by Mike Masnick

Filed Under:
iphone, pricing, subsidies, unlocking

apple, at&t

iPhone Pricing Details: Getting iPhones To Unlock Just Got A Whole Lot Trickier

from the can't-play-that-game-any-more dept

When we wrote about the iPhone pricing immediately after the Steve Jobs keynote, it wasn't entirely clear what the details were, and if AT&T/Apple had shifted to a typical carrier-subsidized model. However, the details quickly became clear. Indeed, Apple and AT&T ditched the deal they had last year, whereby Apple actually received a cut of AT&T's service fees. Instead, AT&T is buying the devices directly from Apple and then selling them (at a loss) to customers who will need to sign up for a more expensive service and a two-year contract (rather than the old one-year contract). Basically, this is back to the traditional model of mobile phone sales -- which Apple had suggested was a thing of a past just a year ago.

Either way, though, the deal works out fine for Apple. It still gets the full price it needs to get on the iPhones and doesn't have to worry about recouping service fees from folks who unlock iPhones. AT&T, on the other hand, now becomes a lot more reliant on service fees, first to make up for the loss on the device sale, and then to show growth in its 3G network usage. To that end, it appears that AT&T has totally ditched the old model where you could buy an iPhone and "activate" it on your own. No more. Now you have to both buy and activate the phone in stores. You can't order the phones online and have them delivered to be self-activated. In Engadget's post, the writer seems confused by this, and quotes AT&T's bogus claim that it did away with self-activation because the company "found that many others wanted to complete purchase and activation in one step so they could walk out of the AT&T store with their iPhone up and running." If that were the case, they could have just added in-store activation, without removing the option for self-activation.

The real reason seems pretty obvious: if you have to both buy and activate the phones at the same time and they require a two year contract, it's a lot trickier to get your hands on an iPhone for unlocking purposes. Since the full process is supposed to happen at once, it seems unlikely that stores will be letting people walk out the door with an iPhone that doesn't also have a contract. Those hundreds of thousands of unactivated iPhones that disappeared into China? Not so easy this time around (of course, you'll also note that the new iPhone will be available in 70 countries, so they're trying to stamp out the issue from the supply side too). Yes, there will still be 3G iPhones out there that can be unlocked, but that market is going to dry up significantly and cost a lot more.

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  1. identicon
    Kevin, 10 Jun 2008 @ 4:19pm

    Does Apple care about unlocking?

    I thought that the only reason that Apple originally was concerned about unlocked phones/jailbreaking is because they were getting a cut of the monthly fees from AT&T or whoever their approved carrier for that country was? Now that AT&T is buying phones at full price and subsidizing that with a 2 year contract (like most carriers do with their phones), why should they care what carrier you use? They're only selling the hardware. Shouldn't you be able to just buy an unlocked 3G iPhone and go to whatever GSM carrier will have you? I can go to Motorola, Nokia, or almost any other phone company and buy an unlocked phone and then use that phone with whatever carrier I want. Why should Apple be different? Why should they care? I'd think they could make more money by selling the phones at full price directly to consumers rather than selling them to AT&T with their volume discount.

    Originally I thought that the issue was that Apple needed to partner with a carrier that wanted the iPhone. Now that the iPhone is the "must have" phone, I'd think that any carrier would be happy to have them on their network, especially if that keeps people from defecting to AT&T.

    At any rate, I'm on Verizon. I'm still using an XV6700 because (at the time) it was the best phone that also sync'd with Exchange. My only complaint is that the XV6700 doesn't do GPS. Now that the iPhone can do both of those things and a whole lot more, I'm considering switching. But first I have to see what Android looks like.

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