iPhone 3G S Pricing
It’s October 2008. I’m in an AT&T store shopping for an iPhone. At the register, I agreed to oblige myself to AT&T for two years in return for their “generous subsidy” on my phone which, they tell me, would otherwise cost me $699.
Holy cats! They’re subsidizing me $500! Thanks, AT&T! What a pal.
I also got my wife a new phone that came for free with our new Family Plan. It’s a very capable Nokia, which – the sales guy tells me – actually has better voice quality than the iPhone, can take pictures, can send MMS … oh, but not to the iPhone … but to other free Nokia phones and a bunch of Sony phones and Blackberries etc. Anyway, it can also play music too, even can sort of surf the Web. But I digress. The main point: free just for signing up. I mean, yes it’s subsidized, but I could have gotten the same very capable Nokia phone free without the two year contract.
So then I left the AT&T store, new iPhone in my pocket, new Nokia in the bag.
On our way over to the Apple Store, I started thinking back to Steve Jobs’ keynote at Macworld Expo 2007, where he introduced the iPhone as “a widescreen iPod with touch controls, a revolutionary mobile phone, and a breakthrough Internet communications device.”
We head to the Apple Store, where we’re looking at the iPod Touch. In Steve’s terms, the iPod Touch is two of these: iPod + Internet communicator. The only thing separating it from it’s cousin is the phone part.
The 16GB iPod Touch cost $299.
That Nokia in my bag was free. Gosh, if Apple could just somehow figure out how to get the free phone part of my Nokia into that $299 iPod Touch, AT&T wouldn’t have to “subsidize” me $500.
Hmmmm…
A few things to point out, then some jackassery:
- Apple sells iPod Touch to me at a profit
- Nokia sells that phone to AT&T at a profit
- There is no way that the circuitry that defines the difference between iPod and iPhone costs Apple or AT&T anything resembling the difference between $299 and $699.
Now, the jackassery:
The fact is that the $199/$299 price tag for the iPhone is the result of AT&T’s—or any other carrier, since the situation is the same all around the world—subsidy. Without subsidy—and tying you to a new two year contract—the iPhone is not different from something like the Nokia N97, which is $700 unlocked. Or the contract-free, unsubsidized iPhone 3G itself: The iPhone 3G costs $770 and $877 unlocked for the 8 and 16GB versions.”
Just because “the situation is the same all around the world” does not mean we should just shrug our shoulders and accept it.
I think a lot of the grumbling we’re hearing (and if we own 3G iPhones, doing) is not because we don’t feel like we should pay SOMEthing for this new bit of Apple magic, but it’s because our gut tells us that we’re being scammed by AT&T due to the rules that the wireless industry has managed to sucker us into accepting as standard procedure.
The question I have is this:
Where would Apple have to price the iPhone 3G S to get it the same profit margin that they get when they sell an iPod Touch?
Is it $299? Probably not.
Is it $699? No way.