This (pricing games) is just dumb. Yes, many people will be convinced by saving $100 dollars at purchase time, but if they really wanted to be competitive they'd lower their monthly rates. Considering how often I use WiFi, I'd gladly take a capped data plan if it saved $10-15/mo., and that would definitely save more than $100 over the course of the contract.
Even I would have a hard time mentally justifying dropping $500 for an iPhone after getting used to $200-300, but even that would be cheaper than paying back the subsidy. #998gbiphone3gs
@anonymousmonk: the issue here isn't that Apple wants to be competitive. Their device alone is more than competitive.
I think that if this happens, it will most likely be due to something else altogether - lemme esplain. No... there's no time. let me sum up: by now, it's probably reaching a point where it's easier and cheaper for Apple to manufacture all of their iPhone models with the same guts (just adding in different storage capacities). They've probably come close to using up their previously-ordered stock of older components that go into the building of the original 3G, and it's probably cheaper now for them to just order all identical parts from their suppliers, and build one model of iPhone - even if it means slightly increased build costs per unit. It'd still be more profitable for them to do things that way.
So really, I doubt that it's a question of seeking to be competitive with other new phones in the same price range... In my opinion, they probably even would have released an 8GB 3GS from the start if they didn't have all the leftover stock of parts for the regular 3G. But leaving the 8GB model as a regular 3G allowed them to cycle through older inventory. Now that they've accomplished that, however, it's just easier for them to offer the same model across the board. It's just a happy side effect for both them and us that it ends up meaning better hardware for cheaper. #998gbiphone3gs
If Apple could only say "Fuck AT&T" and release the iPhone (for the same price) factory unlocked, and to work with additional frequencies, the world would be a happier place.
@RT100: AT&T's service has nothing to do with them being GSM. That's the saddest part - GSM is a dirty word in the US, whereas the rest of the world thinks CDMA is a joke. In Canada, our CDMA carriers just transitioned to 3G/4G to finally abandon CDMA - and now every carrier offers the iPhone.
Verizon will as well, as 4G phones become common. In fact, you can bet who Apple will be going with when their 4G iPhone is released. #998gbiphone3gs
@mmmiles: I'm well aware of the differences between CDMA and GSM. Just because the rest of the world uses it doesn't make it better. Japan actually uses CDMA as well.
What I'm saying is that is costs millions and millions of dollars to put up an infrastructure of a cell phone network. Verizon Wireless and Sprint-Nextel have spent so much freakin money putting up CDMA towers everywhere that they're not just going to drop it on a dime.
4G is a different story, Verizon is going with the GSM crowd with LTE
Sprint is going in their own direction (again) and spending "3 billion dollars" upgrading from CDMA to WiMAX. [en.wikipedia.org]
Fact is, that there are different standards and they're both gonna be around for awhile. CDMA works better over long distances, like in the boonies in the USA. GSM is more flexible (SIM switching, etc.) but has shorter range, so it's better for more heavily populated areas, like European countries. #998gbiphone3gs
@RT100: BTW japan doesn't use CDMA. WCDMA isn't a CDMA technology. Well thats not entirely true either. The whole world pretty much uses CDMA just much lower rates then in the US.
For wide spread adoption its pretty much an american thing (north and south) and SK. #998gbiphone3gs
This article is ignorant. Just because cell phone companies are criminals doesn't mean we have it to like it. The Nokia N7 sure as heck doesn't cost 700 dollars to make. We are just getting ripped off. We are also upset as apple had a history of offering them at a lower upgrade pricing in the beginning. Why change it now, greed. Think Different, people!
@pgammel: Don't fucking buy the products. It's as simple as that. Vote with your wallet, but stop DEMANDING that they make cheaper products. It's just stupid. If there is no demand, the price will go down until it reaches the point in which customers buy. That's how markets have been working since commerce started.
Great post Mr. Diaz. I believe you have touched on the very problem that is running rampant throughout this country. The whole self entitlement imbued in people from this country when these people have done nothing to receive that entitlement is baffling.
The reason people (including myself) are pissed is because AT&T DID let original iPhone customers upgrade to the 3G at the subsidized price. Now they've decided not to let iPhone 3G customers upgrade to the 3GS. This blows goats, and is worth whining about IMO.
I could understand if people wanted to upgrade without renewing your contract. But come on! I'm willing to sign ANOTHER 2 year contract with the suckfest that is AT&T and pay them a minimum of $2,400 over the course of those 2 years, and they won't let me upgrade my phone? Screw that, and screw you for telling us not to whine about it.
In Denmark the phone contracts only are allowed to be in a lenght of 6 months, so we could theoretically buy a new iphone every 6 month if we wanted :D
I don't consider it unfair to charge "full price" for the phone, and I certainly agree that a contract is a contract, and those (like myself) who have the iPhone 3G knew that this was what would happen. And when it comes right down to it I don't even want the 3GS - I wouldn't pay to upgrade even if I could buy it at the subsidized price. It just doesn't interest me that much.
What I do object to is the absurd, monopolistic setting of the MSRP at such an absurd level that it shocks the conscience. $800 for a phone? Phones are no more complicated than a PDA or MP3 player costing $300-$400. But phone manufacturers and cellular network providers routinely collude to set artifically high prices for the devices for the purpose of locking people in to bigger contracts, and so they can reap incredibly high profits in the case of replacement in case of loss or damage. There are probably other reasons too, locked deep within the financial arrangements made between manufacturer and carrier.
I'm not just talking about the iPhone either - I'm talking about every network and every phone maker. They set these ridiculous prices that have no basis in reality.
It's not whining to say that what happens between carriers and manufacturers is collusion, and that they conspire to set artificially high MSRP because ultimately it helps both of them while hurting consumers. I personally think that there is a strong case to be made that the carriers and phone manufacturers have essentially formed a cartel, and that this practice is illegal.
@weatherman: I can assure you the iPhone is WAY more complicated than the the iPod touch. There's no way around what a machine costs. There's a margin on top, sure, but it's not arbitrary. The price for the Pre, Android, etc. is the same.
@Jesus Diaz: but is it really that much more complicated? I'm not trying to do an assesment by teardown price here because I think those things are pretty innaccurate and don't take into account a lot of other costs, but it seems to me that in any ordinary economy the iPhone, Palm Pre, Blackberry... they would all be about $300-$500 retail.
Nope. The only reason that the phones have such a high list price is because they are almost never sold at list price. If companies were forced to sell their phones and plans separately there would be true competition. But that doesn't happen - in part because the cell networks are all running on different systems so it's hard to make one device at one price that runs on all of them, but mostly because the carriers control what devices are made for their networks and the phone manufacturers go along with it because they make a ton of money participating in a non-competitive marketplace.
If I buy a phone at full cost (i.e., un-subsidized), my monthly plan should be cheaper, reflecting the fact that the carrier doesn't have to recoup the cost of the subsidy, but this is not the case. I pay the same monthly rate regardless of my phone-subsidy status.
Once carriers start doing implementing a discount (or conversely, a monthly "subsidy fee"), people will stop complaining because they'll feel like they have an informed choice, instead of feeling entitled, which everybody that is complaining is doing now.
11/06/09
I'd actually like to see a wider switch to how t-mobile is doing it and make it no contract pricing. #998gbiphone3gs
11/06/09
*(not counting the $100 monthly fees) #998gbiphone3gs
11/06/09
11/06/09
Even I would have a hard time mentally justifying dropping $500 for an iPhone after getting used to $200-300, but even that would be cheaper than paying back the subsidy. #998gbiphone3gs
11/07/09
I think that if this happens, it will most likely be due to something else altogether - lemme esplain. No... there's no time. let me sum up: by now, it's probably reaching a point where it's easier and cheaper for Apple to manufacture all of their iPhone models with the same guts (just adding in different storage capacities). They've probably come close to using up their previously-ordered stock of older components that go into the building of the original 3G, and it's probably cheaper now for them to just order all identical parts from their suppliers, and build one model of iPhone - even if it means slightly increased build costs per unit. It'd still be more profitable for them to do things that way.
So really, I doubt that it's a question of seeking to be competitive with other new phones in the same price range... In my opinion, they probably even would have released an 8GB 3GS from the start if they didn't have all the leftover stock of parts for the regular 3G. But leaving the 8GB model as a regular 3G allowed them to cycle through older inventory. Now that they've accomplished that, however, it's just easier for them to offer the same model across the board. It's just a happy side effect for both them and us that it ends up meaning better hardware for cheaper. #998gbiphone3gs
11/06/09
But I know that will never happen :[ #998gbiphone3gs
11/06/09
I scoff! Scoff! Scoff! Scoff! #998gbiphone3gs
11/06/09
11/06/09
11/06/09
11/06/09
Verizon will as well, as 4G phones become common. In fact, you can bet who Apple will be going with when their 4G iPhone is released. #998gbiphone3gs
11/06/09
What I'm saying is that is costs millions and millions of dollars to put up an infrastructure of a cell phone network. Verizon Wireless and Sprint-Nextel have spent so much freakin money putting up CDMA towers everywhere that they're not just going to drop it on a dime.
4G is a different story, Verizon is going with the GSM crowd with LTE
Sprint is going in their own direction (again) and spending "3 billion dollars" upgrading from CDMA to WiMAX. [en.wikipedia.org]
Fact is, that there are different standards and they're both gonna be around for awhile. CDMA works better over long distances, like in the boonies in the USA. GSM is more flexible (SIM switching, etc.) but has shorter range, so it's better for more heavily populated areas, like European countries. #998gbiphone3gs
11/06/09
For wide spread adoption its pretty much an american thing (north and south) and SK. #998gbiphone3gs
06/09/09
06/09/09
06/09/09
06/09/09
06/09/09
The reason people (including myself) are pissed is because AT&T DID let original iPhone customers upgrade to the 3G at the subsidized price. Now they've decided not to let iPhone 3G customers upgrade to the 3GS. This blows goats, and is worth whining about IMO.
I could understand if people wanted to upgrade without renewing your contract. But come on! I'm willing to sign ANOTHER 2 year contract with the suckfest that is AT&T and pay them a minimum of $2,400 over the course of those 2 years, and they won't let me upgrade my phone? Screw that, and screw you for telling us not to whine about it.
:-p
06/09/09
That's not an argument. That makes no sense whatsoever. And, as linked in the article, you had to qualify for that upgrade and it was an exception.
06/09/09
06/09/09
06/09/09
06/09/09
06/09/09
06/09/09
06/09/09
I don't consider it unfair to charge "full price" for the phone, and I certainly agree that a contract is a contract, and those (like myself) who have the iPhone 3G knew that this was what would happen. And when it comes right down to it I don't even want the 3GS - I wouldn't pay to upgrade even if I could buy it at the subsidized price. It just doesn't interest me that much.
What I do object to is the absurd, monopolistic setting of the MSRP at such an absurd level that it shocks the conscience. $800 for a phone? Phones are no more complicated than a PDA or MP3 player costing $300-$400. But phone manufacturers and cellular network providers routinely collude to set artifically high prices for the devices for the purpose of locking people in to bigger contracts, and so they can reap incredibly high profits in the case of replacement in case of loss or damage. There are probably other reasons too, locked deep within the financial arrangements made between manufacturer and carrier.
I'm not just talking about the iPhone either - I'm talking about every network and every phone maker. They set these ridiculous prices that have no basis in reality.
It's not whining to say that what happens between carriers and manufacturers is collusion, and that they conspire to set artificially high MSRP because ultimately it helps both of them while hurting consumers. I personally think that there is a strong case to be made that the carriers and phone manufacturers have essentially formed a cartel, and that this practice is illegal.
06/09/09
06/09/09
Nope. The only reason that the phones have such a high list price is because they are almost never sold at list price. If companies were forced to sell their phones and plans separately there would be true competition. But that doesn't happen - in part because the cell networks are all running on different systems so it's hard to make one device at one price that runs on all of them, but mostly because the carriers control what devices are made for their networks and the phone manufacturers go along with it because they make a ton of money participating in a non-competitive marketplace.
06/09/09
Once carriers start doing implementing a discount (or conversely, a monthly "subsidy fee"), people will stop complaining because they'll feel like they have an informed choice, instead of feeling entitled, which everybody that is complaining is doing now.
06/09/09