AT&T and the New iPhone 3GS: Pricing Shenanigans

iPhone 3GS: Not too expensive (unless you are already a customer)!

iPhone 3GS: Not too expensive (unless you are already a customer)!

Yesterday Apple announced its new iPhone 3GS, which sports accelerated browsing, longer battery life, a better camera (that can capture video too!), voice activation for everything from phone calls to the iPod, and increased processing power. I have a first-generation iPhone, and though I wasn’t tempted to upgrade to the 3G, the 3GS has really caught my attention and made me think about the upgrade.

Pricing for the iPhone is now $99 for the existing 3G, $199 for the 16GB 3GS, and $299 for the 32GB model. Not too shabby, right? Not at all… unless you’re an existing customer that doesn’t qualify for an upgrade. Check out the fine print from Apple’s page:

Requires new two-year AT&T wireless service contract, sold separately to qualified customers; credit check required; must be 18 or older. For non-qualified customers, including existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G, the price with a new two-year agreement is $499 (8GB), $599 (16GB), or $699 (32GB).

WHOA. Seven hundred dollars for the 32GB if you’re a “non-qualified customer,” which includes existing AT&T customers? What’s up with that?

This is something I don’t understand in the slightest. Just days before this announcement, my wife (an existing non-iPhone AT&T customer) checked into her upgrade options for a 3G. $400/$500 for the upgrade. At that point, it’s pretty much a dealbreaker. I would suspect that to be the case with most existing customers. Who wants to pay $500, or even a ridiculous $700, for a phone? It seems to me that AT&T is punishing their existing customers for having signed contracts with them. What does AT&T stand to lose by selling the phone to existing customers at the same price? They still have to re-up on their contracts for another two years… To me, it seems as if AT&T is telling their existing customers to shove it just because they already signed a contract with the carrier. It makes no sense to me.

If anyone has any insight, please enlighten me.

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3 Responses to “AT&T and the New iPhone 3GS: Pricing Shenanigans”


  1. 1 clark June 9, 2009 at 1:41 pm

    This is why it will only be a good thing when other carriers get their grubby hands on the iPhone. It’s a shame that Verizon’s next. AT&T and Verizon are tied for most expensive plans. The latest iPhone shenanigans either shows that AT&T is just cocky about keeping this exclusive a little longer, or Apple’s inability to negotiate a good deal for proliferation of its device amongst existing iPhone converts or both.

  2. 2 Chris F June 10, 2009 at 7:33 am

    Although I agree with you on the shenanigans, it is a recoup cost method. I only paid $199 for my iPhone 3G – complete with the contract. The way they price these things, as long as you last the life of your contract the phone is (for lack of a better term) leased to own over that contract life.

    So, for me to ‘break’ my contract and buy a 3GS, they would lose out on the hardware portion of the original contract – since I would be entering into a new hardware portion contract with the 3GS.

    It is silly though, reward your customers. With phone rates themselves, they aren’t hurting over it.

  3. 3 pbpope June 10, 2009 at 9:23 am

    Here’s the thing, though. Apparently I’m eligible for the “reduced” upgrade, because I’m not on a contract. I had to switch from my employer’s plan to a personal plan earlier in the year. My wife, though, who has a Nokia regular plain jane phone, is under contract, and is ineligible for the upgrade. We pay way less than we would monthly for an iPhone for her.

    What’s more, they’ll be losing money off of both of us if they don’t allow her to do the reduced pricing. The 1st-gen rate plan is cheaper than the current plan, and if they don’t allow her to upgrade, I don’t think I’ll be upgrading until she can get the reduced pricing. So, they lose out on the upgrade costs AND the increased rate plan.


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