Irate iPhone owners still complaining

The din of frustrated iPhone users still hasn't died down, as new-phone lust overtakes common sense. Many people still don't seem to comprehend that they got their original iPhone 3G at a lower price because the phone company was subsidizing the hardware costs. This means that the phone company expects to get that subsidy back over the life of the contracts. No rational company is going to just give away money (shareholders have a very dim view of this, as you might expect). Just because there's a newer tech toy than the one in your pocket right now does not entitle you to walk away from a contract you signed only a year ago, without paying back the phone company's subsidy (plus profit).

Seth Weintraub tries to explain the situation again to folks who don't want to be told:

Let's get one thing straight before I defend AT&T. I think their service is poor and their voice plans are over-priced. Their telephone support is awful as well.

That being said, all of this pooh poohing about the iPhone 3GS upgrade pricing is just silly. AT&T is charging those who've had their contract less than a year (most iPhone 3G users) a $200 fee for upgrading to the new 3GS. That is on top of the iPhone 3GS's $199-$299 price tag.

The iPhone is a subsidy sale. AT&T's prices reflect the costs they have to pay Apple every month to sell the iPhone.

AT&T's price on an iPhone is probably close to $600 (Retail is $700-800, AT&T probably gets $100 off in bulk). Apple sells it to you for $200 and foots AT&T with the bill for the rest. That $400 is broken out over 24 months that you're obligated to pay for your iPhone. Without getting too fancy with interest and amortization tables, that's around $200/year of your bill going toward the purchase price of the iPhone. This is part of the contract you agree to when you buy an iPhone.

I find it amazing just how upset and hurt the folks on the various iPhone mailing lists seem to be that they can't just swap their phones for the newest model without paying the up-front costs. Entitlement mentality, writ very small.