New iPhone pricing even more annoying and confusing than before

June 8, 2009 | Anthony Ha | Comments | |

One of the big themes at Apple’s Worldwide Developers Conference keynote speech today was pricing: A super-cheap price for an upgrade of the new Mac operating system Snow Leopard ($29), a price cut for the iPhone 3G (down to $99), and an affordable entry-level price tag on the new iPhone 3G S ($199). Too bad the speech didn’t come with footnotes, because once again, AT&T and Apple are using the pricing plan to annoy existing customers.

For people still on a two-year AT&T contract (like, say, many iPhone users) but wanting to buy new phones, the pricing for them will go more like this: $499 for the 8 gigabyte iPhone 3G, $599 for the 16 gigabyte 3G S, and $699 for the 32 gigabyte 3G S. While I understand some of the logic here, since AT&T is basically subsidizing the phone price to get new service customers, this is still a heck of a way to reward loyalty, especially at a time when people are already annoyed with erratic phone and data service, plus the fact that AT&T will be slow in adding some fo the iPhone’s new features. I’ve already complained about this policy, which essentially punishes AT&T existing customers; what’s amazing is that the subsidy gap between old and new customers has grown from $200 to $400.

To be fair, AT&T is also saying that iPhone 3G owners who are at least a year into their contracts will only have to pay $200 more. What a privilege! So that amazing new 3G S phone you’re drooling for? It might cost $199. It might cost $399. Or it might cost $599. I wish AT&T and Apple luck in explaining that to customers.

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About the Author, Anthony Ha

Anthony is VentureBeat's assistant editor, as well as its reporter on enterprise technology, cloud computing, and tech policy. Before joining VentureBeat in 2008, Anthony worked at the Hollister Free Lance, where he won awards from the California Newspaper Publishers Association for breaking news coverage and writing. He attended Stanford University and now lives in San Francisco. Reach him at anthony@venturebeat.com. You can also follow Anthony on Twitter.

  • Jaxciz
    Apple and AT&T are greedy and reaping from the exclusive-ness of the iPhone and the marketing jazz surrounding a product that is snazzy but technologically still lacking. I've seen a company on this route before.. Sony
  • this new phone is not gonna be very affordable for me, thinking about switching to a blackberry or a blackjack instead
  • Tim
    Please, it's subsidized. Get over it. You could have been paying $500-$600 every year all along if you'd like.

    Anyone with the "need" to upgrade a phone every year, a phone that costs $200 at minimum and almost $1200 a year in service, can afford another $200 bucks... or they can stop bitching... or keep their 1 year old phone.
  • mike
    I agree with Tim, why should users expect Apple and ATT to give them a new phone? ATT may have problems, but that is no reason they should give away phones. ATT has lots of other phones that have fewer features and cost more.
  • Well, my bigger objection is to the growing price gap between subsidized and unsubsidized customers, which I think is bad for a bunch of reasons.

    Also, I think there's a huge difference between "selling a phone for $299" and giving it away.
  • Matt
    If you must have the latest tech and are familiar with Apple's release cycle (or read blogs), then you should have sold your 1yr old 3G on ebay last week for $500-$600. Then used a burner phone for a couple weeks (using Google Voice to route to the temporary number) until the 3GS is released. Or, if you have an old phone laying around, simply swap the SIM. Finally, use the profits from the ebay auction toward the $200 premium. It's a good way of keeping up with the latest gadgets and not paying the steep retail prices each time.
  • Heidi
    This is an industry practice. Nothing to bitch! Also, for clarification this isn't just an AT&T/Apple thing. Go get yourself a new Blackberry or whatever device from Verizon, T-Mo or Sprint and try upgrading to the latest/greatest BB; you will end-up paying full-price.

    I don't even understand how/why this is even a subject on VB.
  • "I don't even understand how/why this is even a subject on VB."

    Mainly because it's a source of substantial customer dissatisfaction -- check "AT&T" on Google News or Twitter if you don't believe me -- making it a business story. Also, because I was in a bad mood. But mostly the first thing.
  • Charlotte
    My issue with the AT&T upgrade policy is that they are truely offending the iPhone base. The iPhone user is typically classified as an early adopter, which means they DO always want the latest and greatest technology.

    I agree that if you can afford an iPhone, you should be able to pay the $200 upgrade fee, but it is the principle I do not agree with.

    I will be waiting paitently for Steve Jobs' announcement in July that a version of the iPhone will be available on Verizon. :)
  • Arild Kraakmo
    Its a United States industry practice. Go to more developed countries such as Norway or Sweden and you will see how it should be. Contracts longer than 1 year are illegal by law because the average life span of a phone is only1 year.

    If we actually bitch some more then maybe it will help someone important understand that something needs to be done with this system
  • If you want to upgrade your phone every year, you can pay more when you get your phone to have a 1 year contract instead of 2 year contract. Or if you have kids, set up a family plan with the phones on a different yearly cycle. I get a two year subsidized phone every year because my kid is on a $10/mo family plan but I can upgrade his phone (and then use it for myself mwhahahaha!).
  • Mark
    This doesn't work with an iphone. The family plan is different with an iphone in that all the phones in the family plan have to be iphones. So I can't get my kid a cheap phone and then upgrade it to an iphone.
  • Mizzy
    Sorry but I have an iPhone family plan with 3 phones and only my phone is a iPhone
  • Scott
    I'm truly disappointed in Apple/ATT's decision to not allow existing 3G users to upgrade to the new 3GS phone for the same price as new users.

    Apple/ATT established the precedent for discounted upgrades for existing users when the 3G came out. They should continue in this tradition and reward loyal customers who want to purchase the phone as it upgrades year after year. Forget the technicalities of the fine print in the contract, just go with your gut on this Apple - it makes sense to reward loyal customers who want to pay you money to get the latest phone model each year when it comes out.

    The bottom line is that this is going to anger a lot of people who will feel, like me, that they are being punished for purchasing the 3G last year. After waiting for months for news of the release of the new phone with excited eagerness, I'm left feeling like a second-rate customer who will consider another smart phone option when my contract expires. So much for the loyalty to existing customers that Apple has normally shown. They've turned a die-hard Apple enthusiast into a doubter in one day.
  • Marcos
    The original iPhone was unsubsidized - you paid Apple the full retail price - thus they could sell you a subsidized iPhone 3G regardless of where you were in your contract. 3G users received a very generous subsidy on their phone, which is really a loan - and you are still paying back that loan through your 2-year contract. 3G users still early in their contract apparently want AT&T to eat their subsidy on the original 3G iPhone and hand them another one the 3GS, and then probably another one in a year on the iPhone 4G- that's not how it works, and not how any carrier or any phone is handled

    The subsidy-scheme is annoying, but I recall everyone aghast when the original iPhone came out subsidy-less for $500 or $600 - unless you want to go back to that paradigm, wait a few months and then upgrade to the 3GS. Personally, I think skipping a phone is always a good plan; it's why I stuck with the original EDGE-based iPhone, skipped the 3G, and will now be able to get a subsidy on the 3GS.
  • Tim
    Scott, my gut says Apple's gut says you'll still buy an iPhone.

    "They've turned a die-hard Apple enthusiast into a doubter in one day." And yet, you'll wait out another year of a contract? Really? You think you scare Apple by threatening to abandon them a year from now? When there'll be another better iPhone and another subsidy that you will qualify for? On maybe a new carrier? Sure.

    Apple is thinking globally. Apple is thinking hundreds of carriers. Apple is thinking new users. If, in a year, you are still a one-day doubter, maybe then they'll throw you a bone.
  • C Smithson
    Well, my iphone was stolen a few weeks ago, and I've been on a cheapo phone waiting for the new one to come out.

    So it's not that I need the latest shiniest gizmo whenever it comes out.

    I actually need an iphone in order to be able to view certain pre-installed iphone apps (like Notes) that sync'd with my iMac, but cannot be opened on it - only on iphones.

    And the new pricing seems quite crazy for existing customers.

    AT&T service is so bad, in my experience, that I'm not going add years onto my contract with them.

    Apple has lost me - I'm not getting an iphone replacement. Even though I will lose everything that was on iphone Notes, etc.

    And AT&T will lose me the day my contract expires. Forever.

    At $100/month for pretty crappy service, I don't buy into the "AT&T is subsidizing iphones" and they need to make money from customers by charging exorbitant fees for upgrades - they're making a fortune with a bad network.

    (no - I didn't have insurance w/Apple b/c in event of loss/theft, they've would've replaced my iphone with a refurbished one, which I'm not kosher about).
  • Wow. Try buying a Blackberry from Verizon and then 12 months later buying a Storm. Do you think you will get it at the new subscriber price? Seriously? AT&T already bought 2 years of your business with the subsidized 3G. You agreed to be with them for 2 years in exchange for getting a new phone at a reduced price.

    This is totally a non-story.

    I think that Apple gets an unfair share of credit for the good things it does (and I am a big Apple fan) but it gets a huge amount of negative crap for adhering to regular business practices (like higher prices for phones that aren't eligible for an upgrade...)

    I am not arguing that the price difference is fair or right, but it isn't unusual. So just relax. Just because you'd have to wait for a few months for a discount you are going to get out the torches and pitchforks? Please!
  • NegroDamus
    If they end up pissing off the wrong people, were just going to walk into the store and steal the damn phone or jack the delivery.

    Dont mess with crazy people when they feel the world owes them everything
  • If a high end iPod touch costs $400, then a $600 "true cost" for the iPhone seems pretty reasonable. So AT&T basically prorated the subsidy for 1-year customers...seems pretty simple to me.
  • This iphone pricing discussion is going on on twitter all the time. Guys, by it and than be calm, pleas ;)
  • I love the iphone and yes if you want to see the latest discussions twitter will inform you all the time.
  • I love the iphone, too.
  • I saw all the discussions on twitter...but I love the iphone so much!