AT&T to Subsidize iPhone 2.0

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AT&T to Subsidize iPhone 2.0


Fortune reports that AT&T is preparing to subsidize the next generation iPhone.


Apple is expected to reveal the latest iPhone at the WWDC keynote, June 9. The new device is expected replace the EDGE powered internet access, with the much faster, 3G network.


Fortune expects 8GB and 16GB iPhones with 3G to be announced, while many believe the 8GB iPhone will be phased out, and Apple will introduce 16GB and 32GB iPhones at the current $399 and $499 price.


Customers would need to sign a two-year contract with the carrier in order to take advantage of the new lower price. The new, subsidized, $199 price point should help Apple achieve its 10 million iPhone goal. Customers would need to purchase the subsidized iPhone directly from AT&T. Apple is not expected to offer the discount through its retail outlets or online.


Apple and AT&T declined to comment.



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My largest justification for getting the original iPhone was that it's data package (Along with a couple new discounts from the new AT&T) cut my monthly bill in half. I believe the reason for that is that the phone was NOT subsidized, so they don't need to recover the cost. Now, we are looking forward to a phone that uses their more expensive 3G network, AND is subsidized? What stops AT&T from throwing a $85+ data plan at it?
If that is the cost of a cheaper phone, I'm sorry AT&T, I think I will pass.



I do not see a $199 IPHONE reducing its value. That is not the sharpest statement I've seen of late. AT&T realizes that if you pay $199, they make aroung $2,880 out of you in fees and services over that 2 year period. By than, something even better will be out there.



What about existing AT&T customers?
Will they be able to purchase the iPhone for $199 and not sign the two year contract?



I have used Cingular, then AT&T, then AT&T turned into Cingular (and back into AT&T). And while it has varied over time, typically if you are less than half way into your contract, you get no discount, period. If you are an existing customer not currently under contract, you get the same discount, but only if you do sign a new contract. If you are under contract, but have less than half of the contract left, sometimes no discount has been available, and sometimes a discount has been available if you let your contract reset as of the date of discount.

Currently half is 1 year and a full contract is two years, but it used to be a 1 year contract for discounts... then someone said "why not 2?" But the discount policy has been pretty consistent with half-way often being a milestone beyond which they are willing to deal.



I doubt that we will see a 32GB iPhone at the release of the 3G phones. Apple knows everyone will jump on a 3G iPhone. Enough to generate sales without the the memory hike. Then around the holidays or the next Mac Expo, memory will be increased, and there will be a multitude of people who will go out and buy a second or third iPhone for the extra memory. This is Apple's way of getting as much of our money as they can. I'm not falling for it. Apple won't get any more of my money until it's 3G and 32GB.

I point out the 3rd gen iPod Nano as an example. Awesome new little iPod that finally plays video, but gives us no memory bump. Everyone goes out and jumps on the new styling and features, and probably will again when the Nano's memory gets bigger.

Again, I love Apple, I hate Apple.



Very interesting points. Apple was and is very smart with their shipping of iPods as well. I work at Target which carries iPods and I can usually tell when they are coming out with a new iPod. We start to stop getting shipments of them, so we don't really have to clearance any of them out because we sell out of them before they get a chance to go on clearance. Very smart there at that company.

I LOVE Apple and will always LOVE Apple.



I wonder why Apple would want to do this? Selling the iPhone for $199 would just devalue the brand. The iPhone and Apple products in general hold a high quality perception and I don't know why Apple would want to fool with that formula, but we'll see, I guess.




Apple may not be keen on it, but AT&T would guarantee that iPhone purchase equals AT&T phone contract. Right now there are alot (if the stats being floated about are true) of unlocked iPhones out there. Would certainly explain the subsidy only available from AT&T not Apple. A subsidy through Apple could still turn into another unlocked phone.



Just think of how easily AT&T could gain back that $200. With more and more people buying the iPhone, more and more people would be paying their monthly cell phone usage charge starting a $60. Depending on how much AT&T actually makes off that $60 charge, it could be turned around for a gain in no time. Dropping it down that low will certainly get me interested in purchasing one, especially if it has all the rumored upgrades to it. The only thing holding me back is the still small hard drive space.


Kendall Tawes

There was already a price drop for the iPhone once why not add the contract discount. If I can get a Blackberry for $49 with a contract why not an iPhone for $200 less. To me cheapening the brand would be using cheaper materials or putting Windows Mobile on it.

Lowering price doesn't make the phone cheap lowering the price makes it more available. As long as build quality stays tickety-boo I'll be all right.

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