In a curious move, AT&T has raised the subsidized price of its cheapest iPhone to $0.99, up from free.
When the iPhone 4S was announced in October, Apple specifically mentioned in its press release that the iPhone 4 and iPhone 3GS would be available in 8GB capacities for subsidized pricing of US$99 and for free, respectively.
During AT&T's Q3 2011 earnings call with analysts on October 20th, AT&T Mobility CEO Ralph de la Vega twice mentioned the iPhone 3GS's $0 price point, saying during the introductory remarks:
Our lower price plan continues to be a good entry point for many subscribers and now that we offer a free iPhone with a 2-year contract for the first time ever, the iPhone 3GS, we expect to broaden the smartphone base even more.
De la Vega again mentions the 3GS during question-and-answer portion:
I also mentioned in my notes that we have another device that I think is going to dramatically change those people that are on smartphones and quick messaging devices, the 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.
It is unclear why AT&T has elected to raise the price of the iPhone 3GS by a negligible but still notable amount a month and a half after it became free on contract, particularly given the fact that both Apple PR and AT&T Mobility's CEO had specifically touted the free nature of the device. In response to a request for comment on the price increase, AT&T declined to offer a specific reason:
iPhone 3GS is still available at an incredibly low price and we're confident consumers will agree that this remains one of the best deals for a leading smartphone.
For its part, Apple continues to offer the iPhone 3GS, subsidized on AT&T's network, for $0.00 on the Apple Online Store.
Update: MacRumors forum user Metcury46l had one possible explanation for the price change: I work at AT&T, this is being done to help prevent fraud as the 99 cents cannot be billed to your bill. It must be charged to a credit or bank issued debt card. Fraudsters are using stolen identities to steal these handsets ... been an issue since they went free.
(Image courtesy Flickr/MrVJTod)
Top Rated Comments
Believe it or not, marketing it as 99 cents gives the phone much more than a 99-cent value simply because it isn't free.
Anyone who sits and calculates how many THOUSANDS of dollars they will pay over a two year contract, and still decides to get an "old screen" 3G to save $98 bucks, instead of getting the immensely more functional 4 is an absolute idiot.
Isn't is it good for marketing purposes to be able to make the "free" claim? I won't pretend to be a marketing genius or anything but that seems like an odd move.
This is an outrage !!!!!!!!!
Math failure is unacceptable !!!!!!!!!!!