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Reports of 3G iPhone selling for $199 at AT&T stores


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Reports of 3G iPhone selling for $199 at AT&T stores
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turtle
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Join Date: Mar 2005
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2008-04-29, 21:05

C|Net, Fortune/CNN Money

This would certainly be a deviation from the current way of doing business. Especially if Apple continues to sell the iPhone in their stores for the current $399 and $499. If it were to mean that Apple will sell theirs unlocked while AT&T sold them locked it would so be worth it!

Of course, Fortune does say this comes from a single anonymous source. Makes you wonder how accurate it is, though it was enough to have Scott Moritz put Fortune's name on it's possibility though.

How awesome would it be to have an unlocked iPhone here wild in the states that's sanctioned and supported by Apple?

Louis L'Amour, “To make democracy work, we must be a notion of participants, not simply observers. One who does not vote has no right to complain.”
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jdcfsu
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2008-04-29, 21:10

It's an interesting idea, but wasn't it part of the original contract details that AT&T couldn't discount the price of the iPhone in store? Or was that just an assumption made because it was being sold full price?

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turtle
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2008-04-29, 21:15

I don't think anyone really knows the original deal. The original deal is all speculation for those who weren't in the board room during the deal signing.
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veryamusing
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2008-04-29, 21:19

It'd be so freaking awesome if Apple sold an unlocked iPhone. I would pay a premium to be *allowed* to choose a provider myself. Being saddled with AT&T hasn't been a bad experience, but I just dislike being forced into a two-year contract, etc. Kind of sucks.
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kieran
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2008-04-29, 21:35

There really aren't many other options out there in regards to other carriers in the US. Especially one with the coverage that AT&T has.

I just don't get why people are so adamant about an unlocked iPhone in the US. It's not like there are a ton of other carriers to defect to.
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BlueApple
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Join Date: Jun 2006
 
2008-04-29, 22:45

What... 3G iPhone? So will the current iPhone be able to use AT&T's 3G network?

As far as I know, the current iPhone doesn't support 3G; not sure if it's the network not available or the iPhone hardware itself.
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turtle
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2008-04-29, 22:47

It's already using the 3G network. It just can't use it to full capacity like a 3G phone can. Think of it like using a 802.11b adapter on an 802.11n network.

Louis L'Amour, “To make democracy work, we must be a notion of participants, not simply observers. One who does not vote has no right to complain.”
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Kickaha
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2008-04-29, 22:47



New 3G iPhone due out this summer, if rumor is correct.

Current phone doesn't have hardware for 3G.

AT&T has 3G network.

Hope that clears things up.

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veryamusing
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2008-04-29, 22:49

Quote:
Originally Posted by kieran23kk View Post
There really aren't many other options out there in regards to other carriers in the US. Especially one with the coverage that AT&T has.

I just don't get why people are so adamant about an unlocked iPhone in the US. It's not like there are a ton of other carriers to defect to.
More to the point is the backwards US system of carriers offering discounted phones for customers that agree to sign service contracts. I've heard that we're the exception to the rule--the rest of the world buys a phone and then chooses a carrier.

I just don't like being beholden to one particular company, unable to switch if I'm unhappy, if it costs too much, etc. Getting an iPhone through AT&T is like being slapped in the face: not only does the customer not get a discounted phone, but we get to sign two-year service agreements too!

Couldn't you also use an unlocked iPhone more cheaply when traveling, etc.? I'm sure we've all heard the horror stories of the poor saps merely checking they're email while traveling only to discover upon returning home that they've racked up major overcharges.


Last edited by veryamusing : 2008-04-29 at 22:50. Reason: Added quote
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Robo
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2008-04-30, 01:28

Quote:
Originally Posted by jdcfsu View Post
It's an interesting idea, but wasn't it part of the original contract details that AT&T couldn't discount the price of the iPhone in store? Or was that just an assumption made because it was being sold full price?
Oh, believe me: AT&T is already subsidizing the cost of the iPhone; they're just doing it through that monthly bill that they pay Apple rather than any upfront discounts. If you think Apple would sell the iPhone unlocked for $399, you're kidding yourself. It might technically cost them less than that, but not with their typical profit margins intact. (In countries where Apple is legally required to sell the iPhone unlocked, they do - for hundreds more than the locked model.)

So an even deeper discount from AT&T would be quite a bold move, on their part.

and i guess i've known it all along / the truth is, you have to be soft to be strong
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Partial
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2008-04-30, 01:58

Quote:
Originally Posted by Roboman View Post
Oh, believe me: AT&T is already subsidizing the cost of the iPhone; they're just doing it through that monthly bill that they pay Apple rather than any upfront discounts. If you think Apple would sell the iPhone unlocked for $399, you're kidding yourself. It might technically cost them less than that, but not with their typical profit margins intact. (In countries where Apple is legally required to sell the iPhone unlocked, they do - for hundreds more than the locked model.)

So an even deeper discount from AT&T would be quite a bold move, on their part.
Source? I've cannot imagine it costs Apple more than 100 beans to crank out an iPhone. Probably significantly less.
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rasmits
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2008-04-30, 04:39

Quote:
Originally Posted by veryamusing View Post
More to the point is the backwards US system of carriers offering discounted phones for customers that agree to sign service contracts. I've heard that we're the exception to the rule--the rest of the world buys a phone and then chooses a carrier.
I just read an article recently that said 70% of phones sold in Europe are locked and sold with a contract. It's true that buying unlocked phones is easier, and therefor more common, than the US, but most people I know are willing to sign a contract to have a nice phone at a heavy discount. For example, my phone was 1€ with an 18€/month contract. Alone the phone would've cost 300€.

Unfortunately, the US doesn't have the same laws according to unlocking as most European countries. Here, carriers are obligated to provide unlocking services at request, sometimes even for free after a certain amount of time.

Quote:
Originally Posted by Roboman
Oh, believe me: AT&T is already subsidizing the cost of the iPhone; they're just doing it through that monthly bill that they pay Apple rather than any upfront discounts. If you think Apple would sell the iPhone unlocked for $399, you're kidding yourself. It might technically cost them less than that, but not with their typical profit margins intact. (In countries where Apple is legally required to sell the iPhone unlocked, they do - for hundreds more than the locked model.)
I thought that too until I saw the iPod Touch. Apparently the iPod Touch has some fat margins. I can't imagine adding the phone hardware changes the price to such a degree that Apple isn't making a profit off every iPhone sold - even before the money AT&T gives them.

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Robo
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2008-04-30, 05:53

Quote:
Originally Posted by rasmits View Post
I thought that too until I saw the iPod Touch. Apparently the iPod Touch has some fat margins. I can't imagine adding the phone hardware changes the price to such a degree that Apple isn't making a profit off every iPhone sold - even before the money AT&T gives them.
We pretty much agree. Like I said, the cost of the iPhone is, in all likelyhood, significantly less than $399. I'm sure Apple is making a profit on it upfront - just not their typical profit margins. That's why they charge so much more for the unlocked one.

As for the iPod touch, Apple obviously makes money on them, but I'd be surprised if they made the same profit margins off of it as, say, an iPod classic or iPod shuffle. But that's obviously just my conjecture.

and i guess i've known it all along / the truth is, you have to be soft to be strong
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bassplayinMacFiend
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2008-04-30, 07:31

Quote:
Originally Posted by tensdanny38 View Post
Source? I've cannot imagine it costs Apple more than 100 beans to crank out an iPhone. Probably significantly less.
The issue isn't the cost of the phone, it's the amount of income. If Apple sells unlocked phones, they have to either jack up the upfront payment of the phone to account for the estimated $9-11 per month for each iPhone account they receive from ATT, or be OK with losing the $216-264 extra revenue per phone over a 2 year period. With millions of phones already sold, you're looking at needing to replace hundreds of millions of dollars in revenue.

Also, will Apple then charge for iPhone updates on unlocked phones and blame SOX like they do with the iTouch and give the updates away to locked iPhone users since they're giving Apple a continuing revenue stream? This could be a huge accounting / software update management kerfluffle.
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Moogs
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2008-04-30, 08:39

3G iPhone on Verizon FTW.
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Robo
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2008-04-30, 08:41

Quote:
Originally Posted by Moogs View Post
3G iPhone on Verizon FTW.
Ahaha. Not. Gonna. Happen.
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Wyatt
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2008-04-30, 09:02

Quote:
Originally Posted by Roboman View Post
Ahaha. Not. Gonna. Happen.
Nope. I wish it would, but I doubt it. No way Apple re-engineers the phone for a CDMA network when all their other carriers worldwide are GSM (which makes perfect sense).

Plus, I seriously doubt the exclusivity deal Apple signed was only for the first phone.

If I'm wrong on both counts, though, I'll promptly shit my pants and buy the new phone for Verizon.
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Yontsey
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2008-04-30, 09:05

Quote:
Originally Posted by kieran23kk View Post
There really aren't many other options out there in regards to other carriers in the US. Especially one with the coverage that AT&T has.

I just don't get why people are so adamant about an unlocked iPhone in the US. It's not like there are a ton of other carriers to defect to.
I'd love to have an unlocked phone. AT&T is horrible in my area. I would rank it down there with sprint in this area. If I could get my hands on an unlocked 16gig or perhaps bigger iPhone, I'd gladly trade my Sidekick3 in, sell my touch and purchase one immediately.

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Capella
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2008-04-30, 09:41

The reason to be adamant about unlocked is because sometimes one carrier isn't an option. I had AT&T/Cingular once. For whatever reason, it's impossible to get calls through them inside most Rutgers buildings. Outside, it's okay; inside, it isn't. I had no desire to walk down 5 flights and outside every single time I wanted to call someone. It drove me insane. The reception was also poor in my hometown; I can't ever remember having more than 2 bars, and 2 bars was exciting.

That's why I wound up switching to Verizon. I can actually get calls anywhere on campus now, without being forced to go outside. Meanwhile, my Cingular-using roommate still has to go outside. We'll see about home, I haven't been back yet since last August, but given that I spend more than 9 months a year in NJ/at Rutgers, it makes far more sense to have a provider where I can get my calls for sure for that largest portion of the year.

As much as I want an iPhone, there's no way I can justify switching to AT&T and risk missing calls or never having a signal, because then, I'm probably never going to get to use the phone part of it! At least not on campus, and I'm stuck here for more than 2 more years. But if the iPhone was available for use on Verizon, I'd actually be able to use it properly.

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ghoti
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Join Date: Apr 2005
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2008-04-30, 09:58

Still, Spring and Verizon use CDMA, not GSM. The only choice you really have is T-Mobile, plus a few smaller providers. Apple won't make a CDMA iPhone, because nobody outside the US uses CDMA, and it's on its way out, anyway.
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Wyatt
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2008-04-30, 10:01

Quote:
Originally Posted by ghoti View Post
Still, Spring and Verizon use CDMA, not GSM. The only choice you really have is T-Mobile, plus a few smaller providers. Apple won't make a CDMA iPhone, because nobody outside the US uses CDMA, and it's on its way out, anyway.
Yep. Being unlocked has absolutely nothing to do with Sprint or Verizon.
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zippy
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2008-04-30, 10:04

Quote:
Originally Posted by Moogs View Post
3G iPhone on Verizon FTW.
Quote:
Originally Posted by Roboman View Post
Ahaha. Not. Gonna. Happen.
Quote:
Originally Posted by fcgriz View Post
Nope. I wish it would, but I doubt it. No way Apple re-engineers the phone for a CDMA network when all their other carriers worldwide are GSM (which makes perfect sense).

Plus, I seriously doubt the exclusivity deal Apple signed was only for the first phone.

If I'm wrong on both counts, though, I'll promptly shit my pants and buy the new phone for Verizon.
I'm not holding out any serious hope that they will make a CDMA version either, but I wish they would. Hell, I think if this thing had been available on Verizon, they'd have sold their 10 million quota already. Ok, maybe not, but I think they'd be closer.

I really don't think it would be that hard for them to have a second model with CDMA. It seems somewhat akin to having different models of a computer with different processors. I'm just guessing, but I would think that most of the components would be the same, they'd just have to plug in a different radio and maybe antennae or something. The software might have to be tweaked just a bit too, but that seems small potatoes to the other things they are doing with the software.

If they released one on Verizon, I'd likely sell mine, dump my carrier and switch back to Verizon and get two of them. I love my iPhone, and I like my carrier, but they don't have anywhere near the coverage that Verizon has, and that is a downer.

Do you know where children get all of their energy? - They suck it right out of their parents!
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psmith2.0
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2008-04-30, 10:26

Quote:
Originally Posted by turtle2472 View Post
I don't think anyone really knows the original deal. The original deal is all speculation for those who weren't in the board room during the deal signing.
Maybe any deals that were made in 2006/2007 were tied to a specific (current generation) iPhone? Upon the development of a new model, maybe new deals were discussed and arranged? This 3G phone might be something different in the arrangement, if these rumors are true. You can get one for $199 at an AT&T store (with a two-year contract, etc.), or Apple will sell you one for $399 that you can use with someone else?

I don't know.

Just seems hard to believe that Apple and AT&T would hammer out some sort of iron-clad, 2-3 year exclusive, "this is how it's gonna be; no wiggle room!" deal, considering how fast this tech changes. Things seem so different now (tech, marketing, development, pricing, other vendors releasing their iPhone knock-offs, etc.), versus just 6-12 months ago.

I always heard talk of a "multi-year" deal, but we've never really been let on to any concrete specifics, or what that particular deal applies to (certain generations or models of iPhones only, etc.?)



All I know is this: between the 3G stuff, rumored GPS, $199 price, a slimmer (rumored) case AND the whole enterprise/third-party software thing...this new iPhone is going to make the current one (and the iPod) look like batting practice, or child's play.



Who wouldn't jump on a phone like this for $199?!? It'll be a monster...
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Yontsey
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2008-04-30, 10:26

Agree, Verizon has the best coverage. I loved the coverage when I had them, but their phones suck. I switched to T-Mobile to get a Sidekick.

One day I will get a iPhone....just when is the question.

Die young and save yourself....
@yontsey
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kieran
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2008-04-30, 10:37

Quote:
Originally Posted by ghoti View Post
Still, Spring and Verizon use CDMA, not GSM. The only choice you really have is T-Mobile, plus a few smaller providers. Apple won't make a CDMA iPhone, because nobody outside the US uses CDMA, and it's on its way out, anyway.
Quote:
Originally Posted by fcgriz View Post
Yep. Being unlocked has absolutely nothing to do with Sprint or Verizon.
That's what I mean I posted my original response. Most people seem to think that an unlocked iPhone will work with any carrier, even Sprint or Verizon. They don't seem to know that they use an entirely different network.

In the US, the only other choice for most people is to switch to T-Mobile. In my experience, they usually have good coverage in major areas, but not so much outside those areas.

Quote:
Originally Posted by Yontsey View Post
Agree, Verizon has the best coverage. I loved the coverage when I had them, but their phones suck. I switched to T-Mobile to get a Sidekick.

One day I will get a iPhone....just when is the question.
You could easily have an iPhone right now if you wanted one. All you'd have to do is unlock it.

You're one of the few examples that I know that would benefit from an unlocked iPhone.
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ghoti
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2008-04-30, 10:45

This is becoming more and more speculation, but I don't think that the contract between AT&T and Apple is specific to a device. AT&T also has lawyers, and I'm sure they made sure that they wouldn't get screwed too easily.

It makes a lot more sense to me to tie the contract to time, i.e. have an initial period after which the terms can be reviewed and renegotiated, or even the entire relationship can be ended without a penalty for either side. Both sides probably have certain fairly abstract duties, like AT&T providing a minimal level of service for a given price and paying Apple a cut of the money they make from iPhone customers; and Apple has to keep the phone current, make a reasonable effort to make it hard to unlock, etc.

I'm sure they talked about 3G when this was negotiated, it's not like 3G was invented yesterday. So there will be some kind of rule, one way or another, that covers a 3G iPhone. It seems very unlikely to me that a 3G iPhone would mean the end of the partnership between the two companies. There are other reasons for doing such a thing, but certainly not an updated product. And since the partnership seems to be going well, and AT&T is working on extending the HSDPA or whatever coverage, they'll probably stick with the current arrangement.

It's not like they have a ton of choice in the US, and dropping the lock-in would mean the loss of very stable revenue, especially given the current development of the economy.
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zippy
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2008-04-30, 11:12

What makes the article intriguing is that it hints at a mutual change of agreement between Apple and AT&T that seems feasible: Apple will back off of the stance that AT&T can't subsidize the cost, and AT&T will lose the over all exclusivity. They will still be exclusive with regards to subsidized units and visual voice mail, so that gives them a bit of a competitive advantage over T-Mobile and other GSM carriers. But people who are willing to pay the current, full price, can get one and use it on any other GSM network. AT&T customers might even continue to get free software updates, while others will have to pay for them.

That would be an agreement that could see increased sales for both parties. AT&T will have a large base of existing customers who have balked at the price of the iPhone to cater to, and Apple can cater to the large base of GSM subscribers who are unwilling to switch to AT&T, and too afraid to unlock it.

Do you know where children get all of their energy? - They suck it right out of their parents!
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apple007
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2008-04-30, 14:32

Quote:
Originally Posted by turtle2472 View Post
How awesome would it be to have an unlocked iPhone here wild in the states that's sanctioned and supported by Apple?
Quote:
Originally Posted by turtle2472 View Post
I don't think anyone really knows the original deal. The original deal is all speculation for those who weren't in the board room during the deal signing.
I'm not so sure about that ... Hasn't the AT&T exclusivity, for a period of either three or five years, been reported extensively, if not formally announced by one or both parties?

Quote:
Originally Posted by BlueApple View Post
What... 3G iPhone? So will the current iPhone be able to use AT&T's 3G network?

As far as I know, the current iPhone doesn't support 3G; not sure if it's the network not available or the iPhone hardware itself.
The funny thing about that is, the SIM cards in current-gen iPhones often, if not always, feature a big "3G" logo on them. I've been waiting for some knucklehead to file a "false advertising" class-action lawsuit.

Quote:
Originally Posted by veryamusing View Post
More to the point is the backwards US system of carriers offering discounted phones for customers that agree to sign service contracts. I've heard that we're the exception to the rule--the rest of the world buys a phone and then chooses a carrier.
After traveling extensively for the past few years, I'm not so sure the U.S. system is all that "backwards." I've been simultaneously shocked by cell phone pricing and underwhelmed by plan-pricing almost everywhere I've been. Is it really better to pay $300 upfront for a phone just for the "benefit" of choosing your (overpriced) pre-paid carrier?

Quote:
Originally Posted by veryamusing
I just don't like being beholden to one particular company, unable to switch if I'm unhappy, if it costs too much, etc. Getting an iPhone through AT&T is like being slapped in the face: not only does the customer not get a discounted phone, but we get to sign two-year service agreements too!
Well, it's a voluntary slap in the face, and the contract should serve to lock in pricing for you. (And people routinely break cellular contracts if the cost of text messaging goes up $0.01/message, etc.)

Quote:
Originally Posted by veryamusing
Couldn't you also use an unlocked iPhone more cheaply when traveling, etc.? I'm sure we've all heard the horror stories of the poor saps merely checking they're email while traveling only to discover upon returning home that they've racked up major overcharges.
In theory, but it seems unlikely. AT&T's data roaming prices might be exorbitant, but the local-plan pricing is often just as bad. Carriers are simply charging what the market will bear. Text messaging is a perfect example: If people are dumb enough to pay $0.20 to fire off a text message that says "ok" or "thanks" or whatever instead of actually calling the recipient for free, then griping about the companies' pricing seems illogical.

Quote:
Originally Posted by zippy View Post
I'm not holding out any serious hope that they will make a CDMA version either, but I wish they would. Hell, I think if this thing had been available on Verizon, they'd have sold their 10 million quota already. Ok, maybe not, but I think they'd be closer.

I really don't think it would be that hard for them to have a second model with CDMA. ...

If they released one on Verizon, I'd likely sell mine, dump my carrier and switch back to Verizon and get two of them. I love my iPhone, and I like my carrier, but they don't have anywhere near the coverage that Verizon has, and that is a downer.
Perhaps, but I doubt all the message-board posts in the world would be enough to inspire a CDMA version of the iPhone, what with CDMA dying and AT&T's three- or five-year exclusive on the iPhone.

Quote:
Originally Posted by pscates2.0 View Post
Maybe any deals that were made in 2006/2007 were tied to a specific (current generation) iPhone? ...
Maybe, but it seems extremely unlikely. Why would AT&T bend over backwards to help launch the iPhone only to open the market to competition as the device is gaining in popularity (and before all potential customers' existing cellular contracts have even expired)?

Quote:
Originally Posted by ghoti View Post
This is becoming more and more speculation, but I don't think that the contract between AT&T and Apple is specific to a device. AT&T also has lawyers, and I'm sure they made sure that they wouldn't get screwed too easily. ...

I'm sure they talked about 3G when this was negotiated, it's not like 3G was invented yesterday. So there will be some kind of rule, one way or another, that covers a 3G iPhone. It seems very unlikely to me that a 3G iPhone would mean the end of the partnership between the two companies.
Agreed. It's not like Apple wanted to roll out a 3G iPhone last year and AT&T wouldn't let them. For all its faults, it appears AT&T has been every bit the good soldier thus far, and I have to believe AT&T would fight tooth and nail to keep the exclusivity, especially for the 3G version many people have been clamoring for since before the iPhone was even released.

Quote:
Originally Posted by zippy View Post
What makes the article intriguing is that it hints at a mutual change of agreement between Apple and AT&T that seems feasible: Apple will back off of the stance that AT&T can't subsidize the cost, and AT&T will lose the over all exclusivity.
Except that would be an illogical tradeoff for AT&T. The only rational reason to subsidize a cell phone is to attract more customers. Why would AT&T want to eat up to $200 per iPhone *and* face competition for said customers?

Quote:
Originally Posted by zippy
They will still be exclusive with regards to subsidized units and visual voice mail, so that gives them a bit of a competitive advantage over T-Mobile and other GSM carriers. But people who are willing to pay the current, full price, can get one and use it on any other GSM network. AT&T customers might even continue to get free software updates, while others will have to pay for them.
The last sentence seems borderline unworkable, as well as possibly illegal from an accounting standpoint. Doesn't Apple's current Sarb-Ox accounting apply per device, and not per AT&T customer? But regardless, it seems like this type of scheme would inspire yet another problem for Apple -- pirated/hacked iPhone OS updates floating around on the 'net -- that it would assuredly prefer to avoid.
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zippy
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2008-04-30, 14:52

Quote:
Originally Posted by apple007 View Post
Perhaps, but I doubt all the message-board posts in the world would be enough to inspire a CDMA version of the iPhone, what with CDMA dying and AT&T's three- or five-year exclusive on the iPhone.
Dying?? I have never heard Verizon announce that they were shedding their CDMA network, and with arguably the best coverage in the continental US, I'd say they are not dying. Maybe they'll migrate to something else in the future, but to my knowledge, they're fairly mum on it as of now.

Besides, I really don't see too much of an investment in creating and stocking a CDMA version. I don't think they'll do it, but I wish they would.


Quote:
Originally Posted by apple007 View Post
Except that would be an illogical tradeoff for AT&T. The only rational reason to subsidize a cell phone is to attract more customers. Why would AT&T want to eat up to $200 per iPhone *and* face competition for said customers?
If they were the only one that was able to offer the subsidized phone, plus visual voice-mail, and free upgrades due to the subscription based pricing scheme of a contract (which it seems is what makes it legal for them to provide the updates 'freely') then maybe that's enough of a competetive foothold for them to attract new customers as well as retain/re-sign existing customers. They're already eating up to $200 or so on many of the other phone models, so from AT&Ts standpoint, it would be more like getting back to business as usual. Except that they still would have a leg up due to the exclusives I already mentioned.

Quote:
Originally Posted by apple007 View Post
The last sentence seems borderline unworkable, as well as possibly illegal from an accounting standpoint. Doesn't Apple's current Sarb-Ox accounting apply per device, and not per AT&T customer? But regardless, it seems like this type of scheme would inspire yet another problem for Apple -- pirated/hacked iPhone OS updates floating around on the 'net -- that it would assuredly prefer to avoid.
See above why I think they'd be fine legally, though I admit I'm no expert. As for the pirated/hacked updates, it would be something to deal with, but I'm sure they'd manage. After all, it would be similar to what they are doing with the iPod touch. I would assume the updates would be fairly cheap and most people would rather spend $15-20 and not waste their time while risking bricking their phone.

Do you know where children get all of their energy? - They suck it right out of their parents!
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Wyatt
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2008-04-30, 15:11

Quote:
Originally Posted by zippy View Post
Dying?? I have never heard Verizon announce that they were shedding their CDMA network, and with arguably the best coverage in the continental US, I'd say they are not dying. Maybe they'll migrate to something else in the future, but to my knowledge, they're fairly mum on it as of now.
Verizon dumps CDMA for next-generation network -- It's likely Verizon will move to GSM completely by early in the next decade. It just doesn't make sense for them to continue with CDMA when almost no one else uses it.
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