Ipones new prices update

There's been much grumbling over the cost of the iPhone 3G S among existing owners who are not yet near the end of their contract with AT&T (NYSE: T), but who still want to upgrade to the latest and greatest version of the phone. As we reported earlier, those AT&T customers who haven't yet reached the end of their contract, must pay at least $200 more to get the latest model. Unhappy wannabe upgraders have argued their loyalty to the device and to AT&T should be rewarded, never mind their contracts.

But Saul Hansell, writing in the nytimes.com's Bits blog, has a novel proposition?that people shouldn't think they are buying technology products, rather that they should consider that they are subscribing to them. This is especially true, he says, of the iPhone when you consider Apple's pricing of it, which is in line with how they price their other products, but out of sync with how carriers normally charge for their handsets.

Apple (NSDQ: AAPL) sets a price for its products, whether its phones or computers, and heavily discourages its dealers from discounting them. Carriers, on the other hand, turn to their databases of customers to figure out how much money they can earn from them when their contracts are nearing an end. They offer up various deals, with different customers getting different offers. One phone might be given away for free to one customer, while another might have to pay $100 for it. Apple, however, has banned this according to a Bits source, hence all those who want to upgrade but aren't near the end of their contract must pay either $399 for the 16 GB version of the new iPhone, or $499 for the 32 GB one. (So blame Apple, not AT&T for the pricey upgrade cost).

But back to the subscription bit. This is how Bits breaks it down:

The standard model plan: You pay $199 every two years for the standard model, or $299 for the higher memory one. You suffer a "year of jealousy" over not having the latest model.

The latest model plan: You spend $399 every single year, (though you get the introductory rate of $199 the first year), which ensures you get the latest model as soon as it comes out. You pay $499 ($299 introductory rate) for the higher memory version.

Last year's plan: The cheapest of all the plans, you pay $99 every two years, but you get last year's model.

As for AT&T, how do the figures stack up for them? Analysts estimate for the $199 phone, they pay $550, and hope to recoup the $350 subsidy in service fees.



from the washington post