Tuesday, July 1, 2008

iPhone: Pricing Details Announced

AT&T today announced detailed iPhone 3G pricing causing more confusion than clarification.

You recall Steve Jobs' announcing the iPhone 3G at "twice the data, half the price". Well, we quickly learned given higher-priced data plans, the true cost (over the "life" of your contract) was actually slightly higher. Many, including myself, rationalized this as faster data speeds at an increased fee.

Today's announcement sought to clarify just exactly who would receive the touted $199/$299 iPhone 3G device pricing. There are three prices based on your status:

    $199 (8GB) / $299 (16GB):
  • Original iPhone customer before July 11, 2008

  • New customer to AT&T (i.e. move from another carrier)

  • Adding a line of service (say, a second phone)

  • AT&T Customer qualified for an upgrade (you've done the time)

    $399 (8GB) / $499 (16GB):
  • AT&T (non-iPhone) Customer not eligible for upgrade

    $599 (8GB) / $699 (16GB) - not immediately available:
  • Any customer without contract requirement

This is how I understand the pricing scheme. If you read AT&T's information differently, let me know.

I suspect most users will fall in to the first camp. For instance, I'm a T-Mobile customer planning to switch to AT&T. If I were under contract with T-Mobile I'd pay a standard $200 early termination fee. AT&T's own customers under contract will pay a similar higher price to "get out of" their existing commitment to switch to the new iPhone.

The real advantage here goes to the current iPhone users. They are upgrading at the same price meant to attract new customers while only renewing (not adding to) their previous contract commitment. I can only imagine the uproar we'd hear if AT&T didn't recognize current iPhone users' commitment with the $199/$299 pricing.

Footnote: Don Reisinger gives his take on the iPhone 3G pricing in his IT World column. He and I spoke on his Digital Home Podcast about iPhone pricing a few weeks ago. In his column Don writes:
"According to the company, only those people that purchased an iPhone before July 11, want to activate a new line, and are eligible for an upgrade discount, will be allowed to purchase the iPhone 3G for $199 or $299. For the rest of you suckers, you’ll be doling out a whopping $399 for the 8GB model and $499 for the 16GB model.
As I mentioned to Don via. chat a few minutes ago, the "and" (bold added above) should actually be an "or". Hopefully this will be corrected soon. (Kinda changes things, don'tcha think?)