Why I believe that iPhone will go back to unsubsidized pricing

tuna

macrumors 6502
Original poster
Apr 11, 2010
388
0
When the iPhone first came out, it was completely unsubsidized and users paid up to $599 for it.

I believe that within the next 1 to 3 years the iPhone will go back to this model and here are the 2 reasons why:

1: When you sign a contract with AT&T, you aren't able to buy another subsidized iPhone for another 24 months. Maybe 21 months if AT&T likes you. Either way, thats a long time to have a single cell phone. You carry it around in your pocket all day and it gets knocked around; it gets dropped on the ground; half the iPhones I've seen people have get their screens cracked eventually; smartphone technology advances pretty rapidly- all reasons that people would prefer to upgrade their cellphone sooner than the 24 month paradigm. Especially Apple/iPhone consumers, who are probably a little wealthier and technology-aware demographic.

So Apple must be frustrated in at least some way that they can't sell people new iPhones who want them maybe every 12, 16, or even 18 months. If the marketing plan was that you paid full price for a contract-less iPhone, and then the subsidy savings were reflected in a lower monthly cell phone bill, Apple would reap a lot of benefits and sell a lot more phones. T-Mobile USA already has a model that offers this. Their standard plan with unlimited text, unlimited web, and 500 anytime minutes is either $79.99/month with a subsidized phone or only $59.99/month without a phone subsidy. I believe that if similar options were available for the iPhone, Apple would sell many more iPhones.

2: While the eminent cell phone networks in the US (Verizon and AT&T) are currently on completely incompatible network technology, by ~2013 they will both have rolled out large LTE networks. A single iPhone could easily be made to be compatible on both networks. Apple, leveraging its monopsonistic control over the world's most desirable phone, could facilitate a service price way between the two companies. And they could charge high prices selling iPhones outright, which people would gladly pay because they'd be getting cut rate subscription prices from the cell carriers.

I for one hope that the unsubsidized model (with lower cell subscription prices) comes back. 24 months is way too long to have a single phone. If I could, I imagine that I would like to replace my cell phone every ~16 months.
 

r.j.s

Moderator emeritus
Mar 7, 2007
14,926
35
Texas
The iPhone has always been subsidized in the U.S. $599 was the subsidized price.
 

tac22

macrumors 6502
Jun 16, 2009
409
0
I think your wrong =P

I don't wnat to go into why =P

but... i think like last year, at&t will either decide, or apple will make them let costumers upgrade early around 12 months at an extra cost eaither 100$ or 200$ or depending on how much you pay monthly for service. actually last year if i remember correctly, if someone's monthly bill was regularly over a certain amount a month per phone you could upgrade to the 3GS at the fully subsidized price

I will hope they do something like this and have the exact details written in stone, last year it was confusing who was and who wasn't eligable.

I wouldn't mind paying $300 to $400 dollars to upgrade every 12 months becuase selling my current iphone would cover most if not all of the cost.

=)
 

goobot

macrumors 603
Jun 26, 2009
5,545
1,898
long island NY
is that why att make my 3gs 200 on release day when i had the 3g? att gives first day buyers of the older phone that was also bought on the first day the lower price for the new phone for being trusted customers
 

vizkiz

macrumors 6502a
Jul 22, 2008
874
0
Long Island, NY
The iPhone has always been subsidized in the U.S. $599 was the subsidized price.
No it hasn't. The first gen was not subsidized, they were all purchased out of contract. Anyone who paid full price for an iPhone was still eligible for an upgrade whenever their contract was supposed to be eligible prior to buying it.
 

tac22

macrumors 6502
Jun 16, 2009
409
0
is that why att make my 3gs 200 on release day when i had the 3g? att gives first day buyers of the older phone that was also bought on the first day the lower price for the new phone for being trusted customers
I don't think it has to do with being a trusted costumer its more like

1. its been 12 months and you pay a good amount every month and not the bare minumum of $70

2. they don't mind locking you in for another year on top of the year you have left

3. everybody got pissed off last year when they weren't subsidizing it for current costumers and at&t caved
 

Applejuiced

macrumors Westmere
Apr 16, 2008
40,650
6,404
At the iPhone hacks section.
att told me if you bought the 3g the first 3 months you can get the 3gs for 200.
Thats false.
It has to do with your contract and your average bill per month.
Everyone can update their device 18 months after they signed a 2 year agreement and others with monthly fee's over a certain amount per average every month are allowed to renew their contract and get a new device every 12 months.
 

vizkiz

macrumors 6502a
Jul 22, 2008
874
0
Long Island, NY
att told me if you bought the 3g the first 3 months you can get the 3gs for 200.
Odd, I bought my 3G two weeks after it came out, and I was not eligible until the end of December 2009.
I think that was for the customers who had $99 or more in services (before taxes/fees/surcharges) on that line.
 

tac22

macrumors 6502
Jun 16, 2009
409
0
Odd, I bought my 3G two weeks after it came out, and I was not eligible until the end of December 2009.
I think that was for the customers who had $99 or more in services (before taxes/fees/surcharges) on that line.
Yes its something like that, but don't they give other people a partially subsidized price if your bill was lower and it was around the 12 month mark.
 

vizkiz

macrumors 6502a
Jul 22, 2008
874
0
Long Island, NY
Yes its something like that, but don't they give other people a partially subsidized price if your bill was lower and it was around the 12 month mark.
I think I could have picked one up for $100 less than the selling price of the 3GS if I wanted, not sure.
 

Warbrain

macrumors 603
Jun 28, 2004
5,701
287
Chicago, IL
No it hasn't. The first gen was not subsidized, they were all purchased out of contract. Anyone who paid full price for an iPhone was still eligible for an upgrade whenever their contract was supposed to be eligible prior to buying it.
You signed a contract for the original iPhone.
 

r.j.s

Moderator emeritus
Mar 7, 2007
14,926
35
Texas
No it hasn't. The first gen was not subsidized, they were all purchased out of contract. Anyone who paid full price for an iPhone was still eligible for an upgrade whenever their contract was supposed to be eligible prior to buying it.
You were required to sign a new 2-year contract, right? Then it was subsidized.
 

Dr Kevorkian94

macrumors 68020
Jun 9, 2009
2,133
31
SI, NY
last year i used my moms upgrade, first i upgraded my mothers phone to the new iphone then i downgraded mine and took her old razor then i asked them to switch the phone numbers. And it was a double whammy i checked att and they said i can upgrade to a new iphone when it comes out for the lower price unsubsidized i think that is or is it subsidized ahhh im confused:eek::eek::eek: witch ever one is the lowest ahhh. JK i know what they mean :)
 

tuna

macrumors 6502
Original poster
Apr 11, 2010
388
0
I think there is some confusion because the original iPhone was considered unsubsidized, even if you signed a contract, so everyone with an original iPhone "2G" was able to upgrade to the iPhone 3G at the full subsidy rate whenever they wanted (or maybe you had to have only 12 months in?).

However, for upgrading from the 3G to the 3GS, there was only some intermediate rate. Like the iPhone 3GS 32GB with subsidy was $299, and without contract it was $699, but if you had at least 12 months into your contract you were able to upgrade for $499 or something like that.

Either way, the extra $200 isn't a great deal. And it still doesn't help Apple sell more iPhones.

There is a third plank I forgot about as to why we will go back to unsubsidized phones: As Android and other smartphone alternatives mature, Apple will have to update the iPhone more than once a year to stay in the game. Say Apple releases new iPhones every 8 months, a lot of consumers will still want every other iPhone revision, but will be pissed if they are forced to pay early termination fees every time that they don't want to wait for three generations of iPhones to pass them.

Honestly I just hope that it goes to unsubsidized phones and competitive cell plan costs. I would much rather spend $600 on my iPhone upfront and then (1) save $15-$20 every month is cell plan charges and (2) be able to upgrade my phone or downgrade my service plan whenever I want because I'm not locked into any contract.
 

LoganT

macrumors 68020
Jan 9, 2007
2,243
1
Currently the iPhone works like this: If you are eligible for the upgrade its 199/299 dollars for the 16/32 GB. This renews your contract for two years. If you aren't eligible for the upgrade at the time it's 399/499 dollars. This still still extends your contract for two years. Then I think it's like 600/700 dollars if you want to buy it without extending your contract.
 

McGiord

macrumors 601
Oct 5, 2003
4,522
286
Dark Castle
I would prefer to pay a little extra for the hardware and have less expensive service, and the capability to upgrade at a fair price after 12 months.
Having carrier competition will benefit both us (customers) and :apple:.
 

kevink2

macrumors 65816
Nov 2, 2008
1,339
116
Thats false.
It has to do with your contract and your average bill per month.
Everyone can update their device 18 months after they signed a 2 year agreement and others with monthly fee's over a certain amount per average every month are allowed to renew their contract and get a new device every 12 months.
The 18 month timing must depend on average bill too, since the projected upgrade date for me is 20 months for me (bought late November 2008, eligible late July this month). Probably take them up on the offer this time, even though I planned to wait, since my wi-fi is much weaker now since I dropped my phone. Unusable unless I'm within 10 feet of my AP.
 

tac22

macrumors 6502
Jun 16, 2009
409
0
Currently the iPhone works like this: If you are eligible for the upgrade its 199/299 dollars for the 16/32 GB. This renews your contract for two years. If you aren't eligible for the upgrade at the time it's 399/499 dollars. This still still extends your contract for two years. Then I think it's like 600/700 dollars if you want to buy it without extending your contract.
Personally i think this is a good deal. your not completely correct. it was to have been atleast like 12 months i think to get the partially subsidized price, and or else you need to by it at the 600/700 dollars and that still extends your contract. THey don'y always offer the 600/700 dollar non contract option, they have it with the 3gs right now becuase the new iphone is coming out soon. they did it last year with the 3g

you won't be able to get the new iphone without a contract even at that price

I think
 

tac22

macrumors 6502
Jun 16, 2009
409
0
The 18 month timing must depend on average bill too, since the projected upgrade date for me is 20 months for me (bought late November 2008, eligible late July this month). Probably take them up on the offer this time, even though I planned to wait, since my wi-fi is much weaker now since I dropped my phone. Unusable unless I'm within 10 feet of my AP.
I always thought that no matter what your bill was. at a year and a half (18 months) your become eligible for an upgrade... unless its different for the iphone.