The iPhone V2: When a Price Drop is Really a Price Increase
So Apple did it; announced a new iPhone. As they say on their web site, “Twice as fast. Half the price.”
But that’s the old reality distortion field again. It reminds me of the anecdote in the “Indians in the Lobby” episode of The West Wing, where Bruno Gianelli tells Toby Ziegler how P. T. Barnum managed to sell a cartload of white salmon by saying it was “guaranteed to not go pink in the can.”
The truth is that the iPhone is half the price; but the total price to consumers is more. How? Well, what you pay up-front is less; $200 less. But since AT&T, the sole carrier to offer the iPhone in the US, is charging $10 more per month for its data plan, you’ll be paying $240 more over the life of your two-year contract. Hence, the iPhone, over two years, costs you $40 more.
Apple shouldn’t be able to get away with this kind of clear deception. Since you can’t buy a phone without activating it, and without committing to a two-year AT&T contract, the actual selling price doesn’t mean much. What counts is the total price over time. And Apple’s clearly caved to AT&T to allow this to happen. I guess it’s part of the price they have to pay to get more users of the iPhone, but it’s still dishonest.
After the fact: as Glenn Fleishmann at TidBITS points out, you won’t be getting text messages (SMSs) with that price; you’ll have to pay extra for those. So your monthly bill goes up again, either 20 cents (!!!) per message, or $5 for 200.
And don’t forget, when you pay the extra $200 up front you only pay it once
now matter how long you own the phone. The extra $10/month is forever. Nice
to be AT&T.
Have to say that for most people it is more palatable. The up front is all that
matters and the rest doesn’t. That’s why salesman of all things can sell their
wares for low monthly payments because nobody worries about the total cost of
ownership.
Well, at least you are able to buy it and use it legally with all features activated
etc. Here in Luxembourg (small country squeezed in between France, Belgium
and Germany) we still don’t have any word as to when (or if) the iPhone will be
on offer…
So Apple should be accountable for the vagaries of AT&T’s service pricing? That seems unreasonable.
What Apple’s advertising is the price of the handset. In the case of the 8GB, it is half the price. What you’re arguing is like saying that Apple should account for the price of replacing incompatible software when it touts the cost of an OS upgrade. Or to take a more current example, that Honda should factor the cost of gasoline into its advertised price. It’s a more convenient argument to make in this case, since there’s only one service provider handling the iPhone (for now), but it’s no more logical.
And while I won’t defend AT&T’s raising their price, I will point out that recent analyses pretty much conclude that it’s in line with similar plans for similar phones. In any case, the blame for the price increase, and the responsibility for any advertising of it, lie solely with AT&T.
It’s Apple, in collusion with ATT, who is saying on their web site that it’s half the
price.
Kirk
Collusion is a pretty strong accusation. I don’t think there’s anything hanging out there to back it up. If you have access to the notes of conversations between the two companies, I’d love to see them.
Like I said, the handset IS half the price. And accusing Apple & AT&T of collusion doesn’t answer that fact, nor does it answer what I pointed out earlier…the service plan is, in essence, fuel for the engine that is the phone. How many car dealerships have you criticized recently for advertising price cuts even as the price of fuel is rising, leading to higher TCO? And would you buy a V8 without considering the cost of the fuel in this economy?
Of course not. And no one would THINK of blaming the manufacturer if you did. Likewise, anyone who buys an iPhone without looking at the price of service is a fool.
I’ll buy the accusation you (and others) are making when Apple starts talking about the cost of service, rather than the cost of the hardware.
Your point is well taken, but as long as the iPhone can only be used with one
carrier, I stand by the term "collusion". An unlocked iPhone is not half price (at
least not in those countries where, by law, Apple is required to sell it).