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AT&T sees iPhone 3GS sellouts, expects legacy model to expand smartphone base

post #1 of 52
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AT&T revealed on Thursday that the newly free-on-contract iPhone 3GS is seeing inventory sellouts across the U.S., and expects the device to broaden the company's smartphone base.

AT&T Mobility Chief Executive Officer Ralph de la Vega, in a Q&A session following the company's Q3 2011 earnings call, reported that supply of Apple's legacy model iPhone is running low, noting that it's bringing in more new subscribers on average than any other device. The 3GS, an AT&T-exclusive, is now being offered for free with a 2-year contract, however the carrier's online store is currently "out of stock."

"We've seen a tremendous, tremendous demand for that device even though it's a generation old," de la Vega said.

De la Vega sees his company's lower price devices as a "good entry point" for subscribers who want to add data services to their plans, and notes that the 3GS is an important factor in broadening the growing smartphone market.

"We continue to bring in more subscribers onto our network with pure data plans," de la Vega said. "18 million, or nearly half of our smartphone subscribers, are on tiered plans with most choosing the higher priced data plan."

The news comes after it was announced that AT&T had activated over 1 million iPhone 4S units on the device's launch day last Friday, making it the most successful iPhone debut in the company's history.

Combined, Apple's iPhone 3GS, 4 and 4S account for 56 percent of all smartphone activations on AT&T's network, however no specific numbers were given as to how many 3GS units have been activated since it became available as a free-on-contract device.

post #2 of 52
The geek in me cringes at the thought of signing a contract for a 2-year-old phone like the 3GS but I totally understand why "free" would be popular.

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post #3 of 52
When the iPhone 4S came out I get an iPhone 3GS added to my account because it was free. I got it for my brother. I plan to upgrade to an iPhone 4S soon. The 3GS is still a nice phone. My brother likes it allot. I can understand why the 3GS would be sold out. Makes sense.
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post #4 of 52
Quote:
Originally Posted by jd_in_sb View Post

The geek in me cringes at the thought of signing a contract for a 2-year-old phone like the 3GS but I totally understand why "free" would be popular.

I cringe too, for slightly different reasons. The previous cost was $50, which is less than the cost of one month's service. If $50 was a turn-off, then what business do they have subscribing? Subsidies are a fact of life, but it's crazy how much difference it makes between the cost of a month's use and zero.
post #5 of 52
Quote:
Originally Posted by JeffDM View Post

I cringe too, for slightly different reasons. The previous cost was $50, which is less than the cost of one month's service. If $50 was a turn-off, then what business do they have subscribing? Subsidies are a fact of life, but it's crazy how much difference it makes between the cost of a month's use and zero.

People like a sticker price of free. The real price reduction was $100 as I recall.

Next year Apple will keep the 3GS when the iPhone 5 comes out and drop by another $100.
It would run off the shelfs in poorer countries.

Cook also said in his conference call that they were also seeing increased demand for the iPhone 4 from last Q because of price reductions. Hence the blowout predictions.
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post #6 of 52
Quote:
Originally Posted by JeffDM View Post

I cringe too, for slightly different reasons. The previous cost was $50, which is less than the cost of one month's service. If $50 was a turn-off, then what business do they have subscribing? Subsidies are a fact of life, but it's crazy how much difference it makes between the cost of a month's use and zero.

For some reason many people are more concerned about the upfront cost than the monthly fees.

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post #7 of 52
Quote:
Originally Posted by asdasd View Post

People like a sticker price of free. The real price reduction was $100 as I recall.

A lot of places started offering it for $50 very early this year.
post #8 of 52
So does this mean that the 3GS will get IOS 6?
post #9 of 52
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post #10 of 52
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Originally Posted by Mazda 3s View Post

So does this mean that the 3GS will get IOS 6?

I would be surprised if it did but I was also surprised when the 3GS got iOS 5.
post #11 of 52
Quote:
Originally Posted by jd_in_sb View Post

For some reason many people are more concerned about the upfront cost than the monthly fees.

Many people might go in looking for a new basic phone and see that the can get a nice new iPhone for free if they add a data package. The 3GS is a great phone (IMHO) certainly better the free craptastic flip phone of the week they normally shovel out. The customer is introduced to ios and the Apple experience and AT&T gets a higher recuring monthly revenue. Kind of a win-win situation.

Heck the only reason I decided to upgrade from the 3GS to 4s is for the retina display.
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post #12 of 52
Quote:
Originally Posted by Mazda 3s View Post

So does this mean that the 3GS will get IOS 6?

The rule of thumb is "OS with which it shipped plus two".

First iPhone got iPhone OS 3.

The iPhone 3GS shipped with iPhone OS 3 and got 5, therefore it very likely won't be getting six.
post #13 of 52
Quote:
Originally Posted by Mazda 3s View Post

So does this mean that the 3GS will get IOS 6?

Doubtful. Each major iOS revision seems to deprecate the iPhone from three generations ago. iOS 5 did not support 3G and iOS 4 did not support the original iPhone. If history repeats itself, then the 3GS would be deprecated for iOS 6.
post #14 of 52
Quote:
Originally Posted by jd_in_sb View Post

For some reason many people are more concerned about the upfront cost than the monthly fees.

Well, that makes sense, as you aren't spending the the combined 2-year contract fees all at once.

I *think* I'm paying $90/month for my new 4S on ATT. I paid $199 for the phone itself. If I had had to pay it all at once, it would have been $2259. (right? I'm really tired right now. )

And even though I could afford to pay that amount, it is something that I would have probably taken a lot more time to decide, or at least think about. The $199 was just like, "Big deal. I can sell my old iPhone for more than half that!"

So, even though it's the same amount, in the end, it has an obvious psychological effect.

EDITED because my initial math was WAY off. I told you I was tired!
post #15 of 52
Quote:
Originally Posted by PBRSTREETG View Post

I would be surprised if it did but I was also surprised when the 3GS got iOS 5.

Quote:
Originally Posted by Tallest Skil View Post

The rule of thumb is "OS with which it shipped plus two".

First iPhone got iPhone OS 3.

The iPhone 3GS shipped with iPhone OS 3 and got 5, therefore it very likely won't be getting six.

Quote:
Originally Posted by Negafox View Post

Doubtful. Each major iOS revision seems to deprecate the iPhone from three generations ago. iOS 5 did not support 3G and iOS 4 did not support the original iPhone. If history repeats itself, then the 3GS would be deprecated for iOS 6.

The reason I ask is because I don't think that Apple has sold an older generation iPhone for this long. I guess my reasoning is, the longer they keep selling the damn thing as a new device, the longer they'll have to keep providing updates to appease people.

If Apple wants to maintain the "free" iPhone 3GS on contract, people will still be buying these "new" phones until the iPhone 5 comes out next year.

I mean, if they're crazy enough to buy an iPhone 3GS now, they're probably crazy enough to expect IOS 6 on their "one-year-old" iPhone 3GS come this time next year.
post #16 of 52
Quote:
Originally Posted by jd_in_sb View Post

The geek in me cringes at the thought of signing a contract for a 2-year-old phone like the 3GS but I totally understand why "free" would be popular.

The situation will never really be rational until the carriers offer pricing that doesn’t assume a built in subsidy.

If carriers were legally required to unlock multicarrier devices at the end of the contract period (since the customer has effectively purchased it in full) then normal market forces would keep pricing fair.

If at the end of your contract period they stopped automatically charging you the hidden “subised handset fee” then more people would be satisfied with the phone they have and not be in such a rush to sign a new contract every 24 months. There is no incentive for carriers to implement this until one of their competitors break rank and paying subscribers start jumping ship.

I am of the opinion that customers should be earned (with outstanding service) not bribed (with a “free” handset that that cannot be moved to another network). It’s not very fair when the customer's only choice is: a) play by one set of rules, or b) don’t play at all.
post #17 of 52
Doesn't it seem pretty likely that when the iPhone 6 is released the iPhone 4 becomes the new free phone, the iPhone 4S becomes the new discounted phone, and the 6 takes pride of place as the new hotness? That way, the 4 and 4S get their customary upgrades to an OS within the 3 generation envelope and the 3GS falls by the wayside.
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post #18 of 52
Doesn't it seem pretty likely that when the iPhone 5 is released the iPhone 4 becomes the new free phone, the iPhone 4S becomes the new discounted phone, and the 5 takes pride of place as the new hotness? That way, the 4 and 4S get their customary upgrades to an OS within the 3 generation envelope and the 3GS falls by the wayside.
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post #19 of 52
Quote:
Originally Posted by jd_in_sb View Post

For some reason many people are more concerned about the upfront cost than the monthly fees.

For someone on a family plan, who already has a phone, the only cost for going to a 3GS is $0 if they already have a data plan, or $15/mo if they need to add one. For these people, the free 3GS is very attractive.

They may not want to spend $100 or $200 for a new phone, especially for kids, etc.

These are the people the 3GS appeals to...
post #20 of 52
Quote:
Originally Posted by aross99 View Post

For someone on a family plan, who already has a phone, the only cost for going to a 3GS is $0 if they already have a data plan, or $15/mo if they need to add one. For these people, the free 3GS is very attractive.

They may not want to spend $100 or $200 for a new phone, especially for kids, etc.

These are the people the 3GS appeals to...

If it were my kid, they wouldn't be getting a smartphone PERIOD, unless they're paying for it themselves. Smartphone + data + unlimited texting (kids these days and their texting) is outrageous for minors.

Give them a free featurephone with unlimited texting and tell them to be happy they have a roof over their heads Hell, I might even throw in an iPod touch if they do their chores
post #21 of 52
Quote:
Originally Posted by Mazda 3s View Post

If it were my kid, they wouldn't be getting a smartphone PERIOD, unless they're paying for it themselves. Smartphone + data + unlimited texting (kids these days and their texting) is outrageous for minors.

Give them a free featurephone with unlimited texting and tell them to be happy they have a roof over their heads Hell, I might even throw in an iPod touch if they do their chores

So when your high school son or daughter's phone dies, you would make them get a crappy flip phone and pay $200 for an iPod touch, rather than get them a free 3GS?

One year of data (12x$15) would be less than the iPod touch... :-)
post #22 of 52
... and just wait until the 4 becomes the free phone next year...
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post #23 of 52
wasn't there a $49 deal on a refurb unit? and it was $99 on new?
post #24 of 52
Quote:
Originally Posted by aross99 View Post

So when your high school son or dauther's phone dies, you would make them get a crappy flip phone and pay $200 for an iPod touch, rather than get them a free 3GS?

One year of data (12x$15) would be less than the iPod touch... :-)

That's the way the government works, isn't it?
post #25 of 52
Quote:
Originally Posted by aross99 View Post

So when your high school son or dauther's phone dies, you would make them get a crappy flip phone and pay $200 for an iPod touch, rather than get them a free 3GS?

One year of data (12x$15) would be less than the iPod touch... :-)

When I was a kid a phone was something sitting on a table in the hall... and you better keep your damn hands off of it or Dad would raise holy hell!
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post #26 of 52
Quote:
Originally Posted by aross99 View Post

So when your high school son or dauther's phone dies, you would make them get a crappy flip phone and pay $200 for an iPod touch, rather than get them a free 3GS?

One year of data (12x$15) would be less than the iPod touch... :-)

If you know any teenager that would only use 200MB of data a month, I'd like to meet them

Little hellions will be sitting in calculus class every day watching YouTube videos of cats eating pot brownies while playing the piano with their paws
post #27 of 52
Quote:
Originally Posted by island hermit View Post

When I was a kid a phone was something sitting on a table in the hall... and you better keep your damn hands off of it or Dad would raise holy hell!

Ah, those were the days. They seemed just like yesterday. Just kidding!! But I do remember them because I'm somewhere between 53 and 54 years.
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post #28 of 52
Quote:
Originally Posted by Mazda 3s View Post

If you know any teenager that would only use 200MB of data a month, I'd like to meet them

Little hellions will be sitting in calculus class every day watching YouTube videos of cats eating pot brownies while playing the piano with their paws

I gave my oldest daughter my 3GS, and a 2GB data plan when she went to college. She has ready access to WiFi, so routinely uses 150GB-250GB/mo. If she stays off Netflix when she is on 3G it's on the lower side. I don't think she has ever gone over 400GB, and that was because they didn't have WiFi in her dorm room.

My guess is that texting in class is much more of an issue than anything else. I can't believe how many texts my youngest daughter sent when she was in high school. She still averages about 5,000 texts per month now. She hit 10,000 one time, but I think she was trying to see how many she could send. LOL.
post #29 of 52
Quote:
Originally Posted by Mazda 3s View Post

The reason I ask is because I don't think that Apple has sold an older generation iPhone for this long. I guess my reasoning is, the longer they keep selling the damn thing as a new device, the longer they'll have to keep providing updates to appease people.

If Apple wants to maintain the "free" iPhone 3GS on contract, people will still be buying these "new" phones until the iPhone 5 comes out next year.

I mean, if they're crazy enough to buy an iPhone 3GS now, they're probably crazy enough to expect IOS 6 on their "one-year-old" iPhone 3GS come this time next year.

It's entirely possible that Apple will discontinue the iPhone 3GS sometime between now and the release of the iPhone 6, negating the imminent call for the 3GS to support iOS 6.
post #30 of 52
Quote:
Originally Posted by Tallest Skil View Post

It's entirely possible that Apple will discontinue the iPhone 3GS sometime between now and the release of the iPhone 6, negating the imminent call for the 3GS to support iOS 6.

Would that be a smart move though? AT&T is clearly lovin' this cheapass phone, and the component prices probably aren't too high for Apple. This seems more like a long-term strategy than a short-term, let's get a few people hooked strategy.

I could see them keeping the iPhone 3GS onboard longer for free than I can see them making the iPhone 4 free in its place.
post #31 of 52
Quote:
Originally Posted by asdasd View Post

People like a sticker price of free. The real price reduction was $100 as I recall.

Next year Apple will keep the 3GS when the iPhone 5 comes out and drop by another $100.
It would run off the shelfs in poorer countries.

Cook also said in his conference call that they were also seeing increased demand for the iPhone 4 from last Q because of price reductions. Hence the blowout predictions.


Exactly right ... people buy a payment ... Think $199 for a Camry, Accord, ect ...
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post #32 of 52
This is cool. Apple could have the #1, #2, and #3 selling smartphones on the market.
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post #33 of 52
Apple is going to reach a whole new market with this strategy. A huge market.

I wouldn't be surprised to see the 3GS remain at or near the top-selling smartphone.
post #34 of 52
Quote:
Originally Posted by jragosta View Post

This is cool. Apple could have the #1, #2, and #3 selling smartphones on the market.

Easily.

But I wonder if the 3GS will be the second-best selling, rather than the i4?
post #35 of 52
I always thought this was the real innovation at this year's iPhone announcement.
post #36 of 52
Just wondering what the imperative would be to discontinue the 3GS when we get to iOS 6? Are people thinking the 3GS won't have adequate hardware to run iOS 6? Apparently the 3GS runs better on iOS 5 than it did on iOS 4, so whose to say 6 will be so hard to run. And if Apple spend the next 12-24 months with 3GS as top selling phone, they may not want to disappoint all those customers.

Yeah there's a pattern in discontinuing an iPhone model after two iOS releases, but that was just for the initial two iPhones. Might not mean it is a strategic plan.

3GS couldbe round for few more years? White MacBooks from 2007 can run Lion (I think it's 2007).
post #37 of 52
Quote:
Originally Posted by JeffDM View Post

A lot of places started offering it for $50 very early this year.

Around the world, a lot of places had already been offering the 3GS (on a term commitment) for $0, for about a year or more.

But going back to asdasd's post to which you were replying...
Immediately before the iPhone 4S, AT&T's "no-commitment" price for the iPhone 3GS had been $449, and direct through Apple for $499.

After the iPhone 4S, the 3GS's no-commitment price is $375.00 (either unlocked direct through Apple, or locked via AT&T). That is a "real" reduction of (an average of) $100, as correctly stated by asdasd.
post #38 of 52
[QUOTE=nicwalmsley;1971096]
Yeah there's a pattern in discontinuing an iPhone model after two iOS releases, but that was just for the initial two iPhones. Might not mean it is a strategic plan.
QUOTE]

Agreed. The first two generations of iPhone were woefully limitted in RAM, GPU power, and flash memory speed. Remember, they were designed many months in advance of release and well before the app store ecosystem existed or anyone really knew how this class of devices would be used. I think they were dropped from updates earlier than even Apple would have liked simply because of the hardware limitations. Had they had 256MB RAM and even a very low end OpenGL ES 2.0-capable GPU, I bet they'd have gotten iOS 4.3 at minimum. I'm not delusional though... No doubt, they would have supported fewer features as subtle encouragement to upgrade.
post #39 of 52
Quote:
Originally Posted by Tallest Skil View Post

It's entirely possible that Apple will discontinue the iPhone 3GS sometime between now and the release of the iPhone 6, negating the imminent call for the 3GS to support iOS 6.

Yes, because they hate when they sell lots of units, it bugs the bejesus out of them. The 3GS is here to stay. At least the form factor is ( it may get a processor upgrade to an A4, if the higher models bump to to a5, a6 etc.)

But they are not going to discontinue a product without a replacement.
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post #40 of 52
Quote:
Originally Posted by asdasd View Post

The 3GS is here to stay.

Until it can't get software updates anymore

Quote:
At least the form factor is; it may get a processor upgrade to an A4

That's nonsense.

Quote:
But they are not going to discontinue a product without a replacement.

OH, LOOK, the iPhone 4 will be free, the 4S will be $99, and the 6 will be $199.
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