New iPhone pricing policy a bit... unappealing?

[Anonymous]

Is it me or is the new iPhone pricing policy looking a bit... well.. non-appealing (that's the politest phrase I could think of).

First off, there is the cost. At WWDC the following was announced that in the US;

3G 8GB goes from $199 to $99.
3GS 16GB to be $199 (same as old price for 3G 8GB)
3GS 32GB to be $299 (same as old price for 3G 16GB).
From O2 in the UK we get price rises rather than cuts. For example on PAYG;

3G 8GB stays the same price.
3GS 16GB costs about £50 ($80) more than the old 3G 16GB
3GS 32GB costs about £150 ($240) more than the old 3G 16GB

and on Pay Monthly tariffs where you need to pay for the ‘phone you’re looking at paying an up front cost of around £55 ( $88 ) more for a 3GS 16GB than the 3G 16GB, and £145 ( $235 ) more for a 3GS 32GB than the 3G 16GB was!!!

This price increase is also reflected in the £45 per month tariff where the old 3G 16GB was free, now you have to pay £87.11 ($140) for the phone.

Now looking at Tethering, On pay Monthly tariffs “unlimited UK data and Wifi

[Anonymous]

As you might know, I always like to know the source of your quote 'cos I want one now! EDIT: hyperlinks don't show up too well on my laptop! Apologies and my order is going in today

Wouldn't want you to think I was just making figures up to back up my point :).

I don't disagree with your comments however, we don't know if it as simple as putting a bigger drive into the unit nor the costs involved from the manufacuturer which will add to the cost. As an similar example, SD cards jumped from 2GB to 4GB plus but there was incompatibility issues with card readers even though they are essentially the same. If Apple have managed to retain the same amount of battery power against a 16GB then the R&D engineering teams have certainly done a brilliant job justifying the premium.

Most of the R&D would have been done before the 32GB iPod Touch launch over a year ago to ensure that any battery drain or other technical issues didn't make the 32GB iPod Touch look a poor cousin to the 16 GB one.

[Anonymous]

Good posts, and I wholeheartedly agree that we're being offered a bad deal, but negative comparisons with the US prices are mis-informed.

AT&T prices are for 2-year terms (they offer NO 18 month contracts), and at the current exchange rate they compare as follows:

24 Month Contracts (Lowest Tariffs):
US / UK
8GB 3G £60 / £FREE
16GB 3G S £121 / £87.11
32GB 3G S £182 / £175

Monthly Price Plans (All Tariffs)
US / UK
£43 450mins / £34 600mins
£55 900mins / £44 1200mins
£67 1350mins / £73 3000 mins
£79 Unlimited / Not on offer

As you can see, we get the better off-the-shelf price and much cheaper monthly payments. And not to mention the AT&T network is a mess, it's even worse than O2. The Unlimited calls rate is nice, but that's the only plus with US vs UK pricing.

AT&T do have the edge on upgrades however, as existing contractees can pay a one-off $18 to renew and upgrade early rather than O2's approach which requires you to pay off your contract in full (appalling business sense and greed, living off the success of the iPhone, not good value).

But anyway, as you can see by the numbers, if you want to blame anyone over pricing, it's not the carrier; it's Apple.

Apple sell all of their hardware products at Premium price points. Conversely, their software is much cheaper than the competition. Their margins are in hardware sales, and they're one of the most profitable companies in the world.

Nuts and bolts cost the same for everyone. The iPhone 3G cost just $174 to build the $599 device. There's a margin Alan Sugar would be proud of!

As for carriers putting prices up, they're getting less business out of the content side - thanks to Apple revolutionising the content provisioning business via iTunes/App Store. Nokia et al are following suite, so the carriers feel compelled to keep their sales up...and the only way to do that is to reduce subsidised pricing and increase cost of ownership (your lease).

I won't be getting the new 3G S, because I'm sick of wasting money in the middle of a recession (and I have 2 iPhone contracts, as an App Store developer). However I'm under no illusions that the prices will come down next year. Or the next.

Welcome to the Apple Universe, where everything has it's price.

Edited to add monthly pricing comparison

[Anonymous]

Hi,

Just written this letter to the O2 Complaints commitee. Hopefuly I should get a reply.

Dear Sirs,



I am writing as a very disgruntled and very irate iPhone 3G O2 Customer.



I currently own an iPhone 3G 16GB on a £45.00 per month 18 month contract which I purchased on its launch on the 11th July 2008 for the price of £59.



I am also aware of the new iPhone 3GS due for release on the 19th June 2009, and wish to contact you in regards to my position.



My complaint is not regarding an early and free upgrade which appears to be the main gripe of many iPhone users this week, although it does have to be questioned why a more palatable and cheaper upgrade alternative could not have been offered. My complaint is more concerned with the price of the new hand set.



I know that it is a new model and you are a business who need to make money, but as there is no physical difference in the handset whatsoever and its technical specifications and advancements are only marginally superior to the current model, it has to be asked why O2 deem it necessary to overly inflate prices in this manner?



This decision also comes on the back of Apples WWDC keynote where it was mentioned that the iPhone 3GS was set to retail at the same prices as the 3G originally retailed for, which was the smaller capacity for $199.00 and the larger capacity for $299.00. They also mentioned that the 8GB iPhone 3G was to be slashed to $99.00 as of Monday. These decisions were made to keep the iPhone affordable for everyone.



At yesterdays exchange rate these product should have roughly stood as such. iPhone 3GS 32GB £225.00, iPhone 3GS 16GB £125.00 and the iPhone 3G 8GB £62.00.



Instead of these rather attractive prices which would have seen thousands of iPhone customers queuing for upgrades and prospective iPhone customers jumping for joy, we see O2 in the UK has given them all a price tag which far from remaining the same has increased significantly. An Iphone 3GS 32GB which will retail (handset only) in the states for the equivalent of £225.00, will be sold by O2 for an unjustifiable £538.00. It beggars belief.



I am disgusted, absolutely disgusted. With Apple's opinion on prices clearly voiced at their keynote, it is not at their door I lay the blame for this price hike, it is yours.



Why do I have to pay £175.00 up front for the larger capacity model on the same tariff this year, when I only paid £59.00 last year. Why can I not pay the same? It's certainly Apple's intention that I should as the models should be retailing at the same price. What you are asking, against Apple's intentions, is a price increase just £3 short of 200%



I cannot therefore fail to have some serious fears for your launch day on 19th June.



The main buyers of the new iPhone 3GS are dedicated Apple followers whom thanks to your inability to come up with a more attractive upgrade option you have now alienated, so rest assured that they will not be there in droves like last year.



Other prospective Apple iPhone converts will now find the cheaper 3G versions a more attractive option rather than pay your inflated prices, or they may choose to buy from abroad, or purchase unlocked iPhones from ebay and such websites, so its more than likely they will not be there either, making the entire launch a flop and O2's iPhone sales plummet.



This may cause Apple to ask some interesting questions as to why UK sales have become so low, which may result in you losing your exclusive rights for all future models. If this comes about then you only have yourselves to blame.



My contract has another 7 Months to run, so unless a more attractive upgrade package can be offered to you existing and VALUED customers, and this excessive over pricing is remedied by the time my present upgrade is due, I like several thousands of my contemporaries will turn from O2 en masse, and find better deals with your competitors, only returning to the iPhone when it has been finally and justifiably taken from your hands.



I'll be grateful for a reply answering all of my queries and what you intend to do about them.



Yours sincerely.

[Anonymous]

This decision also comes on the back of Apples WWDC keynote where it was mentioned that the iPhone 3GS was set to retail at the same prices as the 3G originally retailed for, which was the smaller capacity for $199.00 and the larger capacity for $299.00. They also mentioned that the 8GB iPhone 3G was to be slashed to $99.00 as of Monday. These decisions were made to keep the iPhone affordable for everyone.
At yesterdays exchange rate these product should have roughly stood as such. iPhone 3GS 32GB £225.00, iPhone 3GS 16GB £125.00 and the iPhone 3G 8GB £62.00.
Instead of these rather attractive prices which would have seen thousands of iPhone customers queuing for upgrades and prospective iPhone customers jumping for joy, we see O2 in the UK has given them all a price tag which far from remaining the same has increased significantly. An Iphone 3GS 32GB which will retail (handset only) in the states for the equivalent of £225.00, will be sold by O2 for an unjustifiable £538.00. It beggars belief.
I am disgusted, absolutely disgusted. With Apple's opinion on prices clearly voiced at their keynote, it is not at their door I lay the blame for this price hike, it is yours.
Why do I have to pay £175.00 up front for the larger capacity model on the same tariff this year, when I only paid £59.00 last year. Why can I not pay the same? It's certainly Apple's intention that I should as the models should be retailing at the same price. What you are asking, against Apple's intentions, is a price increase just £3 short of 200%

You jumped the gun a bit there, and didn't do your homework.

See my post above. The prices discussed by Apple were AT&T's pricing (hey American's don't think outside America). The £62 was for a 8GB iPhone on a 24 month contract - the equivalent here is FREE.

http://shop.o2.co.uk/update/paymonth.html

As to why the prices are, in general, higher than before? Because those were foothold prices aimed to hook people in and create a new market. The market now exists and so the incentive to lower prices is reduced. This is nothing new... "Buy now for 50% off until X date!" sound familiar? You'll see it in nearly every supermarket in the country, on TV commercials selling cars and sofas, and so forth.

It's business; marketing. Admittedly you don't buy a car every 12 months, but then do you really need to upgrade to a new phone every 12 months, especially - as you allude in your own email - one that only has minor improvements over the one you already own? Er.

Well at the very least, it sounds to me like you don't give a schmuck about the environment

[Anonymous]

Whats the environment got to do with this? Why do you greenies always bring your arguement down to the environment. My concerns are financial not ecological. I just don't want to be held to ransom by O2 in Rip of Britain.

And as for wanting a new phone in 12 months, I made it clear that although I think a cheaper..(note the word as I don't mean free)alternative should have been made I was not complaining about my lack of upgrade.

I was referring to the profiteering tactics of O2 who have inflated the price unreasonably from last year. I wanted them to know how I felt about that especially as Apples keynote was geared towards affordability to which this price hike is blatant contradiction.

But as for my opinion on the environment I'd do my bit if they made it worthwhile...make green fuel cheaper than unleaded for example..christ we all would then wouldn't we? It seems they only want to save the planet if theres money to be made by doing it, and I can't really and honestly do my bit to save my planet when the government have just green lighted the demolition of a beautiful ancient village for the purpose of another runway at Heathrow. It will be a bit like me taking two steps forward just so the governemnt can take two hundred miles back.

[Anonymous]

Whats the environment got to do with this? Why do you greenies always bring your arguement down to the environment. My concerns are financial not ecological. I just don't want to be held to ransom by O2 in Rip of Britain.

Greenie?
Oh don't be such a pendant, I was being sarcastic.

I was referring to the profiteering tactics of O2 who have inflated the price unreasonably from last year. I wanted them to know how I felt about that especially as Apples keynote was geared towards affordability to which this price hike is blatant contradiction.

Again let me spell it out for you:
THESE PRICES ARE BETTER THAN THE ONES APPLE QUOTED
As for additional subsidy discounting, there's no point in being miserable because this year's deals aren't as good as last year's. Welcome to the world of consumerism.

But as for my opinion on the environment I'd do my bit if they made it worthwhile...make green fuel cheaper than unleaded for example...etc...

Ah yes, the art of war. Choose your battles wisely - big corporate mess is much more important than millions upon millions of indignant consumers making a mess. And that's not sarcasm, it's me calling you a hypocrite.

[Anonymous]

I can't be called a hypocrite. Not really when I don't agree with either mess, whether created by the corporate bosses or the millions and millions of consumers.
You may think I'm wrong thats your opinion but I am consistant....and not consistanly wrong before you post that particular wity retort.

How can you say that the UK prices are better than the ones quoted by Apple? Apple quoted their prices last year for the 3G launch and I got my phone for £59 up front. They qouted the same prices this year for the 3GS launch and i'm now expected to fork out £175.00 how is that better? How can I possibly be better off? A child of 5 can tell you which is more and which is less, which is slightly worrying as you don't seem to see it.

[Anonymous]

I can't be called a hypocrite. Not really when I don't agree with either mess, whether created by the corporate bosses or the millions and millions of consumers.
You may think I'm wrong thats your opinion but I am consistant....and not consistanly wrong before you post that particular wity retort.
How can you say that the UK prices are better than the ones quoted by Apple? Apple quoted their prices last year for the 3G launch and I got my phone for £59 up front. They qouted the same prices this year for the 3GS launch and i'm now expected to fork out £175.00 how is that better? How can I possibly be better off? A child of 5 can tell you which is more and which is less, which is slightly worrying as you don't seem to see it.

Ok I'll cut some slack on the green; it's a distraction at best.

The UK prices are better than the ones quoted by Apple (remember those aren't Apple prices, they're AT&T) because... they're better. £62 ($99) versus FREE...say it out loud. Not £62 like Apple are quoting.... FREE.

How is £175 better than what Apple quoted? Because Apple quoted $299. £183. I'll repeat that: YOU pay £175, AMERICANS pay £183. And they pay more on their monthly bill than we do, sans MMS and Tethering options.

Look, at the end of the day, it matters nothing comparing what you paid 12 months ago... don't compare last year to this year - even a child of 3 can understand that prices and markets aren't static when their Milky Bar costs 5p more when they're a year older.

Change is as reliable as gravity. You can't stop it by stomping your feet. And just an FYI... the new iPhone is VERY different to the old one....

[Anonymous]

even a child of 3 can understand that prices and markets aren't static when their Milky Bar costs 5p more when they're a year older.

I doubt that very much!!!

[Anonymous]

Hi all i'm a newbie to this forum but couldn't resist a grumble. I jioned O2 when the iphone 3G came out and have been impressed with the service and hardware. What I want to know is why couldn't O2 simply offer an upgrade from a 3G to a 3GS now on a 24 month contract, that way they still get the six months we have left to pay on our original 18 month contract and the following 18 months are all signed for, Everyones a winner, we get the upgrade and O2 get their money for the remainder of this contract and a further 18 months after that. Fingers crossed they'll see sense the wife wants my 3G but looks like she'll have to wait