Opinions And Ramblings By Adam Kmiec On All Things

My Issue With AT&T’s Pricing Structure For The New iPhone 3Gs

Here’s a simple question. Do you believe that consumer loyalty should be rewarded? Let me rephrase. Isn’t it better to reward your customers for being loyal than to pay them to be loyal through so-called “loyalty programs?”

If you’ve answered YES to those questions, good for you, you understand customer relationship marketing.

If you haven’t been following all the conversations about the pricing structure for the new iPhone 3Gs, let me know bring you up to speed:

  1. Apple announced the third generation iPhone – it’s called the 3Gs. the “s” stands for speed.
  2. If you aren’t currently an AT&T customer, you can purchase the iPhone 3Gs for $199 (16gb version) or $299 (32gb version).
  3. If you are a current AT&T customer, that does NOT own an iPhone, you also qualify for the $199/$299 pricing.
  4. If you are an existing AT&T customer and a current iPhone owner, you get to pay $399 (16gb version) or $499 (32gb version).

So basically, AT&T is opting to reward:

  1. Non-AT&T customers
  2. Non-iPhone AT&T customers – you know, the ones not paying over $100 a month for the iPhone monthly service plan

If you’re an existing AT&T iPhone customer you are out of luck. Huh? The rationale being pedaled by places like Gizmodo, is that AT&T is subsidizing the cost of the iPhone for customers. And, given that existing iPhone users were subsidized once (when they originally purchased their iPhone) they shouldn’t be fully subsidized again. To give you an idea of how much they are subsidizing, a brand new iPhone, with no contract would cost $770/$870. Thus, everyone is receiving some type of “benefit” from AT&T in the form of a subsidization.

You know what? In theory, I don’t disagree with this at all. HOWEVER, and this is the key, if that’s the approach you want to take, then I should be able to buy an iPhone 3Gs directly from Apple and then use that phone with any cell phone service provider. I should be able to use the phone with Verizon, Sprint, T-Mobile, or any other provider.

That seems fair, no? If I don’t want to pay for the subsidization I should be FREE to use any carrier, because AT&T wouldn’t be providing me any benefit. Shouldn’t that be an option?

So, that’s my beef.