So the Touch price should drop soon, right?

[earnjam]

The last paragraph is perfect but the bolded paragraph is where you've gone wrong. Apple is not charging $199/$299 for the iphones. Apple are charging AT&T considerably more (and is where Apple are making a profit themselves on the phones), and AT&T are in turn are subsidising and selling the phone at $199/$299. The difference between what Apple charges AT&T, and what AT&T charges the customer, as you quite rightly point out, is made up (with a profit) over the course of the contract with AT&T.

Well why is the price the same when buying from an Apple store or buying from an AT&T store?

Do they sell the phone to AT&T first, then AT&T turns around and gives the phone back to Apple for selling in their stores, but makes up the difference on a contract? For every phone Apple sells in their store, AT&T has to give them money?

I've gone cross eyed.

From my understanding, Apple has decided to start charging less for their phones to make them more affordable.

 

[edesignuk]

Well why is the price the same when buying from an Apple store or buying from an AT&T store?

Because if you're buying it from Apple or AT&T, you're still buying an AT&T subsidised contract tied handset.

argh!

 

[.Andy]

Because if you're buying it from Apple or AT&T, you're still buying an AT&T subsidised contract tied handset.

argh!

Deep breaths e. Deep breaths.

 

[earnjam]

Because if you're buying it from Apple or AT&T, you're still buying an AT&T subsidised contract tied handset.

I'm sorry if I'm an idiot, I'm just not getting it.

According to the reports, they're no longer sharing revenue with Apple. But the Apple price and the AT&T price are the same.

They fact that it was a subsidy would make sense if you could only get it for $199/$299 from AT&T. But you can get that price from Apple too.

Again, I'm sorry if this is basic, but I'm not getting how Apple sells it at the same price (supposed subsidy price), but is getting no cut of the monthly fees from AT&T.

 

[edesignuk]

I'm sorry if I'm an idiot, I'm just not getting it.

According to the reports, they're no longer sharing revenue with Apple. But the Apple price and the AT&T price are the same.

They fact that it was a subsidy would make sense if you could only get it for $199/$299 from AT&T. But you can get that price from Apple too.

Again, I'm sorry if this is basic, but I'm not getting how Apple sells it at the same price (supposed subsidy price), but is getting no cut of the monthly fees from AT&T.

You need to think of the Apple Store as nothing more than a random mobile phone outlet working on behalf of AT&T when it comes to 3G iPhone sales. AT&T are the ones wanting to sucker you in to a long term financial relationship, and this means subsiding the cost of the handset you want to get you on board.

 

[a456]

I'm sorry if I'm an idiot, I'm just not getting it.

According to the reports, they're no longer sharing revenue with Apple. But the Apple price and the AT&T price are the same.

They fact that it was a subsidy would make sense if you could only get it for $199/$299 from AT&T. But you can get that price from Apple too.

Again, I'm sorry if this is basic, but I'm not getting how Apple sells it at the same price (supposed subsidy price), but is getting no cut of the monthly fees from AT&T.

AT&T will pay Apple the difference either when they sell an iPhone or when the iPhone is activated. Otherwise Apple would have to sell you an unlocked iPhone and then AT&T would pay you to take out a contract with them. If this happened you could go to any provider, which you can't do. (How big business accounts and payment systems actually work is down to the accountants - probably using a way too confusing method.)

 

[earnjam]

You need to think of the Apple Store as nothing more than a random mobile phone outlet working on behalf of AT&T when it comes to 3G iPhone sales. AT&T are the ones wanting to sucker you in to a long term financial relationship, and this means subsiding the cost of the handset you want to get you on board.

AT&T will pay Apple the difference either when they sell an iPhone or when the iPhone is activated. Otherwise Apple would have to sell you an unlocked iPhone and then AT&T would pay you to take out a contract with them. If this happened you could go to any provider, which you can't do. (How big business accounts and payment systems actually work is down to the accountants - probably using a way too confusing method.)

Ok, these makes sense.

Just kinda sucks since they make the phone, but are playing the role of a mall kiosk now.

Thanks.

 

[.Andy]

I'm sorry if I'm an idiot, I'm just not getting it.

You are soooo close though. This should do it;

According to the reports, they're no longer sharing revenue with Apple.

True = no revenue sharing. But like we said above apple makes a profit from each phone they sell to AT&T. AT&T make a profit from their data/voice contracts and hence subsidise the phone to $199/$299.

They fact that it was a subsidy would make sense if you could only get it for $199/$299 from AT&T. But you can get that price from Apple too.

It's the same price when you buy it from the Apple store as Apple are in essence just acting as an agent for AT&T. You cannot buy the phone from Apple without a contract from AT&T. So when Apple sell an iPhone in their store, AT&T pay apple for the phone (which is where apple makes it's profit) and the consumer signs a contract with AT&T.

Again, I'm sorry if this is basic, but I'm not getting how Apple sells it at the same price (supposed subsidy price), but is getting no cut of the monthly fees from AT&T.

I hope the above explains it.

^^^^Edit: Beaten again^^^^

Just kinda sucks since they make the phone, but are playing the role of a mall kiosk now.

As long as Apple is making a profit selling their products I don't think they particularly care. I doubt most customers will even give it much thought.

 

[edesignuk]

Ok, this makes sense.

Just kinda sucks since they make the phone, but are playing the role of a mall kiosk now.

Thanks.

But that's the way the mobile phone business works. They tried to break the mould with the first iPhone, and although it worked to an extent, it wasn't good enough. iPhone sales will explode (certainly in the UK) now that they've gone down the normal path of letting the carrier subsidise the cost with a view to pulling in more customers and recouping that cost over the period of the contract you're forced to sign in to at point of purchase.

Meanwhile, Apple get the huge benefits that a larger iPhone user base brings as more people start purchasing music, videos, apps and MobileMe all of which Apple makes a lot of money from.

 

[earnjam]

Yeah, it's wonderful for Apple. I'm sure they will make that 10 million mark they were hoping for. Plus as mentioned above, additional revenue from music, apps, etc will be very nice.

Just disappointing that they were trying to do things different from the usual methods of the mobile industry in the U.S., but apparently we just weren't ready for it.

The whole thing stinks of big carrier excrement.

I'm still excited about the new phone though!

 

[edesignuk]

The whole thing stinks of big carrier excrement.

To an extent yes, but equally to blame are the consumer, at the end of the day we buy their services, so we dictate how they sell their goods. Obviously people are happier with the current pricing models used.

Sucks hugely for the US that there is to be no PAYG option though, this will make purchasing to unlock almost impossible....though I'm sure someone will find a way.

 

[JPIndustrie]

You see. This is why i love Apple. This is why they stay in business.

Think about it. All they do is re-introduce the same features/policies/functions/devices/etc with alot of fanfare, some engineering, and arguably, some "evolution" and everyone thinks they 'invented' it.

Think about it:

Example 1. AT&T and Apple's 'new' activation procedure for the iPhone 3G. Seriously, what is so hard to understand. It is basically the same, exact policy that you, me, my friends, your parents, and pretty much everyone else in the US with a cell phone follow when we purchase a new cell phone or start a new account. You buy the phone subsidized, you commit to a 2-yr contract, fill out documentation in store, and move along. Or, if you're eligible, like any other cell phone, you simply re-up your contract and they sell you the phone.

It's the same exact policy we're used. However, since it's apple I suppose it's new and hard to grasp.

Example 2. The iPod. HDD-based media players we're around for a few years before apple intro'd their first iPod. Now its so ubiquitous, that people think they 'invented' it. Yes, their player dominated because of superior design and construction, and I'm very impressed and happy with apple's media player - however c'mon. Nobody really considered an Mp3 player, until Apple 'introduced' one.

It's awesome. I wanna work for Apple and reintroduce things.

 

[.Andy]

Sucks hugely for the US that there is to be no PAYG option though, this will make purchasing to unlock almost impossible....though I'm sure someone will find a way.

According to the front page story it's not going to too hard to get off contract and unlock.

iPhone 3G Hands On, Notes, and Questions

However, those users can sign up for the iPhone 3G and then cancel their contract after 30 days resulting in the usual (~$200) early termination fee, thus repaying AT&T for the built-in subsidy........Cancelation within 30 days, however, requires the customer to return the phone (and get a refund).

So all it's going to take 30 days but will be relatively easy to obtain an unlocked phone.

 

[Sun Baked]

because, as has been said many many times, one has a long term contract attached, and the other does not.

All depends on if Apple decides to offer the iTunes music subscription service anytime soon.

Buy the iPod Touch and subscribe to a two year contract, and we just might subsidize your Touch purchase.

 

[edesignuk]

According to the front page story it's not going to too hard to get off contract and unlock.

iPhone 3G Hands On, Notes, and Questions

So all it's going to take 30 days but will be relatively easy to obtain an unlocked phone.

Your quote says that the policy will be that if you do decide to cancel, you have to return the phone. So, no unlocked iPhone.

edit: sorry, just re-read that. So after 30 days if you cancel you pay an additional $200 and keep the phone. You're right, people may opt to do that. Not ideal, but at least it's an option.

All depends on if Apple decides to offer the iTunes music subscription service anytime soon.

Buy the iPod Touch and subscribe to a two year contract, and we just might subsidize your Touch purchase.

Maybe so, but that's totally different than a one off purchase of a simple MP3 player with no ties, which is the question that has been asked.

 

[Dippo]

Sorry, No

Like everyone else said. The iPod Touch is not subsidized. What's worse is that you will be paying for every software update as they come out!

 

[smartdog126]

Seems like the Touch price should drop soon, if you can get a 16 GB phone for $299 .....??

I can't believe they haven't been adjusted already.

I suppose there are some who don't want to the phone ... but personally I don't like carrying separate devices for phone and music.

Its kind of funny there actually not going to

 

[Sun Baked]

Its kind of funny there actually not going to

Really funny that Apple likely cannot stick a $499-599 MSRP on the phone even if they never plan on offering the phone at that price.

No matter what, I smell another Congressional probe into the pricing of the iPhone and the fees associated with AT&T service coming.

 

[Mad Mac Maniac]

Seems like the Touch price should drop soon, if you can get a 16 GB phone for $299 .....??

I can't believe they haven't been adjusted already.

I suppose there are some who don't want to the phone ... but personally I don't like carrying separate devices for phone and music.

haha riiiight.... and then they will drop the price of the ipod classic... and then the nano... and then the shuffle....

you realize of they had to make all their ipod's prices in relation to the iphone the shuffle would cost like 10 bucks. haha.

the iphone still costs over $500 more than the touch when you include the data plan...

 

[hotzenplotz]

I thought that the iPhones new price reflected the substituted ATT price, no? In light of that, how can Apple drop the price of the Touch?

 

[.Andy]

I thought that the iPhones new price reflected the substituted ATT price, no? In light of that, how can Apple drop the price of the Touch?

Did you read any of the thread at all?

 

[mikeyg00]

I will never buy an iPhone because the monthly rates are so high. The total cost of an iPhone is something like $2000. The iPod touch is a bargain by comparison.

The original data rate ($20) was below market. Now it's at market ($30).

I haven't compared ATTs phone rates to other carriers, are they really that much higher?

The point I've been trying to make is, I already pay the same rate for my phone and data service. If I'm thinking about a Touch, and I'm already paying the same rate that ATT charges for phone and data, I'm not going to buy a Touch.

So I'm trying to read between the lines here. Is the reason that so many object to the contract because:

1) they hate ATT
2) they're getting lower rates currently?
3) they don't want to be stuck with an outdated phone during the length of their contract?

none of those are issues for me ... I'd also like to stop carrying both an iPod and a phone.

So, if lots of people fall in line behind me, wouldn't iTouch demand fall?

 

[hotzenplotz]

Did you read any of the thread at all?

Not really

 

[gloss]

Did you read any of the thread at all?

Not really

Heh. Honesty.

 

[ntrigue]

The iPod Touch is a different product. If someone were to buy an iPhone 3G they would be committed to well over $1500 over the term of the contract. Otherwise, they could buy an iPhone $199 and pay $200 early termination and have a $399 8GB iPod Touch essentially; with GPS?