Slashdot Mirror
Crazy Stevie's iPhone Prices are Insaaane!
theodp writes "Slate takes a look at the alarming lesson of the iPhone price cut and ponders the long-term effects of a Fire-Sale Nation mentality, especially when companies go all Crazy Eddie slashing prices on products like homes and cars that have active secondary markets. 'High-profile price-chopping tends to occur whenever companies freak out about the vicious combination of a slowing consumer economy and the prospect of getting stuck with big inventories of unsold goods. The tactic often works in the short term. The hype over insanely low prices functions as a form of free advertising, and the lower prices tend to attract buyers. Apple announced on Sept. 10 that it had sold its 1 millionth iPhone.'"
but you still have to be able to afford the monthly bill. Oops I guess Apple forgot that part! Isn't that the #1 thing people shop for and just cross their fingers and hope the phone's either free or cheap? You don't have to be a cell phone expert to know that
Google's Super Secret Search Algorithm: SELECT @search_results FROM internet WHERE @search_results = 'good'
From a business standpoint, it makes sense. AT&T and T-Mobile are the only GSM carriers in the US. Apple wants GSM because it's an international standard and they don't want multiple versions of the iPhone for different countries. AT&T has a larger customer base and more coverage than T-Mobile, so Apple went with them to maximize sales. AT&T does suck (as someone who's currently locked into their glitchy network), but looking at the numbers, it was the logical choice. to make.
By focusing solely on GSM, they're locking themselves out of most of the US cell phone market - over 120 million customers.
Most cell phone manufacturers do make different versions for different countries. LG is perhaps best known around here for their Verizon phones (CDMA), but they also make GSM devices. Motorola makes both GSM and CDMA versions of the RAZR and many other models, as do Sanyo, Samsung, RIM, and Palm.
Visual IRC: Fast. Powerful. Free.
Does anybody really think that Apple won't make money on it at $399? For Grid's sake, it's assembled overseas for slave wages. It only has a few parts (if you count the main board and display as one part each). I don't think they will hurt. And if they do -- that is, if they are dumping it on the market for a loss -- then they are prosecutable under antitrust laws.
Please, let's see some real news, rather than trying to make problems up.
I was actually going to make much the same post as yours. I just Googled it and Apple are indeed getting a substantial monthly payment from AT&T for iPhone users, so again from the standpoint of a business it does make sense to go exclusive (although this doesn't seem to benefit the consumer in any way I can imagine). As for a phone that works on all GSM networks (assuming you didn't mean that rhetorically), it is very much possible (needs to be quad-band if you want to use it anywhere in the world, due to different frequencies, but that's by no means unheard of) and the only network feature I know of that is entirely proprietary to the iPhone is visual voicemail.
Let's say you sell it for use on any network. For the sake of argument, let's pretend that it would magically work on GSM or CDMA so you could use it on Sprint/Verizon too.
Firs thing is first, that's 4 times the compatibility testing (minimum). That is 4 carries that you have to make Visual Voicemail work on. That would be tough. Or you could let some customers have it and some not. Or you could just cut the feature which is probably what would happen.
With four carriers (we'll just assume the big ones for this discussion and leave out the little ones), that is also 4 sets of data plans you have to mess with. Don't forget that you have to support all this including answering questions about it at your Apple stores.
Apple had bargaining power with AT&T. They could walk and go to someone else. When you let four carriers do that, you lose your power. They can all agree not to do feature X, because they other guys aren't. They can just assume the other guys won't, because they wouldn't.
That means Apple would have to customize the software for each carrier. Each would have their own little issues with iTunes (after all, they all have their pathetic over-priced music stores). They would want their own crazy user interfaces or software changes. The whole thing would be a huge mess and very confusing for consumers. I would be amazed if Apple could get two carriers to agree to near-identicle stuff (terms, contracts, phone modifications, etc)... let alone 4.
The grand-parent has it right. AT&T was the most logical choice.
Apple had three choices. Go with one carrier (probably AT&T, which they did), go many carriers (see above), or go MVNO (be their own carrier... huge hassle).
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
I don't care how nice a screen it has, at $400 with a 2 year contract, a locked phone with no extensibility and EDGE-only speeds is still far from cheap. The best one can say is that it has gone from an insanely overpriced phone to merely an expensive fashion phone.
iPhone doesn't start hitting "Crazy Eddie" pricing until it's below $100.
Well they decided that it was worth $599 to them when they handed over that money. They should be grateful to get any rebate, let alone $100.
Many pundits also complained that the iPhone could not compete with the smart phones. Of course, the iPhone is not competing with the smart phone, but merely assuming that some people might be willing to pay more for a phone upfront if it provided a value. Such a market was made clear by the Razr.
Now pundits are saying that Apple is desperate and crazy because it lowers prices. It is true that Apple never has a sale, but this is a phone. Phones start expensive and then get cheap. It always happens. I don't have an iPhone. Being an early adopter was not worth the price. I was waiting for this price drop, and a relaxation to contract rules typical to ATT. The price drop is not like the price drop of a Mac or an iPod. With those devices, one is not contracted with a total costs that is at least $2K.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
The car example cited in this article (Toyota with $850 of incentives per car vs. US car manufacturers with $3K average) is a perfect example of why US automakers are so very, very screwed.
No matter how much Consumer Reports et al. say the reliability has improved, and no matter how much the US makers craft intriguing and unique new offerings, their cars' value will continue to tank.
Sure, all cars lose value the minute they're driven off the lot, and it's a substantial number. But go take a look at what happens to a Civic or Camry versus what happens to a Fusion/Taurus or Malibu. Go ahead, check it out. It's awful.
I bought a new Scion tC last year. I was all primed to buy a used carwith ~35K miles; it makes sense to let someone else take the financial hit. Then I looked at the prices on used Scions, used Civics, etc. $17K cars were selling for $14K after three years. It made absolutely no sense to go buy a three year old car with a nearly-expired warranty and a possibly shady maintenance record when $3K got me a brand new one. On top of that, I was paying cash; the price difference is narrowed even more if you're financing, because the used car will almost certainly have a higher APR.
Now contrast this with a Ford Focus or Chevy Cobalt or similar. Go look at the similar models, and marvel at how much more has bled off of the value; it's because the $17K Ford, depending on when you catch it, might be only $15K, and might have a 7% or a 0% APR. It's great in the short term, and if I was interested in a Focus I'd be all over it.
Ultimately, if I was buying this car to drive it into the ground and toss it at 300K miles, it would be smarter to buy the Ford (assuming the reliability was the same, which isn't really the case with the Focus). Most people, myself included, don't do that. They get rid of the car in the 80K to 120K range, when it's starting to show some age but before it might potentially require major repairs. And many people look at how the US automakers have played their "SUPER LOW 72 MONTHS 0%! $3,000 CASH BACK" games and they walk across the street to the guys who might charge a bit more, but won't slash their prices next week. All things being equal, a Camry with the same MSRP as a Malibu or Fusion will resell for more at every step in its life, and it's because Toyota has shown that they're going to hand out approximately the same deal to everyone.
I want to buy American, or at least be able to widen my prospects when looking at cars. I really do. If I were willing to drive cars into the dirt, I could probably do it, but I'm not comfortable with the risks near the end of the car's life. A $2,000 engine repair does make better financial sense than buying a new car, but not when your car won't start, and you have to get a rental for a week, and you're wondering if it will be okay for another year or will require a new transmission in four months. So, like most people, I sell mine before I think those problems will show. As long as the US automakers are willing to go "Crazy Eddie" and reap the short-term profits, though, they'll continue to lose out on long-term buyers like me. I sincerely hope other industries are willing to look at Ford, GM, and Chrysler's experience when they think that it's a good idea to slash their prices.
Now pundits are saying that Apple is desperate and crazy because it lowers prices
No... pundits are saying that Apple is desperate and crazy because they aren't even close to making their target of 10 million phones in the first year. If Apple gave us an unlocked phone with an SDK, they could easily make or exceed that goal. It's simple really: Apple decided to focus on a great profit instead of a great product, and ended up with neither.
The fed doesn't favor investment over work. What does that even mean? When a company invests in a new technology, that means more work. When a city invests in new infrastructure, it means more work. When farmers plant more crops, it means more work. Investment facilitates work. Without it, people wouldn't have jobs, and nothing would get done. The fed does not "favor investment over work", they favor investment because it leads to work.
The fed works to mediate the economy so that people with money will continue to invest it. If new investment stops, people lose their jobs. If no one is working, no one is building new houses, no one is growing food. That is a really bad thing.
Come up with a real example of a domestic case of a 'dumping' conviction that did not involve leveraging or maintaining a monopoly market and I'll gladly accede.
When information is power, privacy is freedom.
It's not necessarily an overriding factor, but if Apple was edged out (Hah! Get it?) of Verizon in general, they may have simply solidified another gameplan. Who's to say that if they DID work out the deal with Verizon, they wouldn't have maintained CDMA exclusivity during their initial rollout and launch periods instead? It's not like CDMA doesnt EXIST elsewhere... It's just not as widespread.
We certainly know they'll be spreading beyond GSM eventually... But I wouldn't expect anything before the "iPhone 2" launches.
But I agree that Apple probably took that into account. Perhaps they figured that developing the GSM version first would speed up their worldwide release, so they could sell enough units overseas to balance out the ones they aren't selling here. I was once told by someone in the industry never to buy a CDMA version of a phone that was originally designed as a GSM phone. The reasoning being that often the other version was an afterthought and not as thoroughly tested. I'm sure Apple would've put plenty of testing into the GSM version if they'd developed a CDMA version first. After all, it is a much bigger market (worldwide). Maybe at this point Apple is testing the market (worldwide) and will eventually approach the much smaller CDMA market if it seems financially viable. You can't really fault them for going for the bigger pot of fish first. Well, it remains to be seen how well they'll do outside the US. Failing to include HSDPA seems like a mistake in that regard, since EDGE is old news in Europe, and not a good way to showcase the mobile browser no matter where you are.
Visual IRC: Fast. Powerful. Free.
Common sense is expensive. I'd say $100 is pretty cheap a price to pay for a lesson, really.
Perhaps so. However, I am not going to do that; I am not interested in a fairly expensive phone without a warranty or technical support, which appears to be the current policy. Nor am I interested in one that may break with an upgrade, or which is unable to upgrade while the rest of the field is. I am even less interested in handing out such hardware to my family. That wouldn't be a favor.
I see the mods, high on their usual dose of incompetence crack, modded my post "troll"; as if my opinion, and the opinions of the other 250 million non-GSM, non-AT&T customers were completely irrelevant. Funny, but my current cellphone works fine on all the networks - I travel often, and I've yet to find anywhere I can't connect except in the deep boonies of Montana or similar, where there is no service.
The iPhone is simply a non-starter for me. I can easily afford to buy them for my familiy, but it would be pointless, as the phone won't work here. That's a fact, regardless of what slashdot's core of oh-so-qualified moderators may think.
I've fallen off your lawn, and I can't get up.
I agree, and the more amazing thing, is that they are doing the same thing in other countries. I mean, I can understand doing something like that in the US with the crazy service provider situation there, but why do it in european countries too?
Just sell the thing in Apple stores; put the visual voicemail thing on the internet as a service and allow people to pick their own plans.
Max.