In defense of the 'unfair' iPhone 3Gs pricing
Apple’s WWDC keynote yesterday was probably one of the more exciting one’s we’ve seen for a while now. We got a few quick looks at Snow Leopard (and it’s amazing $29 price tag) and we got the big announcement of the new iPhone. I for one was completely excited. Unfortunately, there’s a huge stink brewing on the internet from iPhone 3G[pre-s] customers who are upset that they wont be able to take advantage of the $199 and $299 price points. To those people I’d like to say the following: “Owning a iPhone 3G[pre-s] is not different than owning a Blackberry, Motorola, or any other cell phone. If you’re ineligible for an upgrade, you have to pay more”.
This is the way the cell phone industry has ALWAYS worked. The cost of the phone is always far higher than what you’re paying. Your carrier, in this case, agrees to pay a portion of the phones cost if you are willing to guarantee them that you’ll stick with them for 2 years. This serves two purposes: 1) the cheaper price point is more attractive to the customer (you), and 2) they can afford to do it because they’ll make that money back by the end of the two years.
The whole ‘upgrade plan’ that all the carriers have (I think Verizon’s is called ‘new every two’ or something like that) is not them being nice to you. At the end of your two years, you’re no longer on a contract. This means that at any point you could just decide you want to move to another carrier and ditch them. So, they sucker you in by offering to subsidize a new phone for you. You agree and then you’re locked in.
Now if you ever decide you want to switch to a new phone while you’re still on the old contract, this causes a problem. Your carrier still hasn’t made that money from you completing the alloted term of your contract. So, why should they subsidize another phone for you? Well, the truth is they shouldn’t, and they don’t. It’s no different than any other phone upgrade.
I know, I know, I can hear the replies now. “but what about when the second phone came out. iPhone users didn’t have to pay extra to upgrade to the iPhone 3G[pre-s]!” You’re right, but I’d like to remind you of two VERY important facts regarding that:
1) The original iPhone was not subsidized! We all paid $499-$599 for the damn thing. ATT can subsidize our next phone because we’re not still paying them back for our last one.
2) The SAME EXACT price increase applied for ineligible people trying to upgrade to the iPhone 3G[pre-s] from their RAZRs and Blackberry’s.
So in short (well, you know what I mean), before you all get up in arms and cream out to the masses that apple is screwing over everyone who bought an iPhone last year. Just take a step back, breathe a bit, and realize that unless you want carriers to completely stop subsidizing phones all together, this is how it’s always going to be.
posted by Christopher Schnese
