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.
The consumer/potential consumer has every right to bitch and moan about the price.
Sure Apple has every right to sell their phone at full price...but when they advertise and brag about the iPhone being sold at a certain price...never once mentioning the fine print...then it is disappointing.
If Apple say up front how the price system works then a lot of people wouldn't be so annoyed...annoyed that they can't afford one maybe but won't be so shocked.
Then of course when you see/realize how much it costs to make the iPhone then you'll see how much profit Apple really makes...as well as AT&T.
Stop bitching? Nah, people will always complain about everything and anything Apple pushes out why? because Apple isn't perfect.
That's crap dude...and bad business to boot. Minimal performance bump gives everyone another year to catch up -which means that by the time I AM eligible for the full discounted price, there will probably be something else out there for me.
The poll from yesterday showed that about 48% of people were still planning on getting the GS - plenty to make a ton of cash for apple - but can you imagine how many MORE they would sell if they offered 3G adopters, THEIR MOST LOYAL GROUP, the discount? I would expect that the 28 some odd percent who said they're sticking with the 3G would turn into an additional large group more than happy to throw 200 or 300 bucks at apple/AT&T for the new device.
I've spent over a thousand bucks on iphones for me and my wife over the previous two generations - and I'd be MORE than happy to drop another 400 on this generation - but 600 or 800? Bit steep for me for the new features being offered - I'll wait until next years "revolutionary rather than evolutionary" design (keep in mind, buy it now and you'll have the same problem next year when there may actually be something worth upgrading for)
@krische: Consumers do have a right (and in some sense should) bitch and moan. It's just a form of market feedback. If no one bitched and moaned, then no company would know what to produce in order to appeal to consumers. For instance, if some promising new company were to enter the smart phone market as an iPhone competitor, they will gauge the desirability of features (contract flexibility, applications, cut and paste, etc.) by the magnitude of bitching and moaning. Sure, it will get annoying for tech writers/reviewers who see the same thing over and over again, but it's still market information.
@dreamefx: Do you understand marketing at all? Would you really complain any less if Apple had said "iPhone 3GS: $700 - but if you buy it with a new 2-year contract, AT&T is willing to pick up $500 of that price for you" ???
Then of course when you see/realize how much it costs to make the iPhone then you'll see how much profit Apple really makes...as well as AT&T.
Well freaking DUH! Apple marks it up like crazy because they can, and you'll still buy it, even while whining the whole time. Also, don't forget about development costs, and the fact that they have to pay their employees, pay to have their Brick-n-Mortar stores, pay crazy taxes like every other company/individual... and oh yeah, pay HUGE amounts of money in order to be able to come out with new products with the latest tech. Oh, and maybe they want to actually make money and not just break even on it all. Heaven forbid a business with that kind of evil scheme for a business model.
I'm not just defending Apple, either, so you can choke on your Fanboi claims. How much do you think it costs to manufacture ANYTHING vs the price you end up paying for it??
@brobot: The point he is making is that Apple does not design its marketing to reflect the true cost of the iPhone. This is of course true, as it is for many other companies besides Apple/AT&T. This is rhetoric designed to confuse consumers, and while it is standard industry practice, it does not mean that it is ethical.
@FaustianSlip: If you accept that the most loyal Apple customers probably have the iPhone 3G, then if you screw over all iPhone 3G users, you are screwing over all most loyal Apple customers. Perhaps a diagram would help...
But how are 3g users getting screwed? Their phones don't stop working as soon as 3GS hits the market. No explosions, no drama.
You got the phone at a fraction of the price because ATT picked up the rest of the tab. As you haven't payed ATT back through services yet, they aren't willing to pick up the tab again as that means losing money.
Of all things, this should be clear enough to comprehend, even for the slow ones amongst us.
Sell your current 3g iPhone, buy a new one at the still slightly discounted rate and you'll end up with the same cost as the subsidized iPhone 3GS.
@Das-es: Read my post. I did not say that anyone was being screwed. I'll just copy and paste this:
IF you accept that the most loyal Apple customers probably have the iPhone 3G, then if you screw over all iPhone 3G users, you are screwing over all most loyal Apple customers.
Not everyone has expendable money like you get from your advertisers, we're pissed b/c we are trying to save money in a dying economy. Pretty sure rule 1 in business 101 is customer service/keeping customers happy....guess At&t and Apple skipped that chapter and for that, I won't be upgrading, for 100 dollars it was worth it, not 500 for goodness sakes. I will keep complaining regardless of what anyone thinks, its BS, you did it before, do it again!
@veedubu: Oh for chrissake. What is this? The Soviet Union? You don't have to buy a new phone. You don't have to buy a new car. You don't have to buy a new laptop. You don't have to buy new clothes.
In the words of Tyler Durden: You are not your bank account. You are not the car you drive. You are not the clothes you wear. You are not your grande latte. You are NOT your fucking khakis.
Give up. Stop whining and carry on. Save money, don't get a new phone. Upgrade for fucking free to 3.0.
@Jesus Diaz: Precisely! I got the 3G at launch; I can upgrade in December...will I? Nope...Knowing what I think we ALL know now, there will probably be a new iPhone in about a year. So, I'll just wait till then. No big loss, I still get 3.0, I still get all the features of the phone I originally paid for.
It's not like they're removing anything from what you've already purchased...
I disagree, there's a huge reason to whine for paying full price (which is the same reason I don't own an iPhone in the first place); AT&T.
If iPhones were open or at least locked into a decent network like Verizon, where the full functionality of the phone could be unleashed, it would be worth the money. But not as long as you're tied into AT&T.
Yeah, I know, jailbreak, unlock, blah blah blah, but I'd rather not have to go to that trouble. I should be able to buy a phone anywhere I want and hook it up to any network I want just like a home phone.
Nothing like letting a service provider dictate what you can do with your hardware.
@nexusheli: Did you not read the article? You're not paying the "best" price, but you're surely not paying "full" price... full price is $700-$800 as stated in the article.
@triggerx: Er.. the whole argument hinges on whether or not $700 is a fair price to pay for an untethered iPhone. For all we know, it's just an absurd markup created to make the contract price (which a vast majority of iPhone buyers will use) more appealing. "AT&T is not screwing you. Look at what the 'unsubsidized' price is!" How do we know that the unsubsidized price reflects the true manufacturer cost?
They set a standard last year when they allowed people who already had the iphone to upgrade at the 2 year contract price. That is why we are "whining"
You might wanna note that the original iPhone owners still get the subsidized price on the 3GS since we paid the unsubsidized price the first time around.
I understand your point, Jesus, but the problem lies in slapping the face of the loyal customer. This is not just AT&T, this is all cell phone providers. It's an ass-backwards notion similar to that of the credit card industry charging more interest to those who historically cannot afford it. (And believe me, I understand risk/reward.)
For that matter, a bad precedent was set in the last upgrade period, where people did have some benefits associated with upgrading.
Ultimately, Jesus, complaining about your situation in such a public forum only leads to further unnecessary and unfair empowerment on the part of the companies that establish these models not for the benefit of the consumer, but for the sake of profit. This is not to say that profit is wrong. Indeed it serves as the foundation of our society; but it is never okay to penalize customers who, willing or otherwise (based on exclusivity agreements), are simply paying their bills.
@Gilbert: How is ATT "penalizing" anyone? By that logic, you are "penalizing" my by not giving me $300 yet.
You signed a contract, agreeing that ATT could "penalize" you by not subsidizing a phone for 2 years. It is hardly "unnecessary and unfair" for them to enforce a contract you willfully, and knowingly, engaged in.
I'm sorry your mom didn't put fruit roll-ups in your lunch pale, but get over it.
@D.E.P.C. loves chocolate covered fetuses: I understand the ramifications of a valid contract, as well as the rights and obligations commensurate thereof, trust me.
My issue is not the contract. My issue is that whereas once users who owned a first-gen iPhone were given the opportunity to upgrade to second-gen 3G units, there are not being given the same opportunity. Subsidize away -- again, I understand that model -- the valid consideration for this new exchange would be a renewed two-year agreement.
To forgo taking money from willing customers is not necessarily a sound model, particularly when those customers are likely willing to sign no contracts. I'm not asking for something for nothing.
The slap in the face -- the "penalization" -- comes from the asinine logic that comes with essentially saying that you are going to grant new customers a certain value proposition, whereas the paying customers -- e.g. the ones the company no longer feels the need to incentivize -- are left in the dark.
From the company's standpoint, the rationale used to be that it was worth more to keep a customer than it was to gain a new one (it costs a lot more to gain a new one, a cost not reflected in the subsidy as exemplified by @bigbad's assertion that the subsidy is rolled into the life of the contract). Now, however, it's as though because those customers are locked into an agreement (willfully, as you remind us), the company could care less.
We will see how the model changes once the forms of contracts are no longer enforceable, particularly in states like California. Of course, subsidies might disappear, rendering this entire conversation moot. More importantly, you will see how AT&T scrambles to keep the customers it, as I've clearly demonstrated, so thoroughly slapped.
That you, Jesus, and the fellow above cannot see the detriment to the consumer just blows my mind. Generally, we're all this together. However, if you prefer being locked into contracts for the sake of a now ubiquitous commodity, so be it. I'm sure will make all the major companies quite happy.
And for the record, I do not like Fruit Roll-Ups. I much prefer actual fruit.
@Gilbert: That's all well and good, but signing a new contract doesn't make up for the fact that you haven't fulfilled the terms of your old contract, namely, the two-year term which AT&T calculated would allow them to recoup the subsidy they gave you on the 3G.
@vinhpoo: In contract law, the signing of the new contract in this particular event renders the old one null and essentially irrelevant. Moving forward, all that would matter is the new agreement.
I assure you, AT&T would more than profit from three years of guaranteed subscription with two subsidies, and it would likely continue to profit handsomely moving forward with additional upgrades as the 4th, 5th ... gen iPhones find their way to the market.
@Gilbert: You still don't get it. What you're basically asking for is a substantial loyalty discount. No sane company could keep doing this and stay in business. It's tantamount to asking Sony to sell PS3s for $50 a pop because you promise you'll keep using it for years and years. You're exactly an example of the whiny ME ME ME attitude Jesus is talking about. The new iPhone 3GS will have an actual value approaching $1,000. If you got a subsidized 3G last year, you paid approximately 25% of its actual value, and in the course of one year you have not enabled AT&T to recoup the loss it took to gain you as a customer. And now you want AT&T to take another loss so you can have the newest and best? Ok, so what if they go along with your silly notion...and Apple announces a fourth iPhone model next year. Should AT&T basically become a charity so their iPhone users can keep upgrading at their expense year after year?
@Barion: Without going into the rest of your statement, because I'm tired of this conversation already, just know this: I don't pay a monthly fee to use my PS3.
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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
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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.
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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.
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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.
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The consumer/potential consumer has every right to bitch and moan about the price.
Sure Apple has every right to sell their phone at full price...but when they advertise and brag about the iPhone being sold at a certain price...never once mentioning the fine print...then it is disappointing.
If Apple say up front how the price system works then a lot of people wouldn't be so annoyed...annoyed that they can't afford one maybe but won't be so shocked.
Then of course when you see/realize how much it costs to make the iPhone then you'll see how much profit Apple really makes...as well as AT&T.
Stop bitching? Nah, people will always complain about everything and anything Apple pushes out why? because Apple isn't perfect.
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Also, Apple and AT&T will market the new customer price just like every other phone on every other carrier has advertised.
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That's crap dude...and bad business to boot. Minimal performance bump gives everyone another year to catch up -which means that by the time I AM eligible for the full discounted price, there will probably be something else out there for me.
The poll from yesterday showed that about 48% of people were still planning on getting the GS - plenty to make a ton of cash for apple - but can you imagine how many MORE they would sell if they offered 3G adopters, THEIR MOST LOYAL GROUP, the discount? I would expect that the 28 some odd percent who said they're sticking with the 3G would turn into an additional large group more than happy to throw 200 or 300 bucks at apple/AT&T for the new device.
I've spent over a thousand bucks on iphones for me and my wife over the previous two generations - and I'd be MORE than happy to drop another 400 on this generation - but 600 or 800? Bit steep for me for the new features being offered - I'll wait until next years "revolutionary rather than evolutionary" design (keep in mind, buy it now and you'll have the same problem next year when there may actually be something worth upgrading for)
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I'm not just defending Apple, either, so you can choke on your Fanboi claims. How much do you think it costs to manufacture ANYTHING vs the price you end up paying for it??
Good grief. Don't be ignorant.
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But how are 3g users getting screwed? Their phones don't stop working as soon as 3GS hits the market. No explosions, no drama.
You got the phone at a fraction of the price because ATT picked up the rest of the tab. As you haven't payed ATT back through services yet, they aren't willing to pick up the tab again as that means losing money.
Of all things, this should be clear enough to comprehend, even for the slow ones amongst us.
Sell your current 3g iPhone, buy a new one at the still slightly discounted rate and you'll end up with the same cost as the subsidized iPhone 3GS.
So WTF is the bloody problem?
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IF you accept that the most loyal Apple customers probably have the iPhone 3G, then if you screw over all iPhone 3G users, you are screwing over all most loyal Apple customers.
Perhaps you need a diagram...
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In the words of Tyler Durden: You are not your bank account. You are not the car you drive. You are not the clothes you wear. You are not your grande latte. You are NOT your fucking khakis.
Give up. Stop whining and carry on. Save money, don't get a new phone. Upgrade for fucking free to 3.0.
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It's not like they're removing anything from what you've already purchased...
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If iPhones were open or at least locked into a decent network like Verizon, where the full functionality of the phone could be unleashed, it would be worth the money. But not as long as you're tied into AT&T.
Yeah, I know, jailbreak, unlock, blah blah blah, but I'd rather not have to go to that trouble. I should be able to buy a phone anywhere I want and hook it up to any network I want just like a home phone.
Nothing like letting a service provider dictate what you can do with your hardware.
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The first thing I thought of when I saw this article was you posting that link.
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I understand your point, Jesus, but the problem lies in slapping the face of the loyal customer. This is not just AT&T, this is all cell phone providers. It's an ass-backwards notion similar to that of the credit card industry charging more interest to those who historically cannot afford it. (And believe me, I understand risk/reward.)
For that matter, a bad precedent was set in the last upgrade period, where people did have some benefits associated with upgrading.
Ultimately, Jesus, complaining about your situation in such a public forum only leads to further unnecessary and unfair empowerment on the part of the companies that establish these models not for the benefit of the consumer, but for the sake of profit. This is not to say that profit is wrong. Indeed it serves as the foundation of our society; but it is never okay to penalize customers who, willing or otherwise (based on exclusivity agreements), are simply paying their bills.
06/09/09
You signed a contract, agreeing that ATT could "penalize" you by not subsidizing a phone for 2 years. It is hardly "unnecessary and unfair" for them to enforce a contract you willfully, and knowingly, engaged in.
I'm sorry your mom didn't put fruit roll-ups in your lunch pale, but get over it.
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My issue is not the contract. My issue is that whereas once users who owned a first-gen iPhone were given the opportunity to upgrade to second-gen 3G units, there are not being given the same opportunity. Subsidize away -- again, I understand that model -- the valid consideration for this new exchange would be a renewed two-year agreement.
To forgo taking money from willing customers is not necessarily a sound model, particularly when those customers are likely willing to sign no contracts. I'm not asking for something for nothing.
The slap in the face -- the "penalization" -- comes from the asinine logic that comes with essentially saying that you are going to grant new customers a certain value proposition, whereas the paying customers -- e.g. the ones the company no longer feels the need to incentivize -- are left in the dark.
From the company's standpoint, the rationale used to be that it was worth more to keep a customer than it was to gain a new one (it costs a lot more to gain a new one, a cost not reflected in the subsidy as exemplified by @bigbad's assertion that the subsidy is rolled into the life of the contract). Now, however, it's as though because those customers are locked into an agreement (willfully, as you remind us), the company could care less.
We will see how the model changes once the forms of contracts are no longer enforceable, particularly in states like California. Of course, subsidies might disappear, rendering this entire conversation moot. More importantly, you will see how AT&T scrambles to keep the customers it, as I've clearly demonstrated, so thoroughly slapped.
That you, Jesus, and the fellow above cannot see the detriment to the consumer just blows my mind. Generally, we're all this together. However, if you prefer being locked into contracts for the sake of a now ubiquitous commodity, so be it. I'm sure will make all the major companies quite happy.
And for the record, I do not like Fruit Roll-Ups. I much prefer actual fruit.
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I assure you, AT&T would more than profit from three years of guaranteed subscription with two subsidies, and it would likely continue to profit handsomely moving forward with additional upgrades as the 4th, 5th ... gen iPhones find their way to the market.
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