AT&T + Apple = Bad Apple
There's been much hullabaloo over the JesusPhone 2.0 since its announcement. As far as I can see, most people are relatively excited about it. Apple has apparently managed to incorporate 3G and GPS without a significant hit to battery life.
However, there's also been some criticism about the price. At the WWDC keynote at which the iPhone 3G was announced, El Capitan Jobs listed 5 major improvements of the new iPhone: 3G data speeds, Enterprise support, third party applications, availability in more countries, and last but not least, more affordable. Jobs announced that the new iPhone would sell for $199 for the 8GB model and $299 for the 16GB model. The crowd of course goes nuts.
The problem is that it's not more affordable. It's less affordable. AT&T decided that unlimited data for the 3G iPhone was going to cost $30/month, which is $10 more per month than the original plan. Stretch that out over 2 years and you've paid $40 more for your iPhone 3G than the original. The math goes like this:
$20/month (iPhone) * 24 months = $480
$30/month (iPhone 3G) * 24 months = $720
$720 - $480 = $240
Factor in the $200 price drop in the new iPhone and you're still paying $40 more over 2 years for the new iPhone. So completely overlooking the fact that this is supposed to be a major selling point for the new iPhone, you might say, "But Chris, surely GPS, 3G, 3rd party apps, etc. is all worth this $40 premium." To which I might say, "Yes. I suppose I agree." However, there's more. Today, AT&T announced the official pricing and plans for the new iPhone. Take a look here and here. Essentially what it says is that you only get the price announced at WWDC if you are eligible for an upgrade. I talked to an AT&T representative on the phone and was quoted a 20-month time frame from your last upgrade. Have you perhaps casually gotten a new phone because you weren't happy with your last one? No cheap iPhone for you. There are any number of scenarios in which you are suddenly ineligible for this fabulous selling point that Jobs felt the need to announce at WWDC. You'll have to pay the price of the previous iPhone ($399/$499). Did I mention you still have to get a 2-year contract? The only upside I can see is that, according to Engadget's post, previous iPhone owners get the discounted price.
BUT WAIT! There's more! Did you want to buy that iPhone without activating it, as you could with the first iPhone? You get to pay even more than the previous iPhone cost! Yayyyyyy! Get ready to plunk down $599/$699 for the new hotness. Wait, isn't that more than the first iPhone EVER cost EVER?
So way to go, Apple. I don't know what the fuck happened, but next time I suggest you wear a cup so AT&T doesn't have the chance to get the vice grip on your balls that I can only imagine they must have. I don't even know how to put into words how weasely this is. I expect better from Apple.
Let me sum up this monster of a post in this sentence: The iPhone 3G is in no way cheaper than the original iPhone, in spite of what was announced at WWDC, and what is clearly supposed to be a selling point.
July 8th, 2008 at 9:28 am
You made a few good points lambeco, but I want to say that it isn’t entirely as bad as you made it look. First off the increase in the data plan.
When the iPhone originally came out Apple had managed to secure a lower price for unlimited data for their smart phone from AT&T. This was lower compared to the required data plan for their competitor’s phone the Blackberry which is $39.99. The now current $30 for unlimited 3G data is still less than that and sure it’s $10 more than the old iPhone data plan but we learned almost a year ago when the first plan came out that if you complained that you didn’t have adequate EDGE coverage in your area that you could cancel that data plan. With 3G coverage being even worse than EDGE I highly expect AT&T to allow their customers to opt out of the data plan after activation.
Second to address the issue of the plans, if you are an existing AT&T customer you can keep your voice plan and just add on an iPhone with the data plan (which potentially could be cancelled later). Not that scary after all.
And now about the subsidized pricing. I agree it would have been nice if Apple came up front and said the $199 and $299 prices were indeed subsidized and would only be for qualifying customers. For some it seemed pretty obvious about what had been done, with the rumors flying around that Apple was no longer profit sharing with AT&T over the course of the two year contract as they were previously doing.
If you walk into any wireless store you are barraged with free or heavily discounted phones where in the fine print they say with a two year contract. If you then walked in to that same store 2 months later and wanted to buy the newest cool flip phone they would tell you that the you wouldn’t qualify for that free price and would have to pay some seemingly outrageous price. For AT&T you need to have a contract for one year before you qualify for subsidized price, you can check your compatibility at http://www.att.com/iphone
But in the end, even after saying all of that, I agree with you. Apple needed to get more phones out to more people and the majority of people don’t look at the long term cost of things and just see that sales tag for $199 and their eyes light up! So no doubt they probably will sell a lot more phones because of that and AT&T will make a lot more money as well. Some shady deal.
July 8th, 2008 at 2:08 pm
Horatio, I think your comment is a bit disingenuous… You’re rather apologist in favor of Apple, which is understandable given their reputation, but you end your comment by saying that you agree with me. There’s a contradiction there. I wish you had just stuck with one side or the other.
To address your points though, it’s true that the iPhone is starting to be treated like any other phone that AT&T offers as opposed to some kind of messianic relic deserving special circumstances, but that doesn’t make it a good deal. I think AT&T screws its customers with any phone offered. The difference is that the manufacturers of those phones didn’t hold a keynote address at a major technology conference and announce that their phone is now MORE AFFORDABLE*!
AT&T offers a handful of BlackBerry devices that have the same $30/month unlimited data price point, so your point here is kind of moot. The iPhone no longer gets special treatment.
I don’t really see what this has to do with iPhone specifically. I can appreciate that AT&T allows a customer a way out if it turns out that they can’t use the phone and data plan they paid for in its fullest capacity, but otherwise it would be like selling a boat to a guy who lives in a desert and not letting him return it when he realizes there’s no place to use it…
This doesn’t negate anything I said in my post. All I addressed was the $30 data plan, which applies no matter what. The voice/SMS plans themselves are bad enough for a second post, but I don’t want to wade into that crapfest. And it’s not scary, it’s frustrating.
To expect that average consumer would be as knowledgeable about this situation as you or I or anyone who is so wrapped up in technology is foolish.
Here’s the bottom line, no matter how you slice it: Apple misled its customer base, and I think we expect better.