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In a conference call with analysts this afternoon, Ralph de la Vega, President and CEO of AT&T Mobility discussed the impact of the recent price drop on older-generation iPhones, particularly the iPhone 3GS. That phone is the first iPhone be offered free with 2-year contract in the U.S.
We have another device that I think is going to dramatically change those people that are on smartphones and quick messaging devices, the [iPhone] 3GS, which is free with a 2-year contract. We've seen a tremendous, tremendous demand for that device even though it's a generation old. And actually, we're getting more new subscribers coming on the 3GS on the average than other devices. So we also have an inventory sold out on that device.
De la Vega also noted that AT&T, like Apple, had slightly slower numbers this quarter as a result of the next-generation iPhone launching in the fourth calendar quarter versus the third. He expects AT&T's numbers to surge in the holiday quarter with the launch of the iPhone 4S, saying the company was "very, very optimistic on what the fourth quarter is going to look like in terms of smartphone growth."
Top Rated Comments
Isn't it two generations old?
iPhone 4S=last/current generation
iPhone 4=1 generation old
iPhone 3GS=2 generations old
Free + $1680 over the two year contract for the cheapest voice+data plans.
Chip in an extra $100 or $200 to get a 4 or 4S.
But then most people never calculate how much that 2 year contract costs them for their 'free' phone. :)
This is really going to cause nightmares for Google and their partners as not only is this a "Free" phone but it also runs the latest iOS 5 unlike a lot of android phones out there which will never receive an update from the handset maker.
@ChrisA: You might want to not call people stupid if you don't realize that you are going to pay the same for the service whether you are on a contract or not and whether you receive a subsidized phone or not. Hardware upgrades are a loss leader for carriers to get you to sign up for a contract. Contracts give some kind of guarantee that you will continue using their service months down the road.
You can sometimes negotiate what is called a "retention" plan after your original contract is up but that usually does not give you access to a subsidized phone but just gives you a lower rate.
Some people don't care. They are enamored by the "free"-ness of it. I'm actually curious as to the number of Android devices which were just free or almost free. I have heard of some people getting them because they're "like an iPhone but cheaper."
Free is free. These people have monthly contracts already. They will be paying monthly regardless of the next phone they get.
Before they had to pay an extra $99 to get and iPhone, now they don't. The monthly fee is a constant.
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