS look like yesterdays news.

They are all based on something called comet-d and apple just made it a lot easier with push notification.

Also, I suspect this is one of the reasons apple did not include a front facing camera. Would not be surprised if the carriers had something to do with it.

did you know A LOT of smart phones are capable of wi-fi from the manufacturer but its disabled at the request of the carrier. This is more common in the US than elsewhere.