iPhone upgrades: Broken hearts, broken wallets


Broken iPhone.jpg

There’s been quite a kerfuffle (if I can use that word in a sentence) going on in blog comments and forum threads around the ‘Net this week, since Monday’s Apple WWDC keynote announcing the new iPhone 3Gs model landing on June 19.

And honestly, I just don’t get it.

It should be no surprise to anyone who follows Apple that a new iPhone model was introduced this year. They’ve been doing the same with their iPod line every September since the original 5 GB model was launched in 2001. (The new MacBook Pros they announced on Monday, however, totally caught me by surprise, having just bought a “new” late 2008 15″ model just before Christmas, damn it all.) While I’ve only owned a few generations of iPods (the original 5 GB and a couple of others), I’m sure there are folks out there who line up every year to own the biggest & best model.

With the iPhone, my love affair compelled me to stand (OK, sit) in line 6 hours outside my local AT&T store for the original model on launch day, and the following year stand 5 hours outside the Legacy Village Apple Store to nab an iPhone 3G 16 GB on launch day. And even though the iPhone 3Gs is a modest upgrade compared to the first 2 versions, I’m grabbing one of those, too. (And thankfully, with no line waiting this year… I preordered Monday from the Apple Store and the phone will be delivered to the comfort of my home next Friday by FedEx. Now that’s progress.)

June 29, 2007: Can you spot me waiting in line for the original iPhone?

So, following the new iPhone rumors as I do, for the last few months I’ve debated if the new model would be worth getting. Having upgraded cell phones once or twice before in the middle of a 2-year contract (the last time being the disastrous choice of switching from the awful Motorola ROKR to the equally-awful SLVR about a year before the first iPhone launched), I am already well aware of how carrier subsidies work, and why you have to pay more to get the phone you want.

For the uneducated, the American cell phone industry has settled on a subsidy model that promises consumers on a budget cheap (or in many cases, free) phones, in trade for signing away their souls (and their hard-earned dollars) for up to 2 years. The carrier makes up the difference in the cost of the phone knowing that you’re on the hook for 24 months, the phone maker gets their money up-front, you get a cheap phone, everyone’s happy, right?

That depends. If a year goes by and a cooler phone comes out that you simply must have… in this case, say a new iPhone model. The original iPhone in 2007 was not subsidized, which is why drooling dorks like me paid through the nose to get one (and to add insult to injury, we had to commit to 2 years with AT&T anyway, on top of a new data plan, but it was well worth it). The iPhone 3G released in July, 2008 was available to anyone who had bought the original iPhone, simply because Apple got all of their money up-front from the higher-priced first-gen model. There was no subsidy to recoup. AT&T knew the iPhone 3G would bring the original customers back to get a new, cheaper model, and were all too happy to hook you for another 2 years (especially when the data plan jumped another $10 per month, which was the only real downside to last year’s new model).

Now here we are 11 months later, and Apple has announced the iPhone 3Gs, with a faster processor, better camera, video recording and all of that, plus increased storage (16 GB for $199 and 32 GB for $299). But the catch is, those of us who bought the iPhone 3G last year are still in mid-contract with AT&T. That means we are treated as “early upgrades,” and therefore have to pay more than the first-time buyers.

How much more? In my case, for the 32 GB model, $200 more, or $499. Now you’ll recall a few paragraphs ago, I mentioned this wasn’t my first experience getting a new phone in mid-contract. So, knowing that a new iPhone was pretty much a given to be announced at WWDC, the only question on my mind was, “What are the new features?” and “How much more do I have to pay?”

For me, the increased storage space, faster processor and better camera/video recording were enough for me to scramble for my wallet (although I’d be lying if I said I wasn’t secretly holding out hope for a front-facing chat camera, but I’m sure that will come next year when AT&T gets their 3G network more up to speed). While I would have considered $299 a bargain for the upgrade, realistically I figured it might be more in the $500 range, which it was. So, I don’t consider myself too disappointed by the news, especially considering my current iPhone 3G is in mint condition, jailbroken & unlocked, and could easily fetch $500 on eBay if I sold it right now. (By next Friday, I’m sure that will be less…)

Other folks all across the Internet, however, aren’t as satisfied as me. I guess the iPhone has spoiled us into thinking we’re somehow better than regular cell phone customers, because an awful lot of them are up in arms, feeling shafted by AT&T’s “evil empire” pricing on the mid-contract upgrade. Which got me thinking, have that few people actually never upgraded their phones this way before? I think the average person realizes they can get a new phone every 2 years from all of the carriers (and Alltel recently announced they’re doing subsidies on 1-year contracts now, for the thrifty among you). So maybe that many people really never considered the option of getting a new phone in mid-contract before?

The real problem is the cultural clash between Apple’s “new model every year” philosophy with its product and AT&T’s “new model every 2 years” contract. Some pundits are reading a lot into this, that maybe things aren’t exactly rosy between Apple and AT&T, particularly when AT&T will be late in supporting the new MMS functionality new to OS 3.0 and they have yet to commit to tethering at all, even though the new software is finally capable of it. (For that matter, AT&T is also lagging with their faster 3G network… the iPhone 3Gs is built to take advantage of it, but AT&T won’t even start to deploy it until later this year and throughout 2010!)

To me, the subsidy model itself is the real problem here. While it wasn’t fun to shell out so much money up front to get the original iPhone, at least doing so freed me to upgrade again whenever I liked. It was a bit more like the common European model, where most phones are not carrier-locked (a practice that’s actually illegal in many EU nations)… you buy your phone, you pick your service, and you pay for it as you use it, rather than committing to some draconian contract. It makes sense, especially for gadget freaks like me who might like to buy the latest & greatest. Some of my wife’s friends in Ukraine change cell phones like it’s a fashion statement… phones are plentiful and cheap enough, and they can keep their SIM card and phone number and jump between phones easily.

Sure, we have prepaid phones here in America, but for whatever reason they are generally considered almost a social faux pas, intended strictly for the poor or elderly and those without good credit. And prepaid phones are generally of the basic, throwaway kind, rather than the feature-laden stuff we can get cheap by signing on the dotted line with one of the evil empire carriers. It’s kind of an ass-backward, broken system we have… and if there’s any criticism that can be leveled at Apple in this whole mess, it’s that they caved into AT&T’s likely demand to get on board the subsidy model like everyone else in order for the iPhone 3G to get cheap enough for average folks to buy (especially now that the base 8 GB model can be had for $99). Apple could have taken their breakthrough phone and smashed the “same old, same old” business model by unlocking the thing and letting people choose their own carrier, much as they’ve been forced to do in Germany, France and other countries. (Although it should be noted that AT&T and T-Mobile are the only real choices here, since Verizon, Sprint and Alltel all use the older CDMA standard… though there’s no reason why Apple couldn’t add CDMA to the iPhone and still have a SIM card slot for GSM users, like several Blackberry models have done.)

So maybe I’m part of the problem by bending over and ponying up my $499 so easily for this year’s model. All I know is, I love me some iPhone and I gots to have it! But here’s hoping that America can break its addiction to cheap, subsidized phones and learn some valuable lessons from our European brothers for a change… but, we’re probably more likely to break our dependence on Middle East oil first, especially if carriers like AT&T have it their way…



This entry was posted on Thursday, June 11th, 2009 at 11:26 am and is filed under Apple Talk, Complaint Department, Gadgets, Random Thoughts, Seen & Heard, Technology. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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