The iPhone Upgrade Plan: A Fair Solution to a Growing Apple Problem | iLounge Article

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The iPhone Upgrade Plan: A Fair Solution to a Growing Apple Problem

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By Jeremy Horwitz

Editor-in-Chief, iLounge
Published: Wednesday, June 10, 2009
Articles Categories: Editorials

Apple’s product updating philosophy—explained in a still-useful 2006 iLounge article called Ten Rules for Buying Apple Products—is notoriously bold: the company routinely and unapologetically improves its computers every four or six months, and its iPods every year or so, often adding major new features to excite new customers and win additional business from past ones. As we said back then:

“The purchase of any Apple product can be made on a single question: does the product available today have the features that will satisfy me? If the answer is yes, buy it and enjoy it. If the answer is no, wait. But don’t second-guess your decision or wait around for a replacement that may take years to arrive. If you buy soon after release, you’ll have the longest opportunity to enjoy the features and performance before something else comes along and makes you envious.”

Though the 2007 iPhone followed our prior guidance to a T, with updated models announced and released every 11-12 months, two new, related factors have changed the equation: the cellular service contract and subsidized pricing. In the United States and some other countries, this contract lasts for two years, locking an iPhone customer into a device that may be a generation or two behind the company’s latest release, depending on when the first iPhone was purchased. For instance, those who supported the original iPhone right before its discontinuation, and those who bought the iPhone 3G on day one, still have a year remaining on their service contracts. Additionally, the marketed “$199” and “$299” costs of recent iPhones actually turn out to be their provider-subsidized prices for customers who aren’t already locked into contracts, an obscured point that has confused and angered readers since the release of the iPhone 3G last year.

What this practically means for some prior iPhone users is an apparent “penalty” of $200 to $400 on top of whatever Apple’s announced prices may be for the latest iPhones. Thus, even if the iPhone 3GS will be sold to qualified new AT&T customers for $199 or $299, it will be available to some current customers for $399-$499, and others for $599-$699, depending on the remaining lengths of their service contracts. AT&T deems customers in the latter two camps to be “early upgraders,” and tops off the $200 to $400 hardware fees with two additional $18 charges: one to “activate” the new phone, and another as an additional “early upgrade” fee. All of these costs are in addition to a commitment to pay AT&T a minimum of $1,680 in total service fees over a new two-year contract, or a significant early termination fee.

Two points must be acknowledged at this stage: first, no matter how appealing a newly upgraded iPhone model may be, it is not the consumer’s right to have one at a low price. Apple’s and AT&T’s initial $199 and $299 prices are there to lock customers into new contracts, which is the reason that a more capable iPhone now sells for a lower price than an otherwise similar iPod touch. There was never a point in the past when a brand new top-of-line iPod or Mac could be had on the cheap from day one, and the iPhone isn’t deviating from Apple’s past pricing strategy.

But on the flip side, by failing to offer consumers an easy path to upgrade to its latest iPhone models, Apple is creating a perverse incentive: its biggest fans are learning that they may be better off skipping minor iPhone upgrades altogether than standing in line to be first, then having to re-sign contracts and cough up hundreds of dollars just to add a few new features to their prior models. Some have correctly observed that iPod touch updates will follow a few months after new iPhones, adding similar new features—sometimes even better ones, such as Nike+ and faster processing—without the hassles or costs associated with cellular service contracts.

It should be noted that Apple has previously been able to minimize product update problems despite its aggressive updating cycles. In addition to offering limited return privileges, it has generally kept prices stable enough that serious fans have been able to resell their recent Macs or iPods at relatively small losses, or offer hand-me-downs to family or friends when tempting new upgrades are offered. Yet with the iPhone, which is most commonly sold locked to a carrier and linked to a contract, resale and gifting are far more difficult. Carriers attempt to impose fees and restrictions with every upgrade. Due to higher eBay and other fair market prices for unlocked phones, owners are financially incentivized to seek out unsanctioned tools to unlock their iPhones before selling them to strangers online.

This state of affairs creates problems for everyone—customers, service providers, and Apple alike; consequently, complaints about Apple and AT&T have become so common after new iPhone hardware announcements that they threaten to drown out the significance of whatever new features have been added. A simple, fair solution would help everyone have a lot more fun and excitement. So we’re going to propose one today.

Rather than significantly penalizing loyal customers for wanting to buy Apple’s latest and greatest innovations every year, Apple should require service providers to offer an iPhone Upgrade Plan, consisting of the following no-nonsense services:

* A single, fair Upgrade Plan price with no additional charges, rather than separate hardware subsidy offset, new activation, and early upgrade fees. In the United States, a set price of $150 in addition to the marketed cost of the new iPhone would be reasonable for customers with 1 year or less remaining on their contracts; a set price of $250 would be reasonable for customers with more than one year remaining.

* Transfer of the user’s account from one iPhone model to the next without loss of any accrued contract privileges, such as rollover minutes or length of “good customer” status. In exchange, the user will agree to a contract extension with the provider.

* If requested, free transfer of the prior iPhone handset to the account of another customer without mandating an additional service contract for the second customer. As no subsidy is being offered, this customer will have the right to upgrade to a later iPhone model at off-contract pricing.

* Alternately if requested, recycling of the prior iPhone handset or - in cases where the model has not been discontinued and the provider wants to be able to offer it as refurbished - a fair trade-in value for the used device. This trade-in value could be applied towards the purchase price of the new iPhone.

* Users must be informed of their upgrade options at the time of initial purchase and reminded of them upon the release of the new device.

By offering such an iPhone Upgrade Plan, Apple and its service providers would make substantial strides in winning back the hearts of their past customers, many of whom feel as if they’re stuck being observers to the latest iPhone innovations rather than participating in them as happy users. An acknowledgement of these user concerns, realistic upgrade paths, and resale needs would only help to make the iPhone community larger and happier as Apple’s devices continue to evolve for years to come.

Readers, what are your thoughts? Would an iPhone Upgrade Plan like this one strike a fair compromise between your needs and those of Apple and its service providers? Or would the prices and terms need to be changed to satisfy you? We’ll be looking for your comments below.

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Comments

1

You are addressing this problem from the wrong side. We don’t need any update plans, we just need unsubsidized and unlocked devices directly from Apple. People willing to buy into the locked subsidized device should do it - and all others should have the choice to buy a free device (like available in several countries, where Apple is forced by the law to sell unlocked devices) and subsidize it themselves at will.

Unlocked devices are simply sellable via ebay once the new generation appears and then simply by another unlocked device.

Free the iPhone!

Posted by Josh on June 10, 2009 at 9:22 AM (PDT)

2

Oh - and of course Apple should automatically unlock all locked/subsidized devices after 2 years, which adds them to the AppStore ecosystem again.

Even for people not willing to fork out the money for overpriced AT&T;contracts.

After all it should be our damn right to get the phone unlocked after 2 years. We damn paid it during those two years. AT&T;has no whatsoever right to “tax the next user again” in a new contract - the user gets no subsidy.

Hasn’t anyone sued AT&T;/Apple yet?

Posted by Josh on June 10, 2009 at 9:26 AM (PDT)

3

I like the upgrade plan.  I might grumble a bit more about the $150 upgrade fee ($75 would be more reasonable, IMHO) but if I knew it was coming, I’d be happier than seeing the prices during the keynote and then finding out later that they don’t apply to me.  When I was all ready with my credit card even before the keynote started and I’m thinking I might skip it now.

Posted by amy! on June 10, 2009 at 9:42 AM (PDT)

4

I’d like to see a trade in plan with the used equipment going to schools or non-profits and with an IRS approved tax form provided at trade in. That way, the early adopter doesn’t lose all the value of the original equipment.

Posted by Aceon6 in New England, USA on June 10, 2009 at 9:57 AM (PDT)

5

It’s very simple, just add 2 years to the remaining time on the customers contract.  If they still have 18 months of a 24 month contract remaining, and upgrade to a new phone, then extend their contract 24 months, to 42 months, AT&T;still gets all of their subsidy monry back, as well as increased revenue when the users old phone is recycled to a friend or family member.

Posted by Steve on June 10, 2009 at 10:12 AM (PDT)

6

“It’s very simple, just add 2 years to the remaining time on the customers contract.”

This only accomplishes the goal of protecting the subsidy if, in addition to the contract extension, the termination fee is also increased. After all, this fee is designed to recoup lost subsidy due to early termination. Indeed, some companies are prorating the fee now as the contract term is used up. Conversely, if the contract is extended early, the termination fee for the next two years of contract would need to be added on.

The net result would be an accumulated debt to the subscriber as they repeated this cycle with each year’s new phone releases. After 1 year, they have 3 years worth of contract and fees. After 2 years, they have 4 years worth, and so on.

Rather than dealing with upgrade plans or contract extensions, why not simply go back to the 1 year contract period that used to be common in the past, even if it means a slightly reduced subsidy?

Posted by David on June 10, 2009 at 10:39 AM (PDT)

7

David I agree, I forgot to add the termination fee increase, it was in my original plan. Bottom line, you pay to play.

You do realize, you can walk into an AT&T;store, buy the iPhone or any phone for that matter at full price, and walk out with no contract term, basically month to month service.

Posted by Steve on June 10, 2009 at 10:46 AM (PDT)

8

oh, the weeping, wailing, and whining! i want a new phone every year! i want a new pony every Christmas! charging $200 extra is for my spoiled impatience is an outrage!! it’s all about me!!!

a two year purchase financing cycle for cellphones is eminently reasonable. absolutely no consumer “needs” a new phone every year. gadget lovers may want it, but that is not a moral issue. that’s for their emotional gratification.

and in fact, the extra AT&T;charge applies only for 18 months, not even the full two contract years, so this is boils down to “i shouldn’t have to wait even 6 months.”

iWhiners, please get over yourselves.

Posted by AlfieJr on June 10, 2009 at 11:03 AM (PDT)

9

I think Jeremy’s article hits the nail on the head perfectly. What isn’t available is a clear path for people who always want to upgrade to the latest iPhone. I also like Steve’s suggestion of simply augmenting one’s contract to add another 24 months onto the existing terms if a customer chooses to upgrade.

The upgrade plan presented by Jeremy takes into account the way cell phone equipment and service is sold in the United States. So given the constraints of the American system, this upgrade plan makes the most sense for all parties.

I’m the last person to defend AT&T;or any U.S. provider for that matter, but the deal these companies make with customers is that they get cheap or free cell phone in exchange for contract service. That’s the only way a company can make back the subsidy that allows for the free or inexpensive phone. (The pricing and fairness of the contracts is an altogether different debate.)

My personal preference would be a more European model where a user purchases an unlocked iPhone and chooses the provider best suited to his or her needs.

But until that day happens, iPhone users (of which I currently am not for various reasons) need an easy, transparent path for upgrading their hardware.

Posted by cxc273 on June 10, 2009 at 11:18 AM (PDT)

10

Honestly, AT&T;should attempt a bit of a trade-in plan. If the phone is acceptable, then there is no premium to upgrade, you pay the $199 / $299. AT&T;would have a used phone to sell as a refurb, which would go for $99 / $150 (8 and 16 GB, respectively). So it would be similar in cost to them for “early upgraders”. Then they would also score new iPhone users that can afford $99 / $150, but not $200+. I dunno, just my thoughts.

I bought my 3G last year, and am in the process of selling it to gear up for the 32GB. I can wait (Apple’s site tells me I am eligible as of 7/22/09). It’s obvious that AT&T;and Apple are taking advantage of their most loyal customers by forcing them to either wait (typically up to 6 months) or pay a $200 or more premium. Shame on them, they have/had a good thing going with these fanboys, but might not now.

Posted by Imahottguy on June 10, 2009 at 11:45 AM (PDT)

11

Maybe an easier way of doing this would be to ask those who want to upgrade before they are eligible to pay the current termination fee.  This way AT&T;recovers their subsidy, but it is pro-rated based on how long they have left in their contract (which is exactly what the ETF is for.)  The big thing here is that the user wouldn’t have to actually cancel their account, wait 90 days and get a new phone number the way that I’ve seen some people suggest in order to avoid paying as much; however, they DO have to sign up for the new 2-year contract.  AT&T;simply needs to be a bit more flexible regarding the cancellation procedures.

Posted by Beth on June 10, 2009 at 12:09 PM (PDT)

12

I’m sorry, but this whole upgrade controversy is such a load of you know what.  A 16 gig iPod Touch is $299.  A 16 gig iPhone (upgrade price) is $599 (actually $877 un-subsidized).  If you look around, G1 Android phones are selling for $400-$500.  Nokia N97’s are $799. HTC Touch Pro - $500-$600.  Get over it people. You’re buying a handheld computer that makes and receives calls, not a phone.  If you’ve got an existing, signed, 2-yr. contract, AT&T;or any phone company has the right to earn that subsidy back.  It might be a bummer to your wallet, but it’s not ‘unfair’. You made the agreement, now live with your decision.

that said, the idea of being able to trade in your own unit for a reasonable value, is also a fair idea.  It works well with cars, why shouldn’t it work with phones.  But keep in mind, the phone company still has to make money on re-selling the unit as a refurbished unit.  They’re selling 16 gig. refurbs for $129.  They’ve got to clean them up and clean them out and make sure they are running correctly, all of which costs $, so getting $100 back for a used unit might not be realistic…

And one last thing - with your old phone, your getting a whole spanking new operating system for free, one that offers a ton more features and essentially makes your phone new again.

So let’s get real people.  Just like you need to make $, so do these companies.  You may want the new toy, but you’re not entitled to it, and you knew what you were getting into when you signed the contract.  If you didn’t than that’s an even bigger strike against you.

Posted by DomArch on June 10, 2009 at 12:23 PM (PDT)

13

I think the biggest complaint I have is that if I upgrade on this particular day, it’s going to run me $200 extra, and yet if I go into the same store the next day I’ll be “qualified” for the subsidy. The hard-and-fast cutoff date is what causes the uproar, quite frankly, and with good reason.

The subsidy should be prorated, in the interest of fairness. Trade-in bonuses should be extended. Some of you have referred to the complaining as “whining” and deemed it some sort of misplaced sense of entitlement from iPhone owners, but that’s not even close to being true. The simple truth is that people are awfully sick of the mobile telephone industry jerking us around and tacking on fees left and right. I mean, the $200 subsidy can be argued rationally on both sides, but another $18 “early upgrade” fee? And an $18 “activation” fee for a phone that merely requires me to move a SIM card from one device to the next? Please.

Trust me, this complaining isn’t occurring in a vacuum. It’s not just a function of wanting the latest and greatest iPhone and being asked to pay extra for it, but the fact that AT&T;has done precious little over the past 24 months to ensure that iPhone owners are not only happy with the equipment, but with the professionalism of the provider as well.

Posted by Flippy Hambone on June 10, 2009 at 1:13 PM (PDT)

14

Couldn’t AT&T;just try a contract plan where you pay the subsidized price upfront but then pay the rest off in payments spread out over the length of the contract? So you’d just have an extra $10 or so added to each bill. I’m sure it would make for more people getting the phone who couldn’t afford the large upfront cost and they would probably make even a little more money by charging some interest.

Posted by Dave G on June 10, 2009 at 1:13 PM (PDT)

15

Actually I think the system as is, is fair. YOU HAVE NO RIGHT to have ATT front you money again until you have fulfilled your commitment. Having said that, I feel the $18. fee to activate is gouging IF you already have an iPhone. I feel that should be only charged the first time.

I lease my Audi and if I want next years model before I fulfill my three year lease, I actually don’t believe that there should be no financial penalty for me.

Posted by Mazzy on June 10, 2009 at 1:45 PM (PDT)

16

YES!

I don’t know how feasible this is given the entrenched thinking of service providers… but some logic and certainty here is a must to lure the more methodical buyer (not exactly a key demographic/market segment) but more importantly to appease the CRUCIAL early adopter/fanboy. Indeed they are not only an absolutely essential group for Apple’s continued success (and great marketers buzzmakers) but they are exactly the types worst hit by this particular update as their iPhones like my own are almost certainly bogged down by apps to the point of severe frustration.

Make this happen, Apple. I know it might take a while to force service providers into action, but start that process now. If you can make this happen the market is yours… for keeps.

Posted by SteveBozeman on June 10, 2009 at 2:37 PM (PDT)

17

It seems to me that the real problem is the ridiculous length of the service contract. 24 months is way to long for cell phones which, in general, are “not new” after six months, “old” after a year and “obsolete” after two years.

But shortening the plans to 12 months, or ideally 6 months creates a problem for Apple and AT&T;.

Apple needs to sell the product at a price that seems fair to the consumer. With 6 months contracts it would mean an overly expensive contract with services that’s not needed.

From the AT&T;point of view they would want customers to have a reasonable contract where they’d pay for what they get.

These two are incompatible, and as such they have the choice of selling the iPhone at a high price or chaining the customer to an unwanted and unneeded contract.

This problem is actually illustrated quite well, where I’m from, in Denmark. Here the only time where the iPhone is somewhat reasonably priced, the contracts are madly expensive. With the only useful contracts the iPhone however is ridiculously expensive.

But as along as people don’t research how they use there phone they are easy prey for cheap upfront prices and heavy monthly fees.

That’s how the mobile phone industry has worked so far, and I don’t see it changing

Posted by Maddman on June 10, 2009 at 3:02 PM (PDT)

18

Just called both ATT and Apple customer service about this “double price” new iPhone, and received NO satisfaction from either company. Each blames the other for the high pricing, and offers NO solution whatsoever for the loyal customers who purchase and promote the new products each time they come out.

Yes, I am definitely a “gadget person” who loves to be on the front line of the newest technology. I have had an iPhone since day-one—but this time, and in this economic climate, I’ll just wait it out and skip the newbie GS3s—maybe until I’m finally eligible in January, or I may just maybe forever…

These same companies did this to us once before, then gave a $100 peace offering rebate as an afterthought when their loyalists complained. Seems like the marketing folks would reward their best/first customers—not penalize them for their faithful use of the product.

Perhaps if a majority of us withhold our purchases, as I intend to do, they might get the picture!

Posted by Barbara Locke on June 10, 2009 at 3:12 PM (PDT)

19

I don’t understand the fuss over the pricing. All carriers do the same thing. It happened to me with another provider. If a new model comes out you must wait until you are eligible or pay the price.

Posted by John on June 10, 2009 at 3:15 PM (PDT)

20

AT&T;is practically stealing from its best customers.  iPhone afficianados almost 1 year into their contract have already paid half of the subsidy off.  So to charge them an extra $200 is nothing more than a fleecing.  A pro-rated surcharge makes more sense.

AT&T;is nothing more than greedy capitalist scum.  It’s time Obama take them over!

Posted by Elvis Presley on June 10, 2009 at 3:26 PM (PDT)

21

wwdc!  nah, wwsd?

what would steve (jobs) do?

not what at&t;is doing.

i wont pretend to have answers but good companies (apple) who pursue longevity find ways to strike a unique balance, thus making them good companies.

it’s also “early” folks.  would you personally have had the foresight to see the labyrinthine ways in which apple’s foray into the telecom business could go awry?

i can admit i did not, could not, and can not see a clear strategy for such a complicated, and young, venture.

finally, my 2 cents…  apple is releasing this device to to endure the span of time they have left with at&t;.  when they realized it was going to be a problem they devised a way to “cut their losses” while still maintaining products that everybody wants without showing the real jewel.  now they can end their exclusivity, gain some perspective, and launch the tablet (with net connectivity?) the right way.

Posted by LYTEZ on June 10, 2009 at 5:42 PM (PDT)

22

I like the idea of a one-year contract, but then I think the initial iPhone cost would be higher and so would the monthly carrier charges.  An unsubsidized iPhone would be nice, too, but I believe a normal two-year contract would be less expensive than buying an iPhone at full cost and still needing to pay monthly carrier fees.  I’m sure AT&T;would still work out some formula so you’d come out on the short end with normal use.

I guess they should at least offer that choice, but Apple and AT&T;are counting on you to spend as much money as possible without realizing it.

Let’s face it, Apple and AT&T;will get you one way or another.  They’re in this stuff to make serious money.  It’s really about whether you have enough cashflow to actually afford ownership of an iPhone.  You all realize that stores still sell those $50 prepaid cellphones for the financially handicapped.

Still, being angry about trying to upgrade early on the cheap after signing a two-year contract isn’t right.  I’m sure all carriers do the same thing unless they have no business sense whatsoever.

Posted by Constable Odo on June 10, 2009 at 6:09 PM (PDT)

23

The problem isn’t they want more money for current owners, its that they want more money AND for us to sign new contracts.  They can’t have it both ways.  It looks more and more like Apple needs to sell unlocked phones direct to consumers.  Let carriers sell subsuduzed phones if they wish.  But Apple should sell to anyone, anytime.

Posted by JOhn on June 10, 2009 at 9:26 PM (PDT)

24

The issue is that AT&T;has to recover its subsidy from the first iPhone purchase, so it should be able to offer a gradated upgrade fee based on how long you have paid into the previous contract. Say the original iPhone subsidy was $200, and their profit margin from your monthly subscription is (a conservative estimate) $10. If you’re ten months into your contract, you should be able to pay a $100 fee to upgrade. Twelve months, $80. And so on. Any lost profit from the early termination of your first contract should be easily made up by the fact that you’re signed on for a new two-year term.

AT&T;is hoping to profit outrageously from the wants of early adopters. Instead, it should make a fair attempt to recover its costs and collect a modest fee.

Posted by Omar on June 11, 2009 at 6:04 AM (PDT)

25

I was an early adopter of the first iPhone only to see the price drop dramatically shortly afterwards and to only get back from Apple a portion of that price drop.

I moved up to the 3G a little while after it came out and saw my plan costs go up with the purchase and a new two-year contract begin.

Now with the 3G S following the purchase links tells me it would cost me $599 to but it plus two $18 fees! Either AT&T;is crazy or Apple is, I’ll simply wait until my contract runs out and two things will happen. One, the phone will be even cheaper than the subsidized $299 for the model I want and two, there might be a 4G phone by then knowing Apple’s penchant for releasing new products every year. So Apple will lose a sale this year, great deal you made with AT&T;Apple, could you have possibly, in this economic reality, come up with more ways to alienate your early adopters?

Posted by Les Berkowitz on June 11, 2009 at 7:39 AM (PDT)

26

Service contracts are 3 years in Canada. Meaning iPhone 1.0 users are still a full year away from eligibility for a reduced price here.

The wireless carriers are becoming the equivalent of the oil cartel for tech. Every new product benefits from wireless networking, but if you’re not willing to pay their inflated gas, I mean, service charges then you’re out of luck.

Here’s hoping that Apple’s influence can buck the trend because as it’s going right now they’re about to hit a brick wall of eligible customers willing to play by the service carriers rules (especially in Canada!!!).

Posted by Roots_Levi on June 11, 2009 at 8:05 AM (PDT)

27

Sprint allows its better customers to upgrade phones every 12 months….  You have to have a plan over a certain amount to qualify… We can’t compare the international plans because cell phone rates are much higher overseas… That’s why texting became so big in Europe first because making actual calls was very expensive… Also, most are prepaid with no contracts. No free nights, weekends, and mobile to mobile..  Also, caller pays is the rule….

Posted by Doug_H on June 11, 2009 at 11:02 AM (PDT)

28

When I bought my iPhone 3G I knew that another iPhone would probably come out in about a year.  I had never purchased an Apple product in my life and I was a diehard Microsoft Fanboy, and still am.  However in regards to the iPhone it is simply an amazing piece of technology and I expect to pay a premium price.  My WinMo Mogul phone had persistent and irritating errors and Microsoft had years to fix them, but never did.  I probably spent over 300 hours trying to get my Windows Mobile phone to do what I needed it to do.  The iPhone did what I wanted in about 2 hours out of the box.  Apple continues to improve the iPhone and they seem to care about the non-corporate customer as well as the business users.  I suspect that I will always be a Microsoft fanboy (Tablet PC user here) but strongly believe in the iPhone product.  To summarize I think Apple and AT&T;pricing is totally fair, admittedly expensive, but fair.  The iPhone has changed my life for the better.

Posted by Jason on June 11, 2009 at 11:19 AM (PDT)

29

Don’t care what Apple or AT&T;do with the iPhone because the market will determine what’s reasonable.  Upgrading for more features every 12-24 months is something to reconsider from a buyer’s perspective.  If iPhone’s lose popularity, prices will soften.  There are plenty of smartphones to choose from, and I expect many of the slow sellers to become that next crop of unlocked phones.  Phones these days are almost computer-like so people will beging using them like computers - and we all know most do not

Posted by Darryl on June 11, 2009 at 12:38 PM (PDT)

30

I am a very devoted apple customer and have been with att for 2004 or longer cant really remember.  I purchased both iphones, the first one a week after it came out and the second one the day it came out.  I recently got pushed in a pool with my phone in my pocket and its ruined.  This early upgrade fee is just a big load of crap as i have been loyal to both att and apple.  This means next year i will be dealing with the same situation when the new iphone comes out and the changes are very significant.  After seeing this “discount” that att gives to loyal customers, they better hope they up there exclusive contract because if verizon gets there hands on the new one next year, my contract is going to be broken because not only will i get the cheap price, i will have service that will be sooooo much better than what att will ever have and they aren’t even suppose to be caught up till 2011.  So after this dumb decision they made to make iphone 3G users upgrade for so much it will be my last.

Posted by fox on June 11, 2009 at 1:27 PM (PDT)

31

What if Apple didn’t come out with a new iPhone at all this year?  What if OS 3.0 was the big unveiling at WWDC this year, and all or most of the features of the 3GS were enabled in 3.0?  Like the video recording was enabled, better image processing using some of the algorithms of some of the photo apps out there, peppier OS which we are all getting pretty much anyway and so on.  Are we all making a big deal about a freaking compass?  That would be the only thing missing from the current gen iPhone if they just gave us the camera features.  And the faster processor will only be noticeable if you were comparing phones side by side.  We are talking about 1/2 to 1 seconds difference in most apps.  And the upgraded OpenGl/ES processor will not be taken advantage of fully for close to a year from now anyway b/c most developers will probably not want to make 2 separate apps for 1.1 and 2.0 versions and the few that do, will take longer to crank the app out.  And if the 3GS does not sell like gangbusters b/c most decide not to upgrade, which might happen, then the new graphics chip will not even be taken advantage of.  So what I am getting at, is what if Apple did not even come out with a new iPhone model and just lowered the price on the current ones, or even if the 32GB version was released, would we even be arguing about upgrading or would we be angry that Apple did not give us a new model at all?  Which would be worse?  I personally wish they wouldnt come out with new models EVERY year, and just made the current model stay current by working out all the bugs and adding new features software wise to the existing ones and every 2-3 years came out with a new model.  I dont think this release a slightly better model EVERY single year thing Apple has going on, can last forever.  Thats my 2 Cents.

Posted by Stephen on June 11, 2009 at 1:44 PM (PDT)

32

I think it would make things a lot simpler if they would just replace the 2 year contract with a 1 year contract and adjust the price of the phone accordingly.
Also, Apple needs to seriously look at opening up to other carriers, etc.

Posted by Paul on June 11, 2009 at 4:57 PM (PDT)

33

The irk is the fact that those of us who switched from other carriers for the iPhone are probably gonna not upgrade and bail as soon as we can from AT&T;, just out of PURE SPITE! Nice way to treat CUSTOMERS who usually pay bills over $100 per month! You are always gonna be #2 (and I don’t just mean cellular company… hint..) because of your treatment and lack of foresight when it comes to customer service, network readiness and killing basic phone features!

Posted by G H on June 11, 2009 at 8:13 PM (PDT)

34

I am a 3G owner and I going to buy the 3GS shortly after launch for $499.  I knew what I was getting into when I accepted AT&Ts;$300+ subsidy on the 3G.  AT&T;gives a big subsidy and I commit to a 2 year contract.  It was clear upfront.  I have no idea why people are acting so shocked now.  Either they didn’t read what they were signing, never owned a cell before and just aren’t too bright.  It appears most fall in the later category.

So you whiners keep whining.  I’ll soon be sailing on the open seas using my electronic compass, barking commands into my phone and making videos of the whales…then editing them.

P.S.  By the way, in additional to never buying from AT&T;again, you may want to add GM to your boycott list since Obama appointed the ex-AT&T;CEO & Chairmen, Ed Whiteacre, to be Chairman of GM.

Posted by Melinda Jones on June 11, 2009 at 8:27 PM (PDT)

35

If I want to upgrade my Mac, I can decide whether to sell the old one or pass it along to a family member who can make use of it.  This effectively gives me a discount on the upgrade.  With the iPhone carrier-locked, it’s not nearly as valuable for resale/gifting as it would be otherwise.

If AT&T;would unlock the iPhone after the contract commitment ended (which they’ll do for their other phones), I’d be more than happy to get one…and I’d probably even stay with them out of inertia when it did end, so they’d still get my money (or I’d pay the unsubsidized no-commitment price, so they’d have the money up front).  Instead, I’ll stick with my unlocked T-Mobile phone.

Posted by ckd on June 12, 2009 at 10:39 AM (PDT)

36

My solution.
iphone with/
1 year contract 299.99
2 year contract 199.99
No contract   499.99

If somebody is willing to take a reduced subsidy to upgrade yearly then just let them.

Posted by cheesemac on June 12, 2009 at 7:04 PM (PDT)

37

Roots Levi, the Iphone 1.0 was never released in Canada…we recieved the 3G last summer. Thus we have atleast 2 more years til we can upgrade without incurring penalties.

Posted by DjRags on June 13, 2009 at 1:57 PM (PDT)

38

iPhone 3G users in Canada now have to wait two years before upgrading to the new 3GS. The new rule of smartphone hardwear upgrades is now two whole years. That means I cannot pick up a 3GS until 2010 with lower pricing. This is discusting!

Posted by Eric Lewis on June 15, 2009 at 3:34 AM (PDT)

39

I sincerely don’t get it. You would think that these disgruntled iphone customers had never seen a cell phone contract. You sign 2-yr contract, you get phone. At end of contract you renew and get new phone. It’s been like this for years - what in the world is the problem? Even worse is they act like martyrs anytime apple introduces a lower price or a device upgrade. If you can’t accept the inherent costs and risks of being an early adopter of technology than you should not be one. Otherwise, suck it up.

Posted by craigd on July 6, 2009 at 2:45 PM (PDT)

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