iPhone Owners Discover, Lo and Behold, It's Just Another Cell Phone

from the no-special-treatment? dept

Wed, Jun 10th 2009 5:26pm — Carlo Longino

You probably noticed that Apple announced the latest incarnation of the iPhone, the 3GS, earlier this week. It features mostly incremental upgrades over the existing model's features, alongside software enhancements that will work on earlier models, but it's still creating a lot of demand from existing iPhone 3G owners who want to upgrade. One speed bump, though: like any other handset it subsidizes, AT&T is only offering the lowest price for the new device to new customers, or people who are in the last six months of their contract. Since the iPhone 3G came out less than a year ago, that means users of the latest iPhone that want to upgrade will have to pay an extra $200. Which, of course, is making some of them unhappy. The iPhone's upfront price benefits from a hefty subsidy, like other devices AT&T sells, so the operator's going to treat its subsidy, and how it recovers it, pretty much like any other device. It may come as a shock to some iPhone users, but the device really is just another phone in the eyes of operators, and won't get them any special treatment. Another piece of evidence: the fact that some of the new features in the iPhone 3.0 software that Apple touted -- such as support for faster HSDPA data networks, MMS, and data tethering -- aren't yet available on AT&T, because the operator isn't supporting them (or hasn't figured out how to bill for them). That's more like the mobile world we're used to: innovation and new features from handset vendors making it to customers only with the approval of operators.

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Filed Under: iphone, phone, subsidies

72 Comments

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Matthew Krum (profile), 10 Jun 2009 @ 5:40pm

Alternatives...
Well, I'm leaving this comment from my HTC G-1 on T-Mobile's (limited) 3G footprint and although my carrier's not as big as AT&T, I've been able to use MMS (plus other features the iPhone can't do yet) since I got my device in October. Now that T-Mobile is releasing a few new touchscreen devices, angry AT&T subscribers may have viable alternatives.
(Ps. I don't work for T-Mobile, I'm just a happy customer & I love the Android OS.)
8-)
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CmdrOberon, 10 Jun 2009 @ 6:05pm

Subsidized? Citations, please
I find it extremely hard to believe the marketing story that phones are
expensive and the cheap ones are subsidized. I've never seen an
actual, reputable, bit of information that supports this theory.
If I can get a laptop with more memory, a bigger screen and lots of
hardware that's not on a phone for a much cheaper price, and since
there are more cell phones than computers (economy of scales and all),
how can this be true?

Can someone please show proof of the story that phones are so expensive
and must be subsidized? Or is it just more marketing balderdash that's
crept into public conciousness and become fact through pure repitition?
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Anonymous Coward, 10 Jun 2009 @ 6:07pm

Who is Carlo?
Ah blah. Carlo is the driveby media.

No response necessary.
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Anonymous Coward, 10 Jun 2009 @ 6:09pm

Who is Carlo?
Ah blah. Carlo is the driveby media.

No response necessary.

It'd be more interesting if I didn't know Mike lived on Carlo Ave at one time.
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Gil, 10 Jun 2009 @ 6:16pm

iPhone 3GS, another disappointment
Carlo forgot one more disappointment...still no Voice Navigation on the iPhone. Yes, TomTom says it's developing an app, but has not given a release date, so who knows if it will ever happen...TomTom also wouldn't say what the price of the app will be.

What's so hard about voice navigation? Other phone makers have had it for at least 18 months, maybe longer.
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Big Al, 10 Jun 2009 @ 6:49pm

"It's an iPhone"
"Yes, but it lacks the features of (insert half a dozen models here)"
"But it's an iPhone"
" Yes, and in comparison to (insert half a dozen models here) it's really underpowered"
"But it's an iPhone"
"Yes, and it's overpriced compared to (insert half a dozen models here)"
"But it's an iPhone"...
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Ryan, 10 Jun 2009 @ 7:17pm

Thats exactly it....
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Ryan, 10 Jun 2009 @ 7:19pm

Thats exactly it....
its not about the features, or the cost, or the fact that the second they slide it into their pocket the wrong way the screen is ruined, its that its an "iPhone". All my friends have the iPhone, I can only be cool if I have one.

Too bad, what a huge waste of money. Theres a factory somewhere churning out 1000s of iPhones daily, out of 2 dollars of aluminum and an ounce of plastic. Really not worth it if you ask me.
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Frank, 10 Jun 2009 @ 7:42pm

re:Thats exactly it....
"Really not worth it if you ask me....."

Yeah........but its an iPhone
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Malestone7469, 10 Jun 2009 @ 7:52pm

Re: Subsidized? Citations, please
Actually, the iPhone 3G S only costs between USD80 to USD120. So all this subsidy is bullshit...

By the time a phone example Motorazr V3
- cost USD40 to USD60
reaches the market its price has risen to USD399

You sign up a plan and get the phone for USD199, and you are stuck in a contract for which you pay USD49.99 per month for 2-years.

In fact you actually end up paying more than USD600 for the phone. Because the cost of your contract is more that ever.

And you think you are actually getting a good deal.

Ha! Ha! you just got run over by the invisible...
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Anonymous Coward, 10 Jun 2009 @ 8:08pm

Get over it.

You just wished you had an iPhone, or even a Mac to understand the foundation in which Steve Jobs and his brilliant team created. Something about Scott Forstall bugs me though, and not necessarily in a good way.
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Dirk Belligerent, 10 Jun 2009 @ 8:11pm

I got the Palm Pre yesterday and it's really cool even though it still needs some polish and hella more apps. (It's been out 5 days, so iFanboys can get stuffed.) Biggest problem: It snarfs the battery like Kobiyashi eats Nathan's.

Anyone saying that multitasking on a smartphone isn't necessary hasn't rocked a Pre. It's like having a tiny computer that makes phone calls, too. Streaming Pandora, using Sprint Navigation, checking your incoming email alerts at the light, leaving a web page up you were reading before, etc.

It's snazzy and the service is dirt cheap: $70/mo. for unlimited data and mobile-to-mobile plus 450 mins. talk. (And I get a big work discount cutting it down to $54.) Since nights start at 7 pm and most of my friends are on cells, I'll never run out. I would've gotten an iPhone if AT&T didn't want ~$130/mo. and such manure service.
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Anonymous Coward, 10 Jun 2009 @ 8:25pm

Re:
And your point?

I think you had one somewhere between the 50,000 apps available on iPhone and 18 available for Palm.

Oooh. That gave me a great idea. What if Palm licensed iPhone Software...?
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Anonymous Coward, 10 Jun 2009 @ 8:31pm

I hate it when people say "lo and behold"
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B-Ri, 10 Jun 2009 @ 8:31pm

Re: Subsidized? Citations, please
Just look at buying a non-subsidized phone and you'll see how expensive they are. You can't exactly compare PC pricing with cell phone pricing. They are completely different markets. Though if you look at some of the latest smartphones like the G1, the iPhone, and the Palm Pre they are basically mini computers and so the price seems justified with the small form factor.
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anonymous coward, 10 Jun 2009 @ 8:39pm

Joiku Spot baby..........oops sorry not available on the iPhone
Joiku Spot baby..........oops sorry not available on the iPhone

from a factory UNLOCKED nokia e71 with NO contract. :D
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AnonCow, 10 Jun 2009 @ 8:39pm

Actually, if you look at the iPhone feature set and performance, it is a cell phone from about 2003 with a bunch of the features disabled in a really shiny wrapper...
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LJS, 10 Jun 2009 @ 8:54pm

Re: Subsidized? Citations, please
They're subsidized... I used to work for a cell carrier years ago... the free phone usually cost between 100 and 200 bucks. Star-TAC's, when the first came out were over a THOUSAND dollars..

There's a cost associated with making all the things you're talking about fit inside such a small package.
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LJS, 10 Jun 2009 @ 8:57pm

Re: Thats exactly it....
Dude, your so full of it, you're eyes are brown.

Slide it into your pocket and screen is ruined... give me a freakin' break.

Take the money you saved on a cellphone and see if you can't pony up the cash for a second shot at a G.E.D..
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Anonymous Coward, 10 Jun 2009 @ 9:05pm

Perhaps the biggest mistake was when Avadis Tevanian was let go from Apple.
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Anonymous Coward, 10 Jun 2009 @ 9:11pm

Re:
Yeah, Scott Forstall would make a good Microsoft guy. He should just give up and work for Bing/Live/MSN/Yahoo/JackassWebSearchCo or whatever the flavor of the year is.

I have contacts. Let me know if he's in the market.

recruiting@microsoft.com
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Steve H, 10 Jun 2009 @ 9:20pm

Re:
Avadis did a lot...

Heh
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Melkweg, 10 Jun 2009 @ 9:24pm

Re: Re:
You know him? I understand he worked on TellMe.
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Yohkoh, 10 Jun 2009 @ 9:30pm

Re: Re: Re:
Tellme was the program which Ballmer was so excited about, he spilled his beer... err, water... on himself.
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Kenta, 10 Jun 2009 @ 9:35pm

Re: Re: Re:
Hehe.
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Sean, 10 Jun 2009 @ 9:38pm

An open letter to the iPhone criticizers,

I understand you may not like the iPhone and feel you're very cool because you are 'anti-Apple', but really, nobody cares. Shoving your opinions about someone's electronics down their throat is exactly what you criticize Apple users for - and yet you all do it too, not realizing it.

What a wonderful world it must be for you to just happily exist as a happy-hypocrite totally blinded by your own belief in your individuality and originality.
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Sean, 10 Jun 2009 @ 9:38pm

An open letter to the iPhone criticizers,

I understand you may not like the iPhone and feel you're very cool because you are 'anti-Apple', but really, nobody cares. Shoving your opinions about someone's electronics down their throat is exactly what you criticize Apple users for - and yet you all do it too, not realizing it.

What a wonderful world it must be for you to just happily exist as a happy-hypocrite totally blinded by your own belief in your individuality and originality.
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Hua-Hin, 10 Jun 2009 @ 9:38pm

Re: Re:
What's he doing now? Surely MSFT didn't keep him.
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Sean, 10 Jun 2009 @ 9:38pm

An open letter to the iPhone criticizers,

I understand you may not like the iPhone and feel you're very cool because you are 'anti-Apple', but really, nobody cares. Shoving your opinions about someone's electronics down their throat is exactly what you criticize Apple users for - and yet you all do it too, not realizing it.

What a wonderful world it must be for you to just happily exist as a happy-hypocrite totally blinded by your own belief in your individuality and originality.
[ link to this | view in thread ]
Rush (Sied van Riel), 10 Jun 2009 @ 9:41pm

Re: Re:
Depends on your perspective.
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Carl B, 10 Jun 2009 @ 9:46pm

Re: Re: Re: (Just a Thought)
He's still there. I give him 24 months for MSFT to suck his brain out thru his penis. Then, there's the 12 mos NDA.
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Ariel (profile), 10 Jun 2009 @ 9:47pm

Well...
The thing is, when the iPhone 3G came out, they DID let people with iPhone 1.0 upgrade for the subsidized price. All we had to was re-up for another two years. Not such a hardship.

So why, this time around, will AT&T not let me upgrade at the cheaper price in exchange for another 1+ years on my contract?
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Anonymous Coward, 10 Jun 2009 @ 9:48pm

touche apple
And the daddy's girls, rich snobs, and fashion gurus go crazy for the new best thing... the iphone 3GS!!!

I actually applaud apple for making such a crappy upgrade to reep in a huge revenue from idiots.
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Crossroads, 10 Jun 2009 @ 9:57pm

Re: Re: Re: Re: (Zoo Brazil)
I never thought of it that way, but how true it is to work for a company which resides in the King County district Court area. They're brutal with that kind of shit.
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Anonymous Coward, 10 Jun 2009 @ 9:57pm

Re: Subsidized? Citations, please
Where did they say they *must* be subsidized? You either have some reading comprehension issues with English or are putting words in their mouth.

True, in order to make phones more affordable for people they tend to be subsidized but they don't *have* to be.

The fact that phones are subsidized to make them cheaper so more people will buy them is outright irrefutable. 10 seconds of your time would of found the "evidence" via Google, but you'd rather argue without doing any fact checking of your own.

BlackBerry Pearl from T-Mobile: 49.99
(http://www.t-mobile.com/shop/phones/Cell-Phone-Detail.aspx?cell-phone=T-Mobile-BlackBerry-Pe arl-Flip-8220-Black)

BlackBerry Pearl from Amazon: On sale at 274.99
(http://www.amazon.com/Blackberry-8220-Pearl-Unlocked-Phone/dp/B0029ZA2W0/ref=sr_1_3/189-651 9450-2687963?ie=UTF8&s=wireless&qid=1244695844&sr=8-3)

Hmm, I wonder if there is a massive price difference here even though the one from Amazon is currently 45% off...

And what do you know, another simple Google search whips out this article in a few microseconds:

http://www.businessweek.com/technology/content/jul2006/tc20060720_211102.htm

Whi ch goes in to what goes into a Blackberry and how much it costs RIM.

Think for two seconds of your life. If you are in a management position, be worried. No special training or skills were needed to find out the answers to your question.
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Anonymous Coward, 10 Jun 2009 @ 10:01pm

Re: Re:
You need to learn something about how computers work before you can go suggest things. Specifically about how software relies on operating systems (OS) and don't just magically work from one to the other typically.

Also, while I concede there aren't *yet* as many useful apps on the PalmPre as the iPhone, there is a question of quality with the apps in the iPhone store. They may have 50,000 but they aren't guaranteed to work on your phone from one day to the next and several serve the same function, some far worse than others.

The iPhone is a cute toy but out of the box its a waste of money as you don't have control over your own gadget compared to cheaper phones that can do the same things and more.
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Natalie, 10 Jun 2009 @ 10:03pm

Re: Alternatives...
I'm gunna have to go with Matthew on this one. I love my g1, I saw the iphone and cringed at the price tag, yes its neat yes its apple but who honestly cares? Oh and guess what my smart phone at least came with copy pasta and it took apple how long to do that? Even after the g1 came out sweet jesus. Oh and flash did I mention that? Not to mention that the update that just came out for it made the camera into a video camera as well.
whats up face I know the g2 is due out sometime next June (I'm lucky enough to know people) but I don't think it'll cost nearly as much as the iphone.
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Natalie, 10 Jun 2009 @ 10:03pm

Re: Alternatives...
I'm gunna have to go with Matthew on this one. I love my g1, I saw the iphone and cringed at the price tag, yes its neat yes its apple but who honestly cares? Oh and guess what my smart phone at least came with copy pasta and it took apple how long to do that? Even after the g1 came out sweet jesus. Oh and flash did I mention that? Not to mention that the update that just came out for it made the camera into a video camera as well.
whats up face I know the g2 is due out sometime next June (I'm lucky enough to know people) but I don't think it'll cost nearly as much as the iphone.
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Potato Head (profile), 10 Jun 2009 @ 10:05pm

I am ashamed...
I got an iPhone from work...

*wishpers* I love it!

I is a pretty slick device. I did get to play with a Palm Pre today... Pretty slick too. Maybe I will trade my sprint phone...
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Anonymous Coward, 10 Jun 2009 @ 10:10pm

Re:
No, that's not exactly what they accuse Apple users of. In a place called "reality" Apple fans are complained of because, for the most part, they are fanatical to a fault of whatever the company does. In the PC world its called "drinking the kool-aid" and there are flavors for every company. The difference is there are more Apple ones, and they are louder and more obnoxious.

The 2nd major complaint is with the company itself which seems to think that when you buy something from them, its still theirs and not yours. That kind of arrogance rubs people the wrong way when they realize how true it is.

Unfortunately most people don't realize this ahead of time in most cases unless they know a lot about the tech world in general and still more are those fanatical zealots whom you can't dare question as they've been effectively brainwashed.

Oh and don't get me wrong. Apple does some slick things, and their UI developers are probably the best in the industry. But when I pay for something, its mine. I should be able to put whatever I want on it so long as its legal and I should expect it to work from one day to the next.

You don't get that with the iPhone and so I, like countless others, will disregard it as overrated. Other than its thinness I can get every feature and then some on other phones for cheaper so why bother anyways?
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Blossom, 10 Jun 2009 @ 10:11pm

Re: Re: Re: Re: Re: (Lounge)
You're so right.

So maybe the best answer is for someone to offer no salary, no work expectations, no contract, but, rather a company line of credit for 1 year for expenses, between 10-55k based on previous experience?

Then after 1 year, they could be hired, based on their voluntary and previous activities, with a bonus which may exceed $100k?

Think of it like a scholarship, and you'll understand.
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Driving To Heaven, 10 Jun 2009 @ 10:18pm

Re: Re: Re: Re: Re: Re: (Mat Zo)
I mean, the same person could go out and describe the same things for free online or build in the open source community.

To add, it would all depend on how well you know the person, and how willing you would be to see their knowledge volunteered up. They will volunteer the information up in one format or another, it's just who is in the room at the time, right?

Maybe they should have a blog too.
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Casa Grande, 10 Jun 2009 @ 10:50pm

Re: Re: Re: Re: Re: Re: Re:
Hmm.
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Anonymous Coward, 10 Jun 2009 @ 11:04pm

Re: Re: Re: Re: Re: Re: Re: Re:
Another option may be for the person to create a 503(c) tax exempt organization and become an administrator of the fund. Then, perhaps your organization can do funding for charities thru them, and to ensure proper administration of the fund, salaries may be payed accordingly. Perhaps one of the administrators would want to volunteer onsite at Apple for a while.

I am unsure of 503(c) dissolution. Check with your legal team on that. But, it would take balls that it looks like Horacio Gutierrez and his team don't have, to sue a 503(c) organization.
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Something For Your Mind, 10 Jun 2009 @ 11:10pm

Re: Re: Re: Re: Re: Re: Re: Re: Re: (Andre Visitor)
Ooops, I meant 501. Maybe I was thinking 501(c)3 :-)

You have good taste in Music.
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Tanz Der Seele, 10 Jun 2009 @ 11:59pm

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:
Hmmm
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Brad Hubbard (profile), 11 Jun 2009 @ 12:26am

Re: Well...
Right. The FIRST iPhone wasn't subsidized, so they didn't have to recoup the cost of the subsidy and could happily let you sign another contract. The fact that you had to sign a two year contract to buy an unsubsidized phone is the big joke on iPhone 1.0 owners - you were turning over a two year contract just for the privilege of owning an iPhone.

The argument from the cellphone industry in the US (agree with it or not) is that they give you a cheaper device up front in exchange for two years of guaranteed payments. Given that the cost of buying phones outright (even outside the US) is relatively inline with what they claim the "unsubsidized" phone price is, this actually seems like a fairly reasonable deal. When the iPhone originally came out, Apple claimed it was going to "change everything" about how the cellphone industry worked. Then they discovered that the $600 upfront cost was a hurdle for all but the most devout Apple fans. So in less than a month they lopped it down to $400. Still too high for mass-adoption, so they went to the SAME model that everyone else uses - get the carrier to shoulder the upfront cost for the device in exchange for the promise of future revenue.

So here we are, little over two years later, and Apple has, in fact, changed nothing. Simple features that exist on many phones (like MMS, tethering) have yet to make it. What's worse, the App Store policies make it such even installing SOFTWARE that you want isn't legal, if it gets in the way of the carrier's profits. So while Apple users are understandably upset that they can't upgrade to Apple's latest and greatest, they did sell their souls for a $200 discount on the iPhone 3G.

You can always just cancel your contract and pay the $175 cancellation fee. Then sign up as a new user. If you had Google voice, you wouldn't even lose your number.
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Mr RC (profile), 11 Jun 2009 @ 2:11am

it's a nothing upgrade..
The iphone should have already had all of these features, all apple is doing is dragging out the process trying to suck more money out of the fans... and it's working as well.. nice cash cow...

Me personally, I'm not an apple fan, I used to have to support apple machines for a design studio and it was a nightmare. We mainly use Windows AND Linux where I work (now) and all the users are happy with what they have. I know what I'm doing, so we have very few problems (even with the Vista rollout) but apple still makes me cringe.

I own (purchased outright) a HTC TyTn II, sure it's thicker than an iphone and weighs a bit more, but it does everything an iphone (including the s) can do and more, much much more.. the Palm Pre has only just come out (less than a week now) so comparing it to a device that has been out out for what... 1 year? 2? is completely absurd. If you want to compare the apps to another phone, compare it to something established like the OLD palm, or windows mobile .. you'll see the apps you have available are nothing.. nor is there a killswitch on our phones.. nor do we have to wait for apple to 'approve' an application... sure we get some junk.. but we CAN get what we want...

I do like the iphone, I think it is a pretty toy.. though the only thing I want from it that causes any sort of 'envy' .. is the multitouch thingie that apple patented.. otherwise there is literally 100+ phones that can do everything the iphone can do and more...
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freediverx (profile), 11 Jun 2009 @ 2:30am

Re: Subsidized? Citations, please
"If I can get a laptop with more memory, a bigger screen and lots of
hardware that's not on a phone for a much cheaper price, how can this be true?"

The same argument could be made for getting a desktop computer vs a laptop - you can get more power for less money. There's a price to pay for miniaturization. Most people realize this.
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j, 11 Jun 2009 @ 5:01am

Actualy, they will let you upgrade after a year if you've been a customer for over 5 years like myself. I get every new iphone the day it comes out for the sub rate.
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inc, 11 Jun 2009 @ 5:30am

Re: Subsidized? Citations, please
how can you say that a laptop with more spec and cheaper then a phone like the iphone. The iPhone is basically a very tiny laptop so the cost of making everything smaller is what brings the price up.
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Anonymous Coward, 11 Jun 2009 @ 6:00am

Re: Re: Subsidized? Citations, please
> Just look at buying a non-subsidized phone and
> you'll see how expensive they are.

The price of good in the market have little relation to the
actual cost of goods.
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Anonymous Coward, 11 Jun 2009 @ 6:02am

Re: Re: Subsidized? Citations, please
> They're subsidized... I used to work for a cell carrier
> years ago...

Years ago? Years ago is not a good comparison.
Cell phones are commodities now. The parts are all off-the-shelf. There isn't a single phone that is being manufactureed today that is not using off-the-shelf products.

It doesn't make sense to build a phone with specialized components when there are commodity transmitters, RAM, and screens waiting to be used.

Working for a company years ago isn't definitive proof of cost.
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CmdrOberon, 11 Jun 2009 @ 6:05am

Re: Re: Subsidized? Citations, please
Not true anymore. Many very powerful laptops are
cheaper than desktops.

Besides, one reason laptops were more expensive is economies of scale. When you sell less, you order less. The per unit pricing is higher.

Laptops are very popular now, and commodity, so the costs are lower.

Still, no proof of what popular handsets cost to manufacuter.
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CmdrOberon, 11 Jun 2009 @ 6:07am

Re: Re: Subsidized? Citations, please
This is still speculation.

I asked for definitive proof.

Can't someone provide the cost of manufacture of several
popular phone models?
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CmdrOberon, 11 Jun 2009 @ 6:13am

Re: Subsidized? Citations, please
Here's some info on iPhone build costs:

http://news.cnet.com/8301-17938_105-9992829-1.html
http://gizmodo.com/gadgets/cellphones/ iphone-only-costs-250-to-make-rest-of-price-is-fanboy-tax-229664.php
http://www.tuaw.com/2007/01/19 /iphone-manufacturing-cost-estimated-at-245-83-maybe/

Personally, I take the iPhone as a special case because Apple did some really innovative things in the beginning.
It's really an outlier in the field of manufacturing costs and that's believable.

But, what does it cost to make all those other overly expensive phones? I don't even know the names of them, but I'm always shocked to see $600 commodity phones when I go to cell phone shows.
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VRP, 11 Jun 2009 @ 8:37am

no iFone
The world was a much better place w/o iPhone, and still is.
We save over $1,000/yr by omitting it, more still in time listening to "your call is important to us", or having our calls sent off-shore, for the same reason; yet another $1,000+/yr in usage costs fees and taxes; et cetera.

When you also consider that iPhones run on cel phone networks, and there aren't any cel phone networks in most rural areas that don't have a noisy interstate nearby, the only reasonable conclusion is how much they ought to be paying us to carry one, considering the extra weight, exposure, liability, waiver of privacy, etc...

VRP
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minijedimaster (profile), 11 Jun 2009 @ 11:03am

Re: Re: Alternatives...
Oh and guess what my smart phone at least came with copy pasta and it took apple how long to do that?
I'm not sure any iphone user would want that feature.
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minijedimaster (profile), 11 Jun 2009 @ 11:09am

Re: Re: Re: Subsidized? Citations, please
Show me a single laptop on the market that is both cheaper and more powerful than a desktop. I guarantee you will not find one. You can find any laptop, and price out an equivalently powered desktop and the desktop will be cheaper 100% of the time.
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tdr, 11 Jun 2009 @ 11:49am

Can anyone remember when a phone was just a phone...? :p
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Rafael A. Junquera, 11 Jun 2009 @ 12:16pm

Lets be adults
If people are unhappy about prices for the new iPhone, they should wait until the contract ends. With the new free software update they are going to get almost a new handset. Wanting the new one for the sake of having the new one and being unhappy about your contract is childish, period. I would have expected techdirt to go after those childish unhappy users instead of going after AT&T and the iPhone.
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bowerbird, 11 Jun 2009 @ 5:49pm

i understand the logic a.t.&.t. is using to rob me.

i hope they understand my logic when i walk away.

surely there will be a carrier somewhere who realizes the
importance of ensuring their best customers stay happy...

-bowerbird
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Derek Kerton (profile), 11 Jun 2009 @ 7:14pm

Re: Who is Carlo?
Here's your theory: Mike is every author at this site. He somehow studies up and writes 15 articles a day, replies to moronic accusatory comments, while running the insight community (where he is every analyst), and does sales, web development, and accounting in his pyjamas.

Now, does that theory sould likely, or idiotic?

signed,
Derek (who once lived on Michael Street).
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Derek Kerton (profile), 11 Jun 2009 @ 7:16pm

Re:
"Easy to use" is a very powerful market advantage.

Don't have to be sheeple to appreciate that value.

(and no, I don't use one.)
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Derek Kerton (profile), 11 Jun 2009 @ 9:26pm

Re: Re: Re: Subsidized? Citations, please
Phones ARE heavily subsidized. You keep asking for proof, but you won't get any. That's because the deals struck between the cell phone carrier and the phone maker are confidential deals. The cellphone maker doesn't want it's competitors, nor its other customers to know the discount it gave to Verizon, and the carrier doesn't want its customers or competitors to know how much they paid. Asking for proof isn't practical.

Next point, you are right that even the most advanced smartphone has a bill of materials (BOM) that is sub $200. However, that is just the cost of parts. Do you go to Pizza Hut and complain that the BOM for your pizza is only $2, yet they charge you $17?

Of course, phone makers hire staff, do market research, plan the products, design the products, do the engineering, write the software, strike the partnerships, and market the products. There are fixed and variable costs in all these activities that are not part of the BOM. Also, the market for a leading-edge smartphones is NOT a commodity market, therefore Price is not = MC (like we so often discuss with digital media). Handset vendors with a premium, special product can command a higher price.

That brings me to the next part. What does the carrier pay for the phone? As I said, the actual price is secret, but let's just guess that for an iPhone it's above $450. Why to they pay that much? Because they have to. If they want the iphone, that's what they pay.

Consumers aren't all eager to pay that much for the phone, so ATT choose to subsidize it down to $199 to help people get over the hump of initial outlay. They have no problem doing this, because the 24 month contract pays them back tidily.

You compare phones to laptops. You're right, it's odd that a Netbook can sell for $250 with XP, and be more powerful than a phone that costs ATT $450. But as many others have said, miniturization costs a LOT. Remember when the average laptop was $1000, but Sony had tiny Vaios, IBM had the Thinkpad X series, Toshiba had tiny Portege's, and OQO offered a handheld XP machine. The prices for these miniature computers that were less powerful than a $1k laptop? $2000.
(proof that minaturization costs: http://www.mobiletechreview.com/notebooks/OQO-model-01.htm)

There is no need for a conspiracy theory here, nor is there need for proof. It's pretty standard business. Cutting edge products, great products, and miniature products command a premium. ATT has to pay that premium price. That's the real market price of an iPhone.
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Fred McTaker (profile), 11 Jun 2009 @ 10:27pm

One feature ruins the iPhone: AT&T
I will never have an iPhone as long as AT&T retains their monopoly sales channel in the U.S. One point about the U.S. carriers and their phone subsidy system: prices of all phones might come down with a real open market, where the carriers don't have a near-monopoly on the retail channel. Manufacturers all have incentive to inflate their phone prices, in order to get their fair share because they know the carrier will just inflate the "unsubsidized" prices at point of sale anyway, to make multi-year contract slavery look better. The FCC and the FTC need to start doing their jobs and stop this nonsense.
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Freedom, 12 Jun 2009 @ 6:58am

Upset at AT&T, Really?
Let's see, Apple has been screwing you for the last xx years and yet somehow AT&T is the bad guy in all this for charging full boat for those without enough time on their contract. Wow! Talk about blaming the victim or mis-directing your angry. You can't be mad at Apple, who is your God, so you'll blame AT&T. Wow!

If Apple really cared about their users they would open up the handset to all carriers so you'd have the option of picking one and letting market forces decide the pricing models. That's okay, go ahead and keep blaming AT&T. After all, Apple can do no wrong.

If you really want to be mad at someone, be mad at yourself for buying into the whole Apple "Fashion Craze". As any one can tell you, it is expensive to keep up with the latest fashions - just happens to be the latest fashion today is the iPhone when before it would have been Gucci or whatever. Either way, you are overpaying for style over substance. Nothing wrong with it, but don't go bitching about how the store is ripping you off.

Freedom
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Derek Kerton (profile), 12 Jun 2009 @ 12:02pm

Re: One feature ruins the iPhone: AT&T
Let me see if I get your points:

- Manufacturers need to raise their prices to get their "fair share", so Apple charging a big margin is OK

- Carriers buy at that high price, understand that the price is too high for the consumer, so they take a $300 loss when they sell you the phone, and they're the bad guys?

I agree that a more open unsubsidized market would be good, but I think you need to re-work your argument.
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Steve, 14 Jun 2009 @ 5:00pm

It's all about management of expectations
It's not the subsidy that's really bumming me out, it's that Apple announced the price to all of us fanboys during the event as $199 and $299. If they had at least *hinted* that this was only for new customers or those near the end of the contract DURING the event, this would have felt different. It was a big build up and then a big let down, instead of just hearing it straight-out right away. Hell, they should have started with the price, so everybody at the conference (99% of whom own a non-upgradeable 3G) would know not to overflow with excitement. And as the purpose of these keynotes IS to make us overflow with excitement, this problem is one Apple could have expected and managed during the event.
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porno izle, 25 Jun 2009 @ 8:30am

Re:
i understand the logic a.t.&.t. is using to rob me. i hope they understand my logic when i walk away. surely there will be a carrier somewhere who realizes the importance of ensuring their best customers stay happy... porno izle,sikiş izle
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Jeff, 29 Jun 2009 @ 8:41am

Also, Mac Owners Discover, Lo and Behold, It's Just Another Computer, with not much software and games available to it.
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Thomas, 3 Nov 2009 @ 3:23pm

Re: Re: Subsidized? Citations, please
Where did u get this pricing info?
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