Tech to Spec

Apple this past week has announced their next iteration to the iPhone.  This new phone will be available this week on the 17th of June.  While there are a few new features, which I will cover in a future post, there is at least one Apple’s US service partner has left off.  That feature is UPGRADE.  

This time last year the iPhone 3G came out fixing one of the biggest issues users had to that point, speed.  AT&T had pushed to get their initial rollout of their third generation (3G) service.  So when Apple announced their phone they claimed it was twice the speed for half the price.  That pointed out another feature of that phone a hug subsidy by AT&T.  Apple ditched their model of foregoing the phone subsidy for a share of the monthly payment.  

This perfect set of conditions let AT&T allow upgrades for current iPhone users.  AT&T didn’t have a previous subsidy they had to make up with those users, or in other words, they were already in the black.  This year the upgrade is a much harder and more easily predicted model.  Many users who upgraded last year won’t get the best price this year.  AT&T could very well still be in the red for that customer.  

My conclusion here is, it is very easy to understand why AT&T is not giving the subsidy to current users under contract.  They are at least giving some reduction in price for signing and new two year agreement.  This will likely mean fewer phones  sold right of the bat.  In my thinking if AT&T did honor the subsidy many people would sell their phones, those phones would likely end up in the hands of users who don’t mind being on AT&T just not on contract.  In the long run, while not easy to track I would guess this model would keep current customers happy and let AT&T benefit from being the only providers of iPhones in the US. 

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iPhone 3GS
How to get around the upgrade issues