AT&T halves price of iPhone 3GS, adds fuel to fire
The Mac App Store may be garnering the oohs and aahs this morning, but please, let’s not forget about the iPhone. AT&T certainly hasn’t: the carrier announced on Thursday morning that it will begin selling the iPhone 3GS for just $49—less than half of its previous price—on Friday, January 7.
AT&T will continue to offer the iPhone 4 at its $199 and $299 price points—and Apple, for its part, is still selling the 8GB iPhone 3GS for $99. So what gives? It’s a little early in the year for a new iPhone to appear, so it’s not likely that this is about clearing inventory. And the post-holiday season seems like a strange time to launch such a big discount.
This aggressive pricing is the cheapest way to get an iPhone yet—and, to my mind, therein lies the answer. As always, AT&T is less concerned about the number of phones it sells then it is about locking users into two-year contracts—which, of course, the $49 iPhone 3GS deal requires. (It’s also worth pointing out that AT&T makes this deal available to both new customers and upgrade-eligible customers.) But why worry about that when there’s really nowhere else for would-be iPhone owners to go?
Well, there isn’t yet. But I think AT&T is cutting the price on the 3GS for the same reason that I believe the carrier extended its lowest upgrade pricing to more users when the iPhone 4 debuted last year: to try and stem a flood of departures should Apple make the iPhone available on another carrier.
By locking customers into two-year contracts, AT&T guarantees that it will continue to reap recurring revenue from subscribers who don’t want to pay the exorbitant early-termination fees to break their contracts. Keep in mind that Apple’s probably not charging AT&T any less for the iPhone 3GS units that it’s buying, so the discount is coming out of the network’s pocket.
While I’m not going to climb up on the rooftops and proclaim at the top of my lungs that a Verizon iPhone is imminent, this move by AT&T strikes me as yet another breadcrumb on the trail leading us to a future where the iPhone’s carrier-exclusivity is a thing of the past.