AT&T (Cingular) mulling iPhone price tweaks, survey reveals

Posted:
in iPod + iTunes + AppleTV edited January 2014
While Apple has strong-armed wireless heavyweight AT&T for much of their iPhone deal, the subject of pricing in the carrier's go-to-market strategy may still be up in the air, recent discoveries show.



The Wall Street Journal on Saturday published an exhaustive investigation of the iPhone's tumultuous development cycle that exposed the sheer amount of control Apple wielded over the whole affair -- including the touchy subject of prices.



Even though Apple's partner AT&T (recently known as Cingular) has been adamant in the past that it had "bent" the Cupertino firm to its will by signing a multi-year exclusive deal, the Journal's Amol Sharma revealed that the latter had squeezed an immense number of concessions from AT&T, which normally holds all the cards in its negotiations. Some of these are by now legendary, such as the near-total absence of carrier branding and the insistence that the iPhone only sell in the controlled environments of Apple and AT&T retail stores.



Standing out among the claims in the report, however, was the apparent confirmation of a revenue-sharing plan. Apple would snatch a part of the monthly subscription fees for every iPhone sold, Sharma said. This contrasts sharply with the profit-taking deals for other cellphone makers, which often end as soon as their devices reach a customer's hands. Verizon was known to have turned down a similar offer before the AT&T deal had been struck.



The agreement undoubtedly skewed the pricing arrangement in favor of Apple, guaranteeing a steady cash flow from every iPhone buyer that passes through AT&T's doors. What's less than certain is Apple's influence over the final sticker price, according to a PineCone Research survey leaked online.



ATT/Cingular iPhone pricing survey | Source: PineCone Research.



Discovered (and later pulled) by Apple iPhone Review, the now authenticated study showed a sample ad that deliberately lowered prices to gauge customer reactions to different price levels. Surprisingly, the two-year contract prices in the mockup fell to $299 and $399 for the 4GB and 8GB models respectively -- a precipitous $200 drop from the figures given by Apple at the Macworld keynote in January. Calling and data rates were unchanged.



Although far from a confirmation of a new strategy, the leak has uncovered AT&T's willingness to toy with the pricing of what will almost certainly be a cash cow for the provider. It also calls into question the pricing scheme floated by PiperJaffray analyst Mike Wakley, who suggested last month that the carrier wouldn't subsidize the initial cost to protect the iPhone designer's premium reputation.



It remains to be seen what part, if any, Apple has played in the test pricing.
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Comments

  • Reply 1 of 149
    kolchakkolchak Posts: 1,398member
    $299 would be a lot more tempting. Except it's still friggin' AT&T. I hate them so much I don't think I'd buy it if it was less than $100.
  • Reply 2 of 149
    Does apple want to force people to get $40 + data planes with the Iphone?
  • Reply 3 of 149
    [email protected] thinking that Cingular won't get their money...one way or another. Apple maybe getting a bigger cut, but rest assured that those cuts will be made up for by us, the loyal Apple fans. As the poster above said, the data plan will be high, or they'll find a way to nickle and dime us one way or another.\
  • Reply 4 of 149
    melgrossmelgross Posts: 31,258member
    iPhone sales are far more critical for Apple than for AT&T.



    AT&Tis doing just fine without it, though the intention is to try to gain more customers with it.



    If it doesn't sell well, Apple will be screwed. That's the problem when you make something like this the certerpiece of your company, as Apple has done right noe, to the exclusion of almost everything else.



    It MUST succeed.



    Whatever AT&T does, should be fine, as long as it sells phones for Apple.



    Some people decry AT&T's service. That's fine,



    But, remember that even the worst cell service has only a few percent of its customers who are not happy.
  • Reply 5 of 149
    melgrossmelgross Posts: 31,258member
    Quote:
    Originally Posted by Joe_the_dragon View Post


    Does apple want to force people to get $40 + data planes with the Iphone?



    Without a data plan, few phones these days can be used to their potential.



    How do you expect to get onto the internet, or get email, without a data plan?
  • Reply 6 of 149
    awalawal Posts: 66member
    Quote:
    Originally Posted by melgross View Post


    Without a data plan, few phones these days can be used to their potential.



    How do you expect to get onto the internet, or get email, without a data plan?



    doesn't the iPhone have a wireless card? In which case you wouldn't necessarily need a data plan.
  • Reply 7 of 149
    I am quite skeptical of this report....... I guess we have to wait a few more months to see how it all shakes out.



    Btw, while I agree that iPhone is more important to Apple than ATT, that is perhaps only in the short run. Service providers such as ATT (formerly Cingular) have to be looking to where their future growth opportunities are -- and that is from the next generation of phones such as iPhone that offer much more than voice. They need products such as these to radically expand their own cash flows. While the traditional voice plans have been cash cows, they have been almost zero-growth cash cows. Monthly revenues per subscriber have barely gone up during the past few years (e.g., Cingular's stock price -- now rechristened ATT -- is basically only where it was over five years ago). Also, they are all stuck with major capex commitments they have made (and are continuing to make) in broadband.



    I think that, before long, the Verizons, etc will also seek to enter this market aggressively (e.g., with LG or Samsung), but where ATT will have the significant edge will be in the software, and that is thanks to Apple. Not one mobile phone provider has so far been able to get its software to work well for non-voice applications (and even in voice, they regularly frustrate their customers): In the longer run, ATT is getting so much more than just voice and data plan revenues from this deal.
  • Reply 8 of 149
    melgrossmelgross Posts: 31,258member
    Quote:
    Originally Posted by AWAL View Post


    doesn't the iPhone have a wireless card? In which case you wouldn't necessarily need a data plan.



    It doesn't have a wireless card, it has WiFi built-in.



    That is no guarantee that that it will be usable to get onto data services. There are ways of limiting this. It could be tied to AT&T's services. We don't know yet.



    Remember that there are ways to limit just what you use the WiFi connection for, as well as the other phone based data services.



    An example is the question of why can't anyone who has an internet enabled smartphone go to iTunes and buy tunes?



    Why can't a data service phone be used as a model for your laptop?



    Why does the cell provider have to agree to that?



    Why can't the Zune go onto the internet? Could someone write a browser for it?



    I know that some people assume that this can be done with the iPhone, but I'm not so sure at this time. Neither Apple, or AT&T, has been clear on this.



    I'm not saying that it can't be done either. But, it's not a done deal.



    If one doesn't have a data plan from AT&T (though it might be required when getting the iPhone, I didn't look at AT&T's site plan for this.), or one discontinues the service, the WiFi could be effectively disabled in software, or its functions limited. It can be done.



    Would it be? No one here can know that now, no matter what they may say.
  • Reply 9 of 149
    melgrossmelgross Posts: 31,258member
    Quote:
    Originally Posted by anantksundaram View Post


    I am quite skeptical of this report....... I guess we have to wait a few more months to see how it all shakes out.



    Btw, while I agree that iPhone is more important to Apple than ATT, that is perhaps only in the short run. Service providers such as ATT (formerly Cingular) have to be looking to where their future growth opportunities are -- and that is from the next generation of phones such as iPhone that offer much more than voice. They need products such as these to radically expand their own cash flows. While the traditional voice plans have been cash cows, they have been almost zero-growth cash cows. Monthly revenues per subscriber have barely gone up during the past few years (e.g., Cingular's stock price -- now rechristened ATT -- is basically only where it was over five years ago). Also, they are all stuck with major capex commitments they have made (and are continuing to make) in broadband.



    I think that, before long, the Verizons, etc will also seek to enter this market aggressively (e.g., with LG or Samsung), but where ATT will have the significant edge will be in the software, and that is thanks to Apple. Not one mobile phone provider has so far been able to get its software to work well for non-voice applications (and even in voice, they regularly frustrate their customers): In the longer run, ATT is getting so much more than just voice and data plan revenues from this deal.



    You know the old story about MS's products: They aren't always "good", but they are "good enough".



    This is the problem Apple always has. So, the iPhone MAY be in advance of other products, in some ways, but for how long?



    Thwere are several other phones with screens just as large that have now come out. Some with lower rez, but other with the same Rez. Their screens can be upgraded.



    Others have touchscreens, one with feedback, which Apple doesn't have.



    How many of these phones will be "good enough"?



    How many people buy copies of clothing, watches, and other goods? Plenty.



    I also see some kids buying Zune's because they are NOT Apple products.



    Apple has a headstart, but they need to keep moving forward quickly, or they will find their sales impacted by others.



    Apple has made a mistake, for example, by not also having a secure mail service, instead of just going with Yahoo. Most people who need the kind of mail that Blackberry offers, and now Apple and AT&T will be offering, are corporate. Apple has locked itself out of that entire market.



    By not having 3G, Apple has caused itself problems as well. The excuse Jobs gave was very lame. Hopefully, the finished unit being tested by the FCC will include it, though it will be more expensive.
  • Reply 10 of 149
    Im still locked in with Sprint a little while, unless someone knows how to get out of their contracts
  • Reply 11 of 149
    irelandireland Posts: 17,491member
    Quote:
    Originally Posted by Matthew Yohe View Post


    Im still locked in with Sprint a little while, unless someone knows how to get out of their contracts



    Until when?
  • Reply 12 of 149
    melgrossmelgross Posts: 31,258member
    Quote:
    Originally Posted by Matthew Yohe View Post


    Im still locked in with Sprint a little while, unless someone knows how to get out of their contracts



    I'm also with Sprint. with my Treo 700p, I'm in no rush to leave.



    Why don't you wait until this phone is out, has been in people's hands for a while, and you can properly evaluate it, before you think of jumping?
  • Reply 13 of 149
    Will you be able to purchase the iPhone without signing up for service, i.e., to just use the iPod? Not interested in going with ATT cellular service as I'm happy with my T-mobile service. While I know the phone and related data services will not work, I just would like to have the device for the iPod features and any others that dont require phone connectivity. Any word on whether they will allow you to purchase and whether the price will be jacked up even higher than the current advertisement?
  • Reply 14 of 149
    melgrossmelgross Posts: 31,258member
    Quote:
    Originally Posted by aveRex View Post


    Will you be able to purchase the iPhone without signing up for service, i.e., to just use the iPod? Not interested in going with ATT cellular service as I'm happy with my T-mobile service. While I know the phone and related data services will not work, I just would like to have the device for the iPod features and any others that dont require phone connectivity. Any word on whether they will allow you to purchase and whether the price will be jacked up even higher than the current advertisement?



    As far as we know now, no.



    If you just want the iPod features then this is a lousy purchase.



    Why don't you wait to see what Apple does about incorporating the non-phone features into later iPods?
  • Reply 15 of 149
    jeffdmjeffdm Posts: 12,946member
    I can possibly see myself jumping for those prices, even though I don't need a PDA yet, my current one is still fine.



    I can see the originally given prices prevailing for several months, to soak the early adopters, with a couple reductions staggered every three or so months. I think the original large iPod Photo went for $550 or $600, and its price was dropped a couple times to $500 and then $400, with a few months between.



    The image could be completely fake, made by anyone, even Cingular, as a ruse to convince Apple to capitulate on some things, or by others in a campaign to deflate the hype and interest in the device. I really don't think that the Cingular name will appear anywhere on a real ad once the device is released.
  • Reply 16 of 149
    Quote:
    Originally Posted by JeffDM View Post


    I really don't think that the Cingular name will appear anywhere on a real ad once the device is released.



    And why would that be? I can't imagine Cingular/ATT not being displayed prominently in advertising. Steve just doesn't want the name on the case, is will be in the software and wherever else will sell them...
  • Reply 17 of 149
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by artse View Post


    And why would that be? I can't imagine Cingular/ATT not being displayed prominently in advertising.



    I get the impression that the Cingular name is going away, that's why. The ATT name would be what I would think it would be when it goes live.



    Quote:

    Steve just doesn't want the name on the case, is will be in the software and wherever else will sell them...



    I don't know what Steve really wants regarding the branding, but Cingular's name is currently on the case on Apple's current prototypes. It is on the bezel, on the upper left corner.
  • Reply 18 of 149
    chuckerchucker Posts: 5,089member
    Quote:
    Originally Posted by JeffDM View Post


    I don't know what Steve really wants regarding the branding, but Cingular's name is currently on the case on Apple's current prototypes. It is on the bezel, on the upper left corner.



    It is in the UI's top left, though. So that's where "AT&T" will be. The Cingular brand is dead, yep.
  • Reply 19 of 149
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by Chucker View Post


    It is in the UI's top left, though. So that's where "AT&T" will be. The Cingular brand is dead, yep.



    Oops, you are right, I had misinterpreted the image that I looked at some time ago. I'm not sure what it will look like, I'm thinking the "Death Star" swirl logo will probably be there.
  • Reply 20 of 149
    Quote:
    Originally Posted by melgross View Post




    By not having 3G, Apple has caused itself problems as well. The excuse Jobs gave was very lame. Hopefully, the finished unit being tested by the FCC will include it, though it will be more expensive.



    And say bye bye to any battery time the phone had? I think not, unless El Jobso have made some major innovation in the battery business. But perhaps they counted on 3G being in the phone when they calculated battery time.



    Anyway, least dropped calls? I never had a dropped call over here, unless you somehow find yourself in an area completely without coverage. What gives?
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