July 8, 2008

iPhone 3G Pricing is Outrageous

As the global iPhone fan-boys and fan-girls hold their breath waiting for this Friday's 3G release; one can't help but wondering if the pricing structure set forth by all the carriers globally will cause a setback in sales. AT&T has raised its unlimited data plan to $30/mo (from $20) while text message will cost $5 extra. Canadian telecom Rogers is flat out pissing everyone off (including Apple) with high cost and data cap of 400MB and now I am hearing New Zealanders are getting upset over similar matter.

Raising the unlimited data plan is wrong at so many different levels. My primary objection is the fact that it simply becomes too expensive for the mass public to afford; hence discouraging the public from adopting to wireless data usage. It is also distasteful since adding a 3G chip on the iPhone didn't change the outcome for AT&T's infrastructure. We knew from two years ago, 3G data is made available, it wasn't our fault Apple left it out. Now that they've decided to add it in, why should the data rate increase? Shouldn't cost of technology decrease over time? AT&T must think it's technology premium can defy gravity.

Personally, I think the iPhone 3G has taken a step back in the mobile revolution. The original iPhone's business model was ahead of the curve. Buy an unsubsidized phone at full price (albeit it was $600 in the beginning) and you can take it home and do what you wish. If you choose to go with the "intended" carrier, then simply activate it via iTunes. No need to deal with pesky sales people or talk to anyone under normal circumstances. Should you decide to use the device with other GSM carriers, although not technically permitted, you can still get pass the B.S. and do as you wish.

Apple is a hardware manufacturer and they should have stuck with making and selling hardware for profit. Instead of creatively subsidize the iPhones and making it exclusive through one carrier in each country, they should have made it available to all carriers. For the iPhone 3G, they should have at least kept it the same as the original procedure. Not only did the price of subscription go up, Apple is expecting everyone to bust out their personal information and run their credit history in store in order to buy and activate an iPhone. Talk about taking steps backwards in procedure.

As mentioned above, so many articles in the blogosphere have expressed anger over the new pricing plans. In the U.S., with the current state of economy possibly in recession, consumers are already fed up with paying $4 for a gallon of milk and $5 for a gallon of gas. I am not surprised if U.S. customers simply can't afford to pay $35 on top of a $40 monthly voice plan. Remember, the $199 8GB sticker price is only applicable to new subscribers or selected eligible existing customers. For non-qualified customers, it's likely they will have to pay the full non-subsidized price of $399 on top of the 2 year contract and insane data plan. Just this afternoon, I spoke with my buddy Yasir who is certifiably a hardcore Apple fan-boy. Weeks ago, he said he would buy the new iPhone 3G without hesitation despite the fact of the rising data cost. Today, he told me he is not so sure about buying the iPhone on Friday due to all the incremental fees and costs. If this is keeping a true fan-boy from making a move, I would be a little concerned if I were Apple.

Update: Glad to see Walt Mossberg openly addressed the pricing policy in this very first review of the iPhone 3G. Source: Engadget (most commenters agree as well!)

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