Is an iPhone revolt under way?
By Michael W. Jones
Pressure is rising on both AT&T and Apple to make some changes in their iPhone pricing policies, which are currently asking upgrading 3G to 3GS users to spend more money for less.
The way it stands today, an iPhone user with a current AT&T contract for a 3G handset is being asked to pay a severe penalty to upgrade to the newly announced iPhone 3GS. Not only is that user being asked to pay a $200 premium above retail price to get the new iPhone, they are being told that they will not even have access to all the new features, since AT&T does not yet have the mechanics in place to support them.
There is a burgeoning online campaign on many fronts, including the front-running social media site Twitter, to inject some common sense into the iPhone pricing policies. Dallas Lawrence, vice president of digital media at New York-based Levick Strategic Communications, thinks that the problem may be a critical one. He says, “It’s time for AT&T to step forward and be an industry leader. The next 48 hours will be very telling. AT&T needs to embrace the message, to acknowledge a mistake’s been made, and to make things good.”
The Twitter campaign got started almost immediately when Apple announced at their World Wide Developers Conference that upgrade pricing for existing iPhone 3G users would carry a premium of $200 over and above the retail price of both new models, according to a Computerworld story. More than 8,000 people, a number which has doubled over the last 24 hours, have virtually signed a Twitter-based petition demanding that AT&T sell the new iPhone to current users for the same $199 and $299 prices it charges new AT&T subscribers.
Lawrence, who is in the crisis and reputation management business, having served a number high profile clients, elaborated on his analysis of the situation by saying, “AT&T has the opportunity to turn a potential negative into a positive. They should forget the immediate gratification [of higher revenue] and invest in the longer term to keep iPhone users.”
Both Apple and AT&T are beginning to look bad in this situation. Worse, they are placing artificial barriers between themselves and their customers, not to mention between themselves and future sales. The number possible of iPhone sales are limited by a number of factors. If Apple and AT&T alienate that large established base of users that has already adopted the iPhone, both their reputations and their revenues will fall. In the case of Apple, that could quickly lead to the end of being the darling of stock market analysts, and drop them into the morass of our bad economy.
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June 12th, 2009
This is sort of counter-productive I think.
The problem is that AT&T are subsidizing the pricing of the new iPhones based on the fact that they will be receiving a new customer, or an existing customer, who is signing a contract for 24 months.
If you have had your iPhone 3g for less than 22 months, AT&T doesn’t have as much to gain from discounting the phone pricing. They will continue to lose money based on the upgrading.
Now, it may be a good incentive to meet people half-way, but even then AT&T ends up having to take a larger initial loss on the phone.
The sales strategy makes sense, they don’t actually intend most iPhone 3g users to upgrade right away. The iPhone 3g users get will still get their free software upgrades and next year, when adopters of the 3g-s are eyeballing the iPhone 4g, they will be required to pay the premium to upgrade and 3g users will not.
This has been the case every time every other cool phone has been released prior to the full discount being applied at every other cellular phone company. I don’t understand why iPhone users–users of a product made by a company that is notorious for charging a premium for their product–would feel so entitled to something that no other phone company, and no other cellular phone would do.
If I were a Sprint customer, and I wanted to buy a Palm Pre, and I only had my current phone for 12 months, I wouldn’t get the full discount on that phone either.
Same goes for T-Mobile and the G1, I won’t be able to get the full discount on the G2 when its released, because my contract holds too many months…