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

Posted:
in iPhone edited January 2014
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.



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Comments

  • Reply 1 of 51
    jd_in_sbjd_in_sb Posts: 1,481member
    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.
  • Reply 2 of 51
    tylerk36tylerk36 Posts: 1,037member
    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.
  • Reply 3 of 51
    jeffdmjeffdm Posts: 12,946member
    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.
  • Reply 4 of 51
    asdasdasdasd Posts: 5,137member
    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.
  • Reply 5 of 51
    jd_in_sbjd_in_sb Posts: 1,481member
    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.
  • Reply 6 of 51
    jeffdmjeffdm Posts: 12,946member
    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.
  • Reply 7 of 51
    mazda 3smazda 3s Posts: 1,539member
    So does this mean that the 3GS will get IOS 6?
  • Reply 8 of 51
    jd_in_sbjd_in_sb Posts: 1,481member
    [deleted]
  • Reply 9 of 51
    Quote:
    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.
  • Reply 10 of 51
    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.
  • Reply 11 of 51
    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.
  • Reply 12 of 51
    negafoxnegafox Posts: 480member
    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.
  • Reply 13 of 51
    aaronjaaronj Posts: 1,595member
    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!
  • Reply 14 of 51
    mazda 3smazda 3s Posts: 1,539member
    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.
  • Reply 15 of 51
    dunksdunks Posts: 1,229member
    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.
  • Reply 16 of 51
    addaboxaddabox Posts: 12,660member
    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.
  • Reply 17 of 51
    addaboxaddabox Posts: 12,660member
    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.
  • Reply 18 of 51
    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...
  • Reply 19 of 51
    mazda 3smazda 3s Posts: 1,539member
    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
  • Reply 20 of 51
    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... :-)
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