With a subsidized Apple iPhone, everyone wins

Iphone_largeYesterday the news rumors hit that AT&T might be subsidizing the next Apple iPhone. On our podcast, we discuss what it will take for us to upgrade or buy a new iPhone: what compelling features, for example, would get us to pull the trigger. That show will be up later today, but it was recorded before the subsidy rumors. Now that they’re out there, what does it mean? If true, it means that everyone wins. Nobody truly loses anything that I can see.From a consumer standpoint, people will get the latest and greatest iPhone for $200 less than what it would cost without the subsidy. Yes, they would commit to a two-year service plan with AT&T, but original iPhone customers did the same, so there’s no difference there. Apple still gets the same retail price per phone, since the AT&T subsidy offsets the discount. And if you hit an Apple store to buy your phone, it sounds like they’ll make an additional $200 as there’s no subsidy there. That begs the question of why would anyone buy an iPhone in a retail Apple Store? If I were Apple, I’d want those customers in my store because they’re more likely to come back and buy other Apple gear.I’m personally not a fan of subsidized phones, but this selling model is ingrained into the American cellular market, so it wouldn’t surprise me if the news were indeed true. In this particular case, the consumer isn’t any worse off, although there actually is a loser in all this that I just thought off: AT&T’s competitors. I’m sure we’ll hear of mass migration numbers as customers leave other carriers for a subsidized iPhone. Will you be one of them?


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