Thousands rise to rage at iPhone pricing (which is actually not that many people) [UPDATED]

In a reminder that spurned gadget lovers can quickly turn rabid, several thousand angry iPhone owners in the U.S. and U.K. have signed a pair of Twitter petitions to protest pricing regimes for Apple's new iPhone 3G S. In the U.S., those currently under two-year contract by AT&T must pay  $200 more than for the new phones than customers not under contract.

Screen shot of a Twitter petition.

That means $499 for the top-of-the-line 32-gigabyte iPhone 3G S and $399 for the 16-GB version, rather than $299 and $199 respectively, the prices for those with no existing contract.  If you want to buy the phone with no contract at all, it's a piggy-bank-breaking $699 and $599.

(In the name of fairness, it should be noted that this movement comprises a vanishingly small fraction of iPhone 3G owners. The company has sold more than 15 million of the second-generation devices since their release last summer.)

In a typical complaint on the AT&T message boards, user apw34 seethed, "This is ridiculous and slap [sic] in the face to long time loyal iphone customers. . . . We have to mount a vigorous campaign to change this policy."

"Longtime iPhone customer" is a borderline oxymoron, however. The phone debuted only two years ago at a price point of $599 for the first 8-GB phone, or $399 for the 4-GB -- contract or no. Moreover, customers who purchased those original models in 2007 would now find themselves eligible for the discounted, new-contract pricing. 

Unless Apple decides to institute a quick price reduction -- a move it made soon after the 2007 release (triggering another mini-outrage), customers who expect to be exempted from their contracts may find themselves bound by their own signatures.

"Why should the iPhone be any different than any other ATT phone?" argued user kgipp. "Your reasoning would imply that anyone that has had a Blackberry should be able to upgrade to a new Blackberry anytime they want. What would be the point of offering incentives such as discounted phone prices if they're just going to keep making exceptions?"

Indeed, discounting new handsets to new or out-of-contract customers has long been part of mobile providers' strategy to filch market share from competitors. 

But before you try telling that to the owners of the now-outmoded iPhone 3G -- who woke up Monday to find themselves in possession of a 12-month-old relic that is slightly slower than the new version, not to mention lacking its compass and video camera -- make sure to strap on your helmet.

Corrected, 12:16 a.m.: An earlier version of the post used prices from Apple's iPhone "Apple Store" page, which currently states that existing AT&T customers will pay $699 for the 32GB iPhone 3G S and $599 for the 16GB.  An AT&T representative, however, told the Times that the actual prices will be $200 more for customers under contract, not $400. 

-- David Sarno

Comments

[Nasir]

I agree with this article 100% period. I have an iPhone 3G and I was thankful last year for not having to pay crazy money. This has been a practice of mobile carriers since the begining, we all have lived with it, complained here and there but in General lived with it and accepted as a business practice as this article suggests.

My only question is

when was the last time any mobile device had a following and fan base as big as iPhone?

If we all agree on one fact that no other mobile device has ever been able to generate the phenomenone that iPhone has created, then we must agree that iPhone has changed the way consumers are looking at mobile device. Therfore, mobile carriers must change the way they look at service agreements.

Exclusive service providers (AT&T, O2, T-Mobile... Etc) need to change the way they looked at mobile devices in the past. Business model that worked for every single device they ever carried or carrying does not fit the iPhone. If someone wants to upgrade the device -any device- and extending the contract should be given the same benefits as the new customer.

Hope, it makes sense.

[Alex]

A bunch of whinny entitled idiots expecting giveaways. You are all an embarassment.

-a sane iPhone owner

[CAG]

My only problem is that, as a current AT&T iPhone customer, I don't like having to pay $200 more for the upgrade AND have to re-up for two years. I'll gladly pay the $199 or $299 for a two-year extension or pay $399 or $499 for not extending the contract, but I don't like having to pay more than a new/long-time customer AND having to extend my contract. One or the other please.

[Newiphoneuser]

As a new Iphone user (only had it for 2 months) I am more pissed about the current drop in the price of the 3g phone. I already felt I was getting ripped off on the data plan. Friends of mine with the 1st gen Iphone only pay $20 a month for data I pay $30. Now after having the phone for literally 2 months I see it drops another $100. What is AT&T going to do for those customers. What about someone who may have bought the phone 2 weeks ago. I agree you should wait for the incentives to upgrade the phone for that price which is why I waited a year before I got mine. But if I had known 2 months ago that a newer model was coming out for the same price as the old phone I would have waited to upgrade my phone. Its a crappy move on their part.

[Bleek]

But all of the features don't ever work yet! No MMS, No tethering and 7.2 speeds wont be completed until 2011. So what is AT& T doing for us?

[alphonse]

@Bleek: So, here's a thought. Don't buy a new iphone until AT&T has reconciled the issues to your satisfaction. If buying the next version isn't worth it to you without the new features immediately operable, just exercise a little patience and you'll get what you want.

[fudgiemonkey]

This IS an outrage! Existing customers of AT&T should be able to purchase the new iPhone 3Gs at the advertised (lower) price and if anything - extend their existing contracts another 2 years. THAT is what other carriers do - they don't penalize existing customers and they certainly are not as RUDE as AT&T are!!

Further - AT&T has an abominable policy of staggering upgrade eligibility - i.e. my family purchased two 3G iPhones last summer and were FORCED into a contract with AT&T as well as purchasing two other cell phones all on a Family Plan (but with $30 each iPhone premium charges of course) - all at the same time; now the 2 iPhone users want to upgrade and one is not eligible until end of August and the other (again, who purchased the same day last summer 2008) is not eligible until end January 2010!!

I cannot wait for Verizon to take over. I detest everything that is AT&T and I live to see their demise.

[TeRRy]

BOYCOTT AT$T

[john]

very nice & interesting. good luck

[John Bike]

If you travel internationally you want a BB as it is the only device with an unlimited international data plan i.e., $65 per month. The iPhone international data plan is a rip off. Apple's marketing prowess has been bested by RIM in negotiations with AT&T, sorry Steve the Canadians had a sharper pencil !!!!!!

[Ton]

It is a marketplace, there are plenty of alternatives. If the price is to high, buy another one. Duh.

[Jay]

If you calm down and think about this, everyone that bought the last 3G iPhone signed a 2 year contract in order to get the lowest price possible. YOU accepted that agreement, YOU bought the device, YOU live with what YOU agreed to!

I also have the last 3G iPhone and am not one bit upset that the new version has a FEW (very few) hardware upgrades. Slow down and read the facts. About 90% of the new 3G s is SOFTWARE upgrade that YOU can get on your CURRENT device. Video recording? Absolutely...Compass? Absolutely... These features as well as landscape text, forwarding, and more are all SOFTWARE updates that YOU as a customer of AT&T with an iPhone get for FREE.

Buy a new car and cry about wanting a different color in a year and expect the dealer to take it back, or you give credit for the car you previously purchased...Stop crying, live up to your agreements, and download the 3.0 software so that you get the goodies everyone else is getting on the new device :)

[CWulf]

Subtitle should read:
Thousands rise to rage at iPhone pricing (Millions yawn)

(Yawn)

[Sean-Michael]

Maybe you iPhone owners are forgetting that you too have to wait two years to upgrade just like the rest of us on other networks! We don't upgrade our phones once a year when a new version comes out. Maybe it's our American, privileged sense of entitlement and inability to wait for gratification that permits people to start whining when they have to wait an extra year for a phone that is minimally different than the one you own. If you want the new phone, get the FREE upgrade and wait until your contract ends like the rest of us on Verizon, Sprint, and T-Mobile!

[christian]

You have to remember, At&t pays Apple $300 every time a customer buys an iphone. Playing devil's advocate, let's say most people keep their current phone and text plan. They then charge $30 for a data plan, that's usually the only thing people upgrade to. They only actually make $60 the first year on the data plan. That is why they want to you to keep the phone for 2 years, so they can make $420 over the 2 year period on data. It's about profit and loss people. You can't expect At&t to feed your gadget habit. Love my iPhone 3g, as it is still light years ahead of most phones:)

[iphone]

As a new Iphone user (only had it for 2 months) I am more pissed about the current drop in the price of the 3g phone. I already felt I was getting ripped off on the data plan. Friends of mine with the 1st gen Iphone only pay $20 a month for data I pay $30. Now after having the phone for literally 2 months I see it drops another $100. What is AT&T going to do for those customers. What about someone who may have bought the phone 2 weeks ago. I agree you should wait for the incentives to upgrade the phone for that price which is why I waited a year before I got mine. But if I had known 2 months ago that a newer model was coming out for the same price as the old phone I would have waited to upgrade my phone. Its a crappy move on their part.

Posted by: Newiphoneuser

Are you serious?! If you knew ANYTHING about Apple, you would know they hold their annual keynote conference every year. Most people know that a new iPhone comes out every June or July. This is not even Apple's fault...and maybe you should be a more informed consumer. I know if you get your phone at Best Buy, they will reimburse you the price difference if you bought the product within the last 30 days. Quit complaining that you got your iPhone 2 months ago and didn't get it for the cheaper price. It's very pathetic.

[marion]

@jay the new features theyve shown last Monday are only available in the 3gs. Such as video recording, digital compass, data encryption, etc. Other features such as landscape mode can be found in the new OS. Overall, its not a big leap as it was from the first gen iphone to the 3g.

[Jeff]

I think the pricing structure is discriminatory and unfair -- and in my mind, it smacks of a classic tie-in sale which violates antitrust laws. An arbitrary class of customers is created and gouged. I don't have a problem with committing to a newly-starting 2-year plan with AT&T each time I want to upgrade my equipment. I also don't have a problem with Apple having an exclusive arrangement with AT&T as their carrier. But the purchase of the phone itself should be unrelated. I should be able to buy it either from Apple or AT&T (or for that matter from another vendor) without having to pay a penalty because of the state of my customer relationship with the carrier. At the very least from a business point of view, this practice infuriates loyal customers and engenders terrific ill-will.

[robinson]

This is the KEY comment:

"Existing customers of AT&T should be able to purchase the new iPhone 3Gs at the advertised (lower) price and if anything - extend their existing contracts another 2 years. THAT is what other carriers do - they don't penalize existing customers and they certainly are not as RUDE as AT&T are!!"

If this is the true, then most of the people reporting and commenting on this have missed real story. AT&T is trying to gouge its current customers and hit them up bigtime--bigger than new customers or ones with expiring contracts.

Plus, if AT&T were really customer-friendly, they'd provide a way for people to buy the iPhone w/o having to sign up for a data plan.

Much of the debate-- and the critique of the whiners--amazes me-- people sound just like AT&T shills--suck it up, this is the way the cellphone industry works, you signed up for it. What's missing is that the entire way the cell phone industry is structured in the U.S. allows such indentured servitude. The FCC and Congress should get into this and free the cell phone device from its providers and contracts. It's too bad Apple didn't do that from the get go.

[J]

I wish I had seen this article a few hours ago. I just got off the phone with AT&T trying to convince them of the same logic--that they are penalizing loyal customers with a needless $200 mark-up to a public price of $99 for the old 8G. They did not give. The rep did help me figure out that it is cheaper to pay $120 for the prorated cancellation fee + $99 for the old iphone 8G + $10 to have my hubby add another line to our fam plan, then to pay $299 for an early equipment upgrade. AT&T has actually structured this so it is cheaper to leave than to buy the phone at the price they want existing customer to pay! Problem was I would have to change numbers...drats...foiled again. :( If anyone figures out another work around LMK. For anyone who doesn't mind changing numbers, considering leaving AT&T and rejoining to get the best pricing.

[DanF]

These "unruly" iphone 3G owners really need to get a grip. If you weren't so ignorant you would have already known that anything electronic that is worth anything gets upgraded annually. Perhaps you could look back at the turnover from the 1st gen iphone to the 2nd gen! WAKE UP, you are not entitled to anything! Now suck it up like big kids and wait until you are eligible for an upgrade like everyone else with a contract has to do!

A bunch of whinning, ignorant losers are what you all are making yourselves look like.

[Bozo]

DanF, So how is it working for ATT? I have used Sprint, Verizon and unfortunately ATT. I am going to first file a complaint with the FTC and FCC for false advertising and poor service.
If I have to I will go ahead and pay the ETF and save the heartache of giving them $120.00 per month for crap service.

Verizon will have the iphone by Christmas….

[Bozo]

J, You can port your number over to a new carier. No big deal...

[smithtown]

Every US Carrier works the exact same way...and they have for the last 10-20 years...this is nothing new. You may think you are renewing a 2 year contract...but you are really only adding 1 year to the contract. Since you are only adding half the contract term...you get half the discount. Try smashing your recently purchased (and insurance free) BB Storm...go to Verizon and see what they say. To all the people saying they should just add 2 years to the contract...you are being ridiculous...you clearly would not have the control to resist the next iPHone, and the next...and pretty soon we have a bunch of people complaining to the government that they are locked to AT&T for 10 years...bunch of idiots. I hope everyone is filing a complaint about the Blackberry Storm, and the Pre...they too are advertised at their fully subsidized price (and don't forget Apple does a majority of the advertising on price...so throw some of the blame on them).

For the love of God wake up and realize if you have an iPhone 3G you can sell it on Craigslist for like $400 bucks (I sold mine yesterday for this price)...buy a new one WITHOUT a contract for the 199 or 299 difference, then maybe finally you can all shut up.

[smithtown]

And to clarify what Apple makes on all this...

AT&T pays them whatever subsidy they ask for + a bonus of 200-300 dollars for new lines and upgrades. Apple is making bank on this, and all the fanboys are up in arms against AT&T...I am no fan, but I have been a customer with every major carrier, and it is the exact same thing no matter where you go. These are all businesses not charities for early adopters with clear entitlement problems.