Right, but as you go lower in service price, profit goes down. It does not cost ATT, in any real marginal cost sense, $10 to provide 200 minutes of airtime. But if you go down to a lower level of service, you pay $20 less. So revenue goes down $20, and costs stay essentially the same for ATT, meaning that they make $20 less. Marginal cost of offering service on a cell network is essentially zero. It's all fixed and infrastructure costs, so a wireless provider has no reason to encourage those cheaper plans except for that nasty competition word.
Profit per customer goes down somewhat probably, but given that all of the providers offer smaller plans for lower monthly charges, they must be profitable, or they providers would not sell them. I certainly would not go nearly as far as to say that it costs AT&T the same to provide a customer with 400 calling minutes as it does for 200. Bandwidth costs, that's one of the things you are paying for.
If the numbers being tossed around are correct (and I think they're close at least), AT&T's cost for an iPhone is $600. They collect $200 from the customer upfront, and make up the balance over the course of the contract, about $17 month. If you're paying $80 a month, that means over $60 a month is bandwidth charges. If they cut the amount of bandwidth in half, they could probably lower the price to $50 and make about the same profit. They'd also get a lot more iPhone customers, some of whom may upgrade their service.
I certainly would not go nearly as far as to say that it costs AT&T the same to provide a customer with 400 calling minutes as it does for 200. Bandwidth costs, that's one of the things you are paying for.
If the numbers being tossed around are correct (and I think they're close at least), AT&T's cost for an iPhone is $600. They collect $200 from the customer upfront, and make up the balance over the course of the contract, about $17 month. If you're paying $80 a month, that means over $60 a month is bandwidth charges. If they cut the amount of bandwidth in half, they could probably lower the price to $50 and make about the same profit. They'd also get a lot more iPhone customers, some of whom may upgrade their service.
Not a chance. The marginal cost of delivering 100 minutes of service to a customer is essentially zero. All the costs are in paying the customer support, building the towers, marketing, etc. NONE of those expenses rise even a penny when one customer goes from a 400 minute plan to a 500 minute plan. All the costs in this business are fixed.
Yes AT&T also offers other phones that are free with cheaper terms than the iPhone. The question is what other carrier offers a real iPhone competitor at a cheaper rate?
That may be a good question, but I don't think it's "the" question. If Apple is hitting a wall on iPhone adoption they may (along with AT&T) need to find another approach. Some believe lower handset prices will make a big difference. I tend to believe that rate plans tailored to the needs of a wider variety of users would be a more successful strategy.
What I'd really like to see is a family data plan. The incremental cost of owning multiple iPhones is too high, and is exactly why my son has one and not me or my wife.
Not a chance. The marginal cost of delivering 100 minutes of service to a customer is essentially zero. All the costs are in paying the customer support, building the towers, marketing, etc. NONE of those expenses rise even a penny when one customer goes from a 400 minute plan to a 500 minute plan. All the costs in this business are fixed.
What is the marginal cost of delivering 100 minutes of service to 10 million customers?
Not a chance. The marginal cost of delivering 100 minutes of service to a customer is essentially zero. All the costs are in paying the customer support, building the towers, marketing, etc. NONE of those expenses rise even a penny when one customer goes from a 400 minute plan to a 500 minute plan. All the costs in this business are fixed.
So why do providers already offer smaller plans at lower monthly charges, if the cost of providing the service is virtually the same? According to your logic, there's not a chance they'd do what they already do.
Apple and AT&T have not hit a wall on iPhone sales. Sales are up over 100% from last year. This story is just pure speculation from a financial analyst.
Quote:
Originally Posted by Dr Millmoss
That may be a good question, but I don't think it's "the" question. If Apple is hitting a wall on iPhone adoption they may (along with AT&T) need to find another approach. Some believe lower handset prices will make a big difference. I tend to believe that rate plans tailored to the needs of a wider variety of users would be a more successful strategy.
What I'd really like to see is a family data plan. The incremental cost of owning multiple iPhones is too high, and is exactly why my son has one and not me or my wife.
It isn't much savings at all. I save $10/month for the family plan with two iPhone 3Gs. The second line is $10 but each has a data plan charge.
Apple and AT&T have not hit a wall on iPhone sales. Sales are up over 100% from last year. This story is just pure speculation from a financial analyst.
The key word in my post being "if."
That being said, it seems obvious to me that having only one rate plan for the iPhone limits customer appeal. That's why I don't own an iPhone, and I have a feeling I'm not alone.
That being said, it seems obvious to me that having only one rate plan for the iPhone limits customer appeal. That's why I don't own an iPhone, and I have a feeling I'm not alone.
Yes, it does, as does being on only one carrier and having only one style of phone. But there are reasons for them. You don't have to like the reasons but they exist for a reason. Their has been plenty of speculation that AT&T will be offering more rte plans, but you still won't be able to pick and choose the exact number of minutes and kilobytes you wish to pay for.
Guess what? You are wrong. I live in Ann Arbor Michigan. I have an iPhone. I have it unlocked. It runs on T-Mobile. I don't have a data plan. I use Wi-Fi. Compared to my friend's AT&T iPhone it has better reception as well.
Further, I want a smart phone and am willing to pay for a smart phone (as I already did). What I don't want is to be tethered to an overpriced data plan that I don't want or need. You seem to think that having a smartphone requires a data plan. Sorry, it doesn't as I am proof.
My post was making the point if AT&T (and other companies) want to grow their base they will need more flexible pricing plans. Not everybody follows the herd and is willing to be overcharged for unneeded services.
Quote:
Originally Posted by chadisawesome
guess what you don't have? a smartphone with t-mobile. if you did, they would force you to pay for a data plan too. You can't buy a blackberry or a windows mobile phone, or even a sidekick without a dataplan. AT&T will gladly sell you a $20 phone to get you on a contract for 2 years without requiring a dataplan. Unfortunately you want a smart phone, but you want to continue to pay regular phone pricing.
When/If the iPhone comes to t-Mobile, Verizon, or Sprint, and the customers are told they will need to upgrade their plan to one that includes data just like they do on AT&T what will you complain about then?
Does it suck? Yes. But it's the way it is. Don't lie to yourself and say that your RAZR phone monthly bill will stay the same if t-Mobile offered the iPhone... and if you think it will, go into t-Mobile and tell them you want a blackberry, but you don't want a dataplan... let me know how far that gets you.
but you paid double for the actual phone than 3G buyers paid.
first gen iphone people tend to leave out that nugget of info when complaining about costs of the new plan.
so over two years of you using the first gen phone, for $10 less a month, I saved $200 on the initial cost of the phone. end of the day, over 2 years, the difference is only $40. so you are complaining about $40 over 2 years, or less then 2 bucks a month to have the newer phone...
Well I only pay $55/mo with unlimited data and my iPhone was only $500 (with the $100 gift card from Apple). So over 2yrs mine cost me $1,820. Thats a little more than what 1 iPhone costs for ONE year I believe. Plus I'm not stuck with a contract.
Yes, it does, as does being on only one carrier and having only one style of phone. But there are reasons for them. You don't have to like the reasons but they exist for a reason. Their has been plenty of speculation that AT&T will be offering more rte plans, but you still won't be able to pick and choose the exact number of minutes and kilobytes you wish to pay for.
Since I'm not looking to choose the "exact number," maybe they will offer a rate plan that makes sense for me, given that the current one doesn't. Still possible, don't you think?
Well I only pay $55/mo with unlimited data and my iPhone was only $500 (with the $100 gift card from Apple). So over 2yrs mine cost me $1,820. Thats a little more than what 1 iPhone costs for ONE year I believe. Plus I'm not stuck with a contract.
The iPhone 3G on AT&T is $1855 over two years at $69/month for service and $199 for the handset.
Since I'm not looking to choose the "exact number," maybe they will offer a rate plan that makes sense for me, given that the current one doesn't. Still possible, don't you think?
It would be nice if they offered like 3 different plans. I think it would make the phone more appealing to others. Especially people with teenagers, or have low(er) incomes.
The iPhone 3G on AT&T is $1855 over two years at $69/month for service and $199 for the handset.
($69 x 24) + $199 = $1,855
Ok...true. I was thinking their plans were $69 plus the cost of the data. However, I still will NOT pay for something I cannot get. I don't care if it doesn't add up. Just because I'm upgrading a phone doesn't mean it can't be cheaper over time.
Guess what? You are wrong. I live in Ann Arbor Michigan. I have an iPhone. I have it unlocked. It runs on T-Mobile. I don't have a data.
This isn't exactly a straight forward option. You have to make some compromises that other people won't be willing to make. You either have to buy an iPhone at full price or buy a used iPhone. You will not have a warranty or any official support. Without data you cannot use many of the iPhone's features anytime you choose.
Quote:
My post was making the point if AT&T (and other companies) want to grow their base they will need more flexible pricing plans. Not everybody follows the herd and is willing to be overcharged for unneeded services.
I'm not sure what you mean by this AT&T and Verizon are the two most expensive and fastest growing carriers. They aren't too concerned with the need for more flexible pricing.
Ok...true. I was thinking their plans were $69 plus the cost of the data. However, I still will NOT pay for something I cannot get. I don't care if it doesn't add up. Just because I'm upgrading a phone doesn't mean it can't be cheaper over time.
If you can't use AT&T 3G in your area then it would be pretty pointless, unless you really want the GPS, but that is just this current iPhone. The next one looks to me a major jump in HW. Besides having faster WCDMA it will have a faster CPU, more RAM, higher resolution display and other HW changes. At least, that is how it looks at this point.
So why do providers already offer smaller plans at lower monthly charges, if the cost of providing the service is virtually the same? According to your logic, there's not a chance they'd do what they already do.
Competitive challenges and market segmentation demand it.
Ok...true. I was thinking their plans were $69 plus the cost of the data. However, I still will NOT pay for something I cannot get. I don't care if it doesn't add up. Just because I'm upgrading a phone doesn't mean it can't be cheaper over time.
How stupid. So you're willing to pay the exact same amount after going through all this trouble to unlock your phone, just because you'd be paying for something you can't get.
It's like you go to McDonalds and a Big Mac and fries cost $4, or you can get a big mac, fries, and a free cab ride to NYC if you ever need it. But no, because you don't want to go to NYC, you're trashing the latter deal as a bad deal. Duh!
Comments
Right, but as you go lower in service price, profit goes down. It does not cost ATT, in any real marginal cost sense, $10 to provide 200 minutes of airtime. But if you go down to a lower level of service, you pay $20 less. So revenue goes down $20, and costs stay essentially the same for ATT, meaning that they make $20 less. Marginal cost of offering service on a cell network is essentially zero. It's all fixed and infrastructure costs, so a wireless provider has no reason to encourage those cheaper plans except for that nasty competition word.
Profit per customer goes down somewhat probably, but given that all of the providers offer smaller plans for lower monthly charges, they must be profitable, or they providers would not sell them. I certainly would not go nearly as far as to say that it costs AT&T the same to provide a customer with 400 calling minutes as it does for 200. Bandwidth costs, that's one of the things you are paying for.
If the numbers being tossed around are correct (and I think they're close at least), AT&T's cost for an iPhone is $600. They collect $200 from the customer upfront, and make up the balance over the course of the contract, about $17 month. If you're paying $80 a month, that means over $60 a month is bandwidth charges. If they cut the amount of bandwidth in half, they could probably lower the price to $50 and make about the same profit. They'd also get a lot more iPhone customers, some of whom may upgrade their service.
I certainly would not go nearly as far as to say that it costs AT&T the same to provide a customer with 400 calling minutes as it does for 200. Bandwidth costs, that's one of the things you are paying for.
If the numbers being tossed around are correct (and I think they're close at least), AT&T's cost for an iPhone is $600. They collect $200 from the customer upfront, and make up the balance over the course of the contract, about $17 month. If you're paying $80 a month, that means over $60 a month is bandwidth charges. If they cut the amount of bandwidth in half, they could probably lower the price to $50 and make about the same profit. They'd also get a lot more iPhone customers, some of whom may upgrade their service.
Not a chance. The marginal cost of delivering 100 minutes of service to a customer is essentially zero. All the costs are in paying the customer support, building the towers, marketing, etc. NONE of those expenses rise even a penny when one customer goes from a 400 minute plan to a 500 minute plan. All the costs in this business are fixed.
Yes AT&T also offers other phones that are free with cheaper terms than the iPhone. The question is what other carrier offers a real iPhone competitor at a cheaper rate?
That may be a good question, but I don't think it's "the" question. If Apple is hitting a wall on iPhone adoption they may (along with AT&T) need to find another approach. Some believe lower handset prices will make a big difference. I tend to believe that rate plans tailored to the needs of a wider variety of users would be a more successful strategy.
Not a chance. The marginal cost of delivering 100 minutes of service to a customer is essentially zero. All the costs are in paying the customer support, building the towers, marketing, etc. NONE of those expenses rise even a penny when one customer goes from a 400 minute plan to a 500 minute plan. All the costs in this business are fixed.
What is the marginal cost of delivering 100 minutes of service to 10 million customers?
Not a chance. The marginal cost of delivering 100 minutes of service to a customer is essentially zero. All the costs are in paying the customer support, building the towers, marketing, etc. NONE of those expenses rise even a penny when one customer goes from a 400 minute plan to a 500 minute plan. All the costs in this business are fixed.
So why do providers already offer smaller plans at lower monthly charges, if the cost of providing the service is virtually the same? According to your logic, there's not a chance they'd do what they already do.
That may be a good question, but I don't think it's "the" question. If Apple is hitting a wall on iPhone adoption they may (along with AT&T) need to find another approach. Some believe lower handset prices will make a big difference. I tend to believe that rate plans tailored to the needs of a wider variety of users would be a more successful strategy.
What I'd really like to see is a family data plan. The incremental cost of owning multiple iPhones is too high, and is exactly why my son has one and not me or my wife.
It isn't much savings at all. I save $10/month for the family plan with two iPhone 3Gs. The second line is $10 but each has a data plan charge.
Apple and AT&T have not hit a wall on iPhone sales. Sales are up over 100% from last year. This story is just pure speculation from a financial analyst.
The key word in my post being "if."
That being said, it seems obvious to me that having only one rate plan for the iPhone limits customer appeal. That's why I don't own an iPhone, and I have a feeling I'm not alone.
The key word in my post being "if."
That being said, it seems obvious to me that having only one rate plan for the iPhone limits customer appeal. That's why I don't own an iPhone, and I have a feeling I'm not alone.
Yes, it does, as does being on only one carrier and having only one style of phone. But there are reasons for them. You don't have to like the reasons but they exist for a reason. Their has been plenty of speculation that AT&T will be offering more rte plans, but you still won't be able to pick and choose the exact number of minutes and kilobytes you wish to pay for.
Further, I want a smart phone and am willing to pay for a smart phone (as I already did). What I don't want is to be tethered to an overpriced data plan that I don't want or need. You seem to think that having a smartphone requires a data plan. Sorry, it doesn't as I am proof.
My post was making the point if AT&T (and other companies) want to grow their base they will need more flexible pricing plans. Not everybody follows the herd and is willing to be overcharged for unneeded services.
guess what you don't have? a smartphone with t-mobile. if you did, they would force you to pay for a data plan too. You can't buy a blackberry or a windows mobile phone, or even a sidekick without a dataplan. AT&T will gladly sell you a $20 phone to get you on a contract for 2 years without requiring a dataplan. Unfortunately you want a smart phone, but you want to continue to pay regular phone pricing.
When/If the iPhone comes to t-Mobile, Verizon, or Sprint, and the customers are told they will need to upgrade their plan to one that includes data just like they do on AT&T what will you complain about then?
Does it suck? Yes. But it's the way it is. Don't lie to yourself and say that your RAZR phone monthly bill will stay the same if t-Mobile offered the iPhone... and if you think it will, go into t-Mobile and tell them you want a blackberry, but you don't want a dataplan... let me know how far that gets you.
but you paid double for the actual phone than 3G buyers paid.
first gen iphone people tend to leave out that nugget of info when complaining about costs of the new plan.
so over two years of you using the first gen phone, for $10 less a month, I saved $200 on the initial cost of the phone. end of the day, over 2 years, the difference is only $40. so you are complaining about $40 over 2 years, or less then 2 bucks a month to have the newer phone...
Well I only pay $55/mo with unlimited data and my iPhone was only $500 (with the $100 gift card from Apple). So over 2yrs mine cost me $1,820. Thats a little more than what 1 iPhone costs for ONE year I believe. Plus I'm not stuck with a contract.
Yes, it does, as does being on only one carrier and having only one style of phone. But there are reasons for them. You don't have to like the reasons but they exist for a reason. Their has been plenty of speculation that AT&T will be offering more rte plans, but you still won't be able to pick and choose the exact number of minutes and kilobytes you wish to pay for.
Since I'm not looking to choose the "exact number," maybe they will offer a rate plan that makes sense for me, given that the current one doesn't. Still possible, don't you think?
Well I only pay $55/mo with unlimited data and my iPhone was only $500 (with the $100 gift card from Apple). So over 2yrs mine cost me $1,820. Thats a little more than what 1 iPhone costs for ONE year I believe. Plus I'm not stuck with a contract.
The iPhone 3G on AT&T is $1855 over two years at $69/month for service and $199 for the handset.
($69 x 24) + $199 = $1,855
Since I'm not looking to choose the "exact number," maybe they will offer a rate plan that makes sense for me, given that the current one doesn't. Still possible, don't you think?
It would be nice if they offered like 3 different plans. I think it would make the phone more appealing to others. Especially people with teenagers, or have low(er) incomes.
The iPhone 3G on AT&T is $1855 over two years at $69/month for service and $199 for the handset.
($69 x 24) + $199 = $1,855
Ok...true. I was thinking their plans were $69 plus the cost of the data. However, I still will NOT pay for something I cannot get. I don't care if it doesn't add up. Just because I'm upgrading a phone doesn't mean it can't be cheaper over time.
Guess what? You are wrong. I live in Ann Arbor Michigan. I have an iPhone. I have it unlocked. It runs on T-Mobile. I don't have a data.
This isn't exactly a straight forward option. You have to make some compromises that other people won't be willing to make. You either have to buy an iPhone at full price or buy a used iPhone. You will not have a warranty or any official support. Without data you cannot use many of the iPhone's features anytime you choose.
My post was making the point if AT&T (and other companies) want to grow their base they will need more flexible pricing plans. Not everybody follows the herd and is willing to be overcharged for unneeded services.
I'm not sure what you mean by this AT&T and Verizon are the two most expensive and fastest growing carriers. They aren't too concerned with the need for more flexible pricing.
Ok...true. I was thinking their plans were $69 plus the cost of the data. However, I still will NOT pay for something I cannot get. I don't care if it doesn't add up. Just because I'm upgrading a phone doesn't mean it can't be cheaper over time.
If you can't use AT&T 3G in your area then it would be pretty pointless, unless you really want the GPS, but that is just this current iPhone. The next one looks to me a major jump in HW. Besides having faster WCDMA it will have a faster CPU, more RAM, higher resolution display and other HW changes. At least, that is how it looks at this point.
So why do providers already offer smaller plans at lower monthly charges, if the cost of providing the service is virtually the same? According to your logic, there's not a chance they'd do what they already do.
Competitive challenges and market segmentation demand it.
Ok...true. I was thinking their plans were $69 plus the cost of the data. However, I still will NOT pay for something I cannot get. I don't care if it doesn't add up. Just because I'm upgrading a phone doesn't mean it can't be cheaper over time.
How stupid. So you're willing to pay the exact same amount after going through all this trouble to unlock your phone, just because you'd be paying for something you can't get.
It's like you go to McDonalds and a Big Mac and fries cost $4, or you can get a big mac, fries, and a free cab ride to NYC if you ever need it. But no, because you don't want to go to NYC, you're trashing the latter deal as a bad deal. Duh!