Cell Phone Pricing, Entitlement, and iPhones
Monday, June 8, 2009 at 06:05PM So, here's a big old rant. Without links. It contains far too many switches of grammatical style (second to third to second to third). And it stems out of comments I found myself leaving on various blogs as people were bitching about AT&T's upgrade pricing for iPhone 3GS models for existing 3G owners.
I'm amazed at how many people are caught off-guard by the fact that it costs full price to upgrade from an iPhone 3G to the new 3GS. And full price is exactly where iPhone prices where when they first came out and we enjoyed HONEST pricing - $499, $599, and $699.
The US carriers shot themselves in the foot a long time ago with their whole 'free phone when you sign up!' plan, as Americans now expect that the world owes them a free or cheap phone along with their free or cheap lunch and free or cheap gas and free or cheap air travel.
I loved that when the iPhone first came out, it was expensive. Expensive, but fair (until they knocked $200 off the price suddenly, but then gave all early adopters $100 back). Even Steve Ballmer laughed "no one's going to pay $600 for that when there's an HTC Touch Diamond available for $200"... Wrong. The HTC Touch Diamond (or whatever fancy model was around at the time) really cost $900+ new. Few US carriers offerred it, particularly at the so-called 'subsidized' rate. But people see that $199! price tag in the cell phone store window and thinks that's what all high end phones cost, when in fact, that's about how much the LOW end phones actually cost.
I had hoped that the original iPhone would usher in an era of honest pricing, as well as an era of not needing the painfully slow in-store activation process that existed at that point. It was so cool to just pay for your iPhone, go home, and activate it (once the activation server issues got balanced out).
I think that Apple was really trying to change the cell phone industry, or at least make it a bit more like the regular Computer and Gadget industry. But alas, they weren't successful. They caved in with the 3G and went to subsidized pricing and in-store activation.
Anyways, so many people are gasping at the full-price option. I saw one comment saying "AT&T may not be in a recession, but I am, I'm not paying for this!"
But he was willing to pay $199 for a product he technically does not NEED.
If he is in a recession, he should be trying to get the most value out of what he already has, which is the iPhone 3G. And that's still a damn fine device. In fact, with the free OS upgrade in a week, it will be even better!
The iPhone is meant to last two years. When Apple talks about their subscription-based accounting model for iPhones, it's because they break the price out across two years. You're paying, say, $599 up front for a two year subscription that includes all new functionality that future firmware options might bring. (It's a weird accounting rule, but it makes some sense - enabling MMS can be seen as a value-adding feature; so if it's not enabled initially but six months or a year down the line, does that change the value of the phone for the people who bought it before it was enabled? Does it change its relative cost to Apple? Same phone, semi-major new feature that was not initially advertised... It's weird. But I'm not an accountant). Anyways, as I understand it, Apple is just now able to take full account of my original iPhone purchase that I made two years ago.
And yes, I bought my iPhone when they were full price. And that made me think more about upgrading. I decided that I wanted to get full value out of my phone, regardless of what came out next. When the 3G came out, I decided it wasn't enough of an update. Sure, I wanted it. But I definitely didn't need it. (Technically, I don't need an iPhone, but hell if I'm going to give it up!) 3G speeds? Would be nice, but EDGE is OK here, and much of my time is spent at home or work where I have Wi-fi anyways. GPS? Would be nice, but triangulation works well enough for my needs.
Granted, I'd still feel the pull of the 3G - it has better built in speakers and a louder ring, as well as a properly-flushed headphone jack. As a musician who loves playing with some of the music apps available on the iPhone, all of those would be nice. The only thing that really is tough about my first-gen iPhone is that it's a 4GB model (it's all they had in stock the day I bought mine). I thought "I enjoy my 1GB shuffle, 4GB should be fine!" but I constantly run into that wall. But still, I've managed to get by.
It just didn't feel worth it to jump up and buy a whole new phone over relatively minor improvements, especially when the battery and everything else were holding up fine. I've only had one relatively bad drop (which just scuffed up the case a little), no water incidents... It's still in excellent shape.
When Apple did the surprise price cut on the initial iPhones (dropping 8GB from $599 to $399, and dropping the 4GB altogether), a lot of people bitched. I didn't understand this. I'm kindof glad they did - hey, we get $100 to spend at Apple store! But still, they were the ones who felt that the product that they were buying was worth $599. And it's a luxury item, not a necessity. If you NEED a cell phone and have little or no money, there are plenty of other options. But the way that people got upset was baffling. I can understand saying "oh goddammit" and moving on, just accept that I paid more.
A few months ago, Louis CK had a terrific rant about how we live in amazing, amazing times, and nobody is happy. And it was a rant about how people (particularly Americans) feel like they are entitled and owed so much, for free, and right now!
We are not owed or entitled to ridiculously discounted cell phones without strings attached. We are not entitled to ridiculously cheap air fare without having to put up with some minor irritations (honestly - SLC to JFK in five hours for less than $150? How can you complain about that?).
I hope that AT&T does not back down from their full-priced iPhones for current 3G owners. The AT&T contract has long been set up so that you only get special pricing after 18 months, which is a reasonable amount of time. If nothing else, it should prevent people from just throwing away whatever perfectly good thing they have for something that they don't particularly need. If it's something that you really need, you should be willing to pay full price. If you can't pay full price, wait for it to go on sale or be otherwise available at a discount. If you can't pay full price and can't wait, it's probably not the product for you.
Unless you're a developer. In which case Apple really needs to improve its developer program to provide developers with either discounted live phones, or usable test hardware (my understanding is that Apple does not provide this, leaving developers to use their primary phone as their test phone).