True. AT&T, or any other carrier, will never subsidize another people for people who are already locked into a contract. The only way the new model will be had for cheaper is if Apple lowers the cost of the unsubsidized phone.
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Next Gen iPhone = No Upgrade Price?
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True. AT&T, or any other carrier, will never subsidize another people for people who are already locked into a contract. The only way the new model will be had for cheaper is if Apple lowers the cost of the unsubsidized phone.
Or they might do what Rogers did for my iPhone.
I was in a 2 year contract, 1 year in. I got a subsidized price but had to lengthen my contract by 2 years. From my time of purchase I am effectively in a 3 year contract(****** deal, but so worth it once I got that little black box).
Despite what I might have to go through, if there are enough changes to get my attention I will be upgrading.
I was in a 2 year contract, 1 year in. I got a subsidized price but had to lengthen my contract by 2 years. From my time of purchase I am effectively in a 3 year contract(****** deal, but so worth it once I got that little black box).
Despite what I might have to go through, if there are enough changes to get my attention I will be upgrading.
My thought exactly. If ATT allows everyone to pay the new contract price they loose.
So, correct me if I'm wrong. (I havn't bought myself an iPhone yet)
The orignal iPhone adopters that paid the "Unsubsidized" price when V.1 was released for what...600 bucks? Were able to upgrade within a years time to the new "subsidized" iPhone 3G correct? I still don't completely understand why but anyways...
Those V.1 owners signed a 2 year contract right? So when they got their 3G's they had to renew a 2 year contract right? In other words AT&T allowed them to upgrade without hassle as long as they committed to another couple years correct?
If that is true, then obviously a 2 year contract is to just keep you tied in for as long as possible. If they let you upgrade every year and just keep signing contract after contract then they've got you! After one year who's gonna break contract right? And if a new version of iPhone is gonna be released then most are probably going to be willing to renew without second thought.
I could be totally off base here so someone help me out if this all sounds ridiculous as I havn't yet gone through the process myself. And actually, I'm getting an iPhone, be it new or current model after WWDC this year anyhow so I'm not to worried about it. Here's to hoping everyone that wants to upgrade is allowed to do so and be happy.
The orignal iPhone adopters that paid the "Unsubsidized" price when V.1 was released for what...600 bucks? Were able to upgrade within a years time to the new "subsidized" iPhone 3G correct? I still don't completely understand why but anyways...
Those V.1 owners signed a 2 year contract right? So when they got their 3G's they had to renew a 2 year contract right? In other words AT&T allowed them to upgrade without hassle as long as they committed to another couple years correct?
If that is true, then obviously a 2 year contract is to just keep you tied in for as long as possible. If they let you upgrade every year and just keep signing contract after contract then they've got you! After one year who's gonna break contract right? And if a new version of iPhone is gonna be released then most are probably going to be willing to renew without second thought.
I could be totally off base here so someone help me out if this all sounds ridiculous as I havn't yet gone through the process myself. And actually, I'm getting an iPhone, be it new or current model after WWDC this year anyhow so I'm not to worried about it. Here's to hoping everyone that wants to upgrade is allowed to do so and be happy.
We are making projections on incomplete data. We need to see AT&T's profit margin on phone plans for smart phones like the iPhone to know how quickly they make up their losses for their subsidy. They make 360 alone a year for the data plan, so my guess is that they can make their subsidy up in a year or less.
If that's the case, it makes sense to allow continued upgrades. It keeps the current customers happy paying the prices they are, and it doesn't scare away new customers who don't want to be stuck with an outdated phone. Of course it makes sense for Apple, who makes money hand over first for each iPhone. This is partly a market-share game, and that's a game both AT&T and Apple want to play.
If that's the case, it makes sense to allow continued upgrades. It keeps the current customers happy paying the prices they are, and it doesn't scare away new customers who don't want to be stuck with an outdated phone. Of course it makes sense for Apple, who makes money hand over first for each iPhone. This is partly a market-share game, and that's a game both AT&T and Apple want to play.
It's a lot easier to make profits when you are making 10 dollars off of ten million customers as opposed to 20 dollars of a million. Volume and market share matter. Keeping apple happy helps prolong exclusivity, which guarantees more customers and more income.
Simple.
The next iPhone won't be subsidized and will see high pricing just like the first gen iPhone. There is NO other good way of doing this that will get profits to AT&T/Apple. There will be no special pricing for people who bought the iPhone 3G the first day it came out. Why? What about the people that bought a month later? They signed a 2 year contract and that is that. Apple knows this. Anyone who bought the iPhone 3G upfront probably had the first iPhone too, and will always upgrade.
They will also bring back the activation the first time around, of just buying an iPhone and taking it home and doing it yourself.
You heard it here first.
The next iPhone won't be subsidized and will see high pricing just like the first gen iPhone. There is NO other good way of doing this that will get profits to AT&T/Apple. There will be no special pricing for people who bought the iPhone 3G the first day it came out. Why? What about the people that bought a month later? They signed a 2 year contract and that is that. Apple knows this. Anyone who bought the iPhone 3G upfront probably had the first iPhone too, and will always upgrade.
They will also bring back the activation the first time around, of just buying an iPhone and taking it home and doing it yourself.
You heard it here first.
So, you just expect Apple to recant on their whole rant about making the iphone affordable? I think not.
I don't see the connection you are making between this and the length of a contract with respect to the subsidy. What you are talking about is the demand curve, demand increases as the price decreases. That would relate to the initial cost of the phone and the total monthy charges. For example, how many more customers would sign up with AT&T if they included unlimited texts into the data plan and charged $5 less per month for the voice plans. The demand curve would have nothing do to with the minimum length of time to upgrade subsidized plans.
They won't stop making the iPhone 3G. They will sell it for much longer. Or have a new iPhone that is similar to what we have right now, but looks like the new iPhone.
Chances are the pricing is going to go how it went with the iPhone 3G
199/299 for upgrade eligible customers
399/499 for non upgrade eligible customers (this is what I did)
499/599 for buying the phone completely unsubsidized.
Already the iPhone has a special deal with AT&T. There's no other phone where they will give you a discount, it's usually subsidized price or pay the full price.
199/299 for upgrade eligible customers
399/499 for non upgrade eligible customers (this is what I did)
499/599 for buying the phone completely unsubsidized.
Already the iPhone has a special deal with AT&T. There's no other phone where they will give you a discount, it's usually subsidized price or pay the full price.
NOOOOOO!
I've 300 bucks saved up for a new one! What was the first one sold for right off the bat? $600? Sh*t!
When do you become eligible for that 199/299 price? Is it one year and then you have an upgrade option? Only reason I ask is because I havn't made the switch yet from T-Mobile so I'm unsure of how that works.
Btw, your pricing chart seems realistic enough.
Here's my guess on pricing if a new version of phone is released this summer.
Current 8GB iPhone 3G Model = $99 with 2 year contract.
New Version 16GB iPhone = $199 with 2 year contract.
New Version 32GB iPhone = $299 with 2 year contract.
And I'll even throw in one of those 'Nicksphon' "you heard it here first folks" thingies as well.
When do you become eligible for that 199/299 price? Is it one year and then you have an upgrade option? Only reason I ask is because I havn't made the switch yet from T-Mobile so I'm unsure of how that works.
Btw, your pricing chart seems realistic enough.
Here's my guess on pricing if a new version of phone is released this summer.
Current 8GB iPhone 3G Model = $99 with 2 year contract.
New Version 16GB iPhone = $199 with 2 year contract.
New Version 32GB iPhone = $299 with 2 year contract.
And I'll even throw in one of those 'Nicksphon' "you heard it here first folks" thingies as well.
When I bought the iPhone 3G I wasn't eligible to upgrade until January 6th, 2009. I don't know what happened, but as soon as I bought the iPhone I was upgrade eligible to any phone.
No one is going to buy it then. The first generation iPhone wasn't flying off the shelf due to its super high price. Apple realized this themselves and lowered the price. Still, it was likely only the Apple diehards, Jobs worshippers, tech junkies, and people with money to burn who bought the original iPhone. It wasn't until it became subsidized that its popularity really took off. I'm sure it wasn't the 3G that turned everyones heads.
The people who are in current 2 year-contracts likely aren't going to fork out unsubsidized prices and the people who have yet to buy an iPhone (on the fence people) certainly aren't going to pay unsubsidized prices either.
Something to think about is that the iPhone is still, even when subsidized, the most expensive phone on the Market (at least here in the uk).
I've never paid £160 for a phone before in my life, and I've had at least one a year since 1999. Most other handsets out there that are free on contract cost a similar ammount to buy sim free as the iPhone is sim free.
I wonder if this 'price adjustment' is to help them make up the cost of the handset if they were to provide an early upgrade path at the 12 month mark?
Just a thought.
I've never paid £160 for a phone before in my life, and I've had at least one a year since 1999. Most other handsets out there that are free on contract cost a similar ammount to buy sim free as the iPhone is sim free.
I wonder if this 'price adjustment' is to help them make up the cost of the handset if they were to provide an early upgrade path at the 12 month mark?
Just a thought.
Because the first iPhone was not subsidized at all. You paid full price, so you were upgrade eligible. I purchased my first gen iPhone in Dec 07, and my account was immediatley upgrade eligible because I paid full price. When I upgraded to the 3g on lauch day in July, it pushed my upgrade avaiable date to DEC 09.
An explanation of subsidy...
It seems quite a few people aren't clear on what the subsidy really is, or how it works.
When you buy a new phone from AT&T, and pay the subsidized price, you are paying for part of the cost phone up front, and AT&T is extending you a line of credit for the other part of the cost. You haven't paid enough at this point to cover the cost of the phone. AT&T has not yet made a profit on you (or at least, and acceptable profit...).
To guarantee repayment of that line of credit, AT&T requires a 2-year contract from you, and they have an early-termination fee so they can recover that loan from you should you decide to cancel early. AT&T's terms are such that after 18 months of your 24 month contract, they have decided that you have paid off this line of credit, and are once again eligible for a new phone at the subsidized price.
Without insider knowledge, all we can see are the subsidized, unsubsidized, and "no-commitment" consumer prices, as well as the contract termination fee. For the iPhone, the unsubsidized price is currently $200 more than the subsidized price, and the "no-commitment" price (if available) is $300 more than subsidized price.
AT&T does this all to make sure they cover their costs for buying the iPhone from Apple, and to insure that make a profit.
Is the system great for consumers? Nope. The Early Termination Fee doesn't make a lot of sense for example. By 18 months you have covered the cost of the phone to the point that you are eligible for the subsidized upgrade price, but if you cancel the contract at 18 months you still owe $85 in early termination.
In the end, it all comes down to AT&T making sure they cover all their costs. From buying the phone to the manufacturer, to the time spent by their employees setting up the account, to the cost of maintaining their network.
It seems quite a few people aren't clear on what the subsidy really is, or how it works.
When you buy a new phone from AT&T, and pay the subsidized price, you are paying for part of the cost phone up front, and AT&T is extending you a line of credit for the other part of the cost. You haven't paid enough at this point to cover the cost of the phone. AT&T has not yet made a profit on you (or at least, and acceptable profit...).
To guarantee repayment of that line of credit, AT&T requires a 2-year contract from you, and they have an early-termination fee so they can recover that loan from you should you decide to cancel early. AT&T's terms are such that after 18 months of your 24 month contract, they have decided that you have paid off this line of credit, and are once again eligible for a new phone at the subsidized price.
Without insider knowledge, all we can see are the subsidized, unsubsidized, and "no-commitment" consumer prices, as well as the contract termination fee. For the iPhone, the unsubsidized price is currently $200 more than the subsidized price, and the "no-commitment" price (if available) is $300 more than subsidized price.
AT&T does this all to make sure they cover their costs for buying the iPhone from Apple, and to insure that make a profit.
Is the system great for consumers? Nope. The Early Termination Fee doesn't make a lot of sense for example. By 18 months you have covered the cost of the phone to the point that you are eligible for the subsidized upgrade price, but if you cancel the contract at 18 months you still owe $85 in early termination.
In the end, it all comes down to AT&T making sure they cover all their costs. From buying the phone to the manufacturer, to the time spent by their employees setting up the account, to the cost of maintaining their network.
No, I'm talking about how volume relates to profits. Big stores like newegg, amazon and wal-mart move a lot of products. Therefore, they can afford to make a slimmer profit on each product sold since they sell so many. For subsidies, I've already stated how we don't have enough info, plus see below.
All We Know Is That We Don't Know Nuthin'
Take whatever you're speculating Apple and AT&T will do in July this year. Turn it 180 degrees. Examine it from every possible angle. Worry about it a lot. Turn it 90 degrees, repeat. Turn it 90 degrees again, repeat. Does it look like it did when you started? Congratulations. You still have no idea what Apple and AT&T are going to do in July, including whether or not they will do anything at all.
But for the sake of saying it, I'm thinking back to when I bought my first Razr V3, at a time when I was upgrade-eligible. Two months later, some other manufacturer came out with something I felt I just had to have. And AT&T would've sold it to me, for full price. Or made me wait until I was upgrade eligible again to get it for the subsidized price. Together, Apple and AT&T have sold, like, half a bazillion iPhones now. Doesn't seem likely they still have a need to sell half a bazillion of a new model, if it means offering a subsidy and potentially losing money. Hmmm. Now, let me turn that 180 degrees.....
Take whatever you're speculating Apple and AT&T will do in July this year. Turn it 180 degrees. Examine it from every possible angle. Worry about it a lot. Turn it 90 degrees, repeat. Turn it 90 degrees again, repeat. Does it look like it did when you started? Congratulations. You still have no idea what Apple and AT&T are going to do in July, including whether or not they will do anything at all.
But for the sake of saying it, I'm thinking back to when I bought my first Razr V3, at a time when I was upgrade-eligible. Two months later, some other manufacturer came out with something I felt I just had to have. And AT&T would've sold it to me, for full price. Or made me wait until I was upgrade eligible again to get it for the subsidized price. Together, Apple and AT&T have sold, like, half a bazillion iPhones now. Doesn't seem likely they still have a need to sell half a bazillion of a new model, if it means offering a subsidy and potentially losing money. Hmmm. Now, let me turn that 180 degrees.....
See? This is what I'm trying to say. As much as I would love to see a new model in June since I havnt bought one yet, it still doesn't make much sense that they would shut out all the new 3g owners from upgrading to a new and improved model. Which would be a LOT of people! What about everyone that just got one for christmas? Do you think they will be ready to upgrade to the next model only owning their christmas gift for a mere 6 months? And lets not forget, economy-wise, most of those people aren't going to fork over for a $5-600 unsubsidized iPhone, hell as bad as I want one I don't think I could afford that right now.
The past couple months I've been falling into the hype of a possible powerhouse iPhone with drastic changes just over the horizon come WWDC. Now I'm finally coming to the realization (for today anyhow
) that there will "maybe" be slight improvments to internal hardware that wouldn't make THAT much difference to newer 3G owners.Maybe Im just getting down on the idea but like someone said above, we have no idea, we'll have to wait and see. Well, I'm (still) waiting anyhow.
Thank you for your post. Very informative.
So, taking what you said into account. This means even if you bought the iPhone 3G on day 1, you STILL aren't eligible for upgrade until the end of 2009/early 2010 since you have to put in 18 months correct?
Unless its insubsidized which I would imagine would be amost double the price.
So that would lead me to believe that nothing overly exciting (hardware-wise) will be here come WWDC as a lot of first day/week 3G buyers probably wouldn't want to pay a fortune to upgrade at that point and others that pretty much just started their contracts over the holidays would feel the same way.
Now, original V.1 owners, sure they will be ready to upgrade (those that didn't get the 3G anyways) as will people like myself which have been waiting for 'other' contract restraints to end which I hardly doubt there are 13+ million others like us that will all of a sudden get this "new" iPhone that would blow the 3G away and outsell it within 6 months.
Prove us wrong Apple.