For my continued belief in humanity, let me first wish that I don’t see herds of people wasting precious days of their lives lining up for the new iPhone. Apple announced the highly anticipated gadget last week and everyone cooed over its new features, 3G capabilities, and amazingly low $199 price tag. I own an iPhone, so I can’t be too smug…
Buried in the glowing articles over the phone was a very interesting report from Foxnews.com (yes, Foxnews.com) that shed light on a business model that sounds eerily familiar to what the printer industry has mastered. Apple’s new $199 ($150 cheaper than the $349 edition I bought) will actually cost customers more money by the end of their contract with AT&T. Yes – with the new 3G iPhone, AT&T upped its minimum monthly contract from $60 to $70 – resulting in a $240 cost increase by the time the 2 year contract runs out. In the end, Apple and AT&T will make $90 more on the cheaper iPhone.
So giving away the hardware for free and then making money on downstream revenues…….hmmmm (scratch your chin).
To ensure that Apple has a contained audience, the company has stopped selling iPhones through its online store. Instead, the company is requiring interested customers to visit AT&T and Apple brick and mortar stores. Once there, the customer will have no choice but to sign up for AT&T’s minimum 2-year, $70 a month contract – and hand over an extra $240. By forcing customers to visit the store and sign the contract, hackers won’t have the chance to crack the phone and make it work with other carriers.
The article also makes an interesting point regarding American and European shoppers. Europeans are far more willing to cough up big bucks on hardware, on the assurance that their contracts are less costly. We Americans, on the other hand, love to save money on the initial buy and d
on’t mind getting handed the big bill later on. The difference in shopping cultures could easily apply to other industries and technologies….
But, for those of you packing your tent to camp in front of the AT&T store – take it to the park instead.