Gizmodo to AT&T Upgrade "Whiners": You Got Your Subsidy Last Year


AT&T and other carriers subsidize the upfront cost of the iPhone and other smartphones and make up the difference via guaranteed long term contracts/commitments. That's their business model, but it means they can't and won't give repeated subsidies until you've finished the associated contract terms. With many iPhone 3G owners -- still under contract -- eyeing the iPhone 3G S, and the non-subsidized price it brings with it, a fair amount of anger has been plasma-cannoned in AT&T's monstrous direction.

Gizmodo's Jesus Diaz, however, gives a nasty spoonful of reality medicine to those of us who bought heavily subsidized iPhones last year, and are upset we can't get the same subsidy again this year:

The fact is that the $199/$299 price tag for the iPhone is the result of AT&T's—or any other carrier, since the situation is the same all around the world—subsidy. Without subsidy—and tying you to a new two year contract—the iPhone is not different from something like the Nokia N97, which is $700 unlocked. Or the contract-free, unsubsidized iPhone 3G itself: The iPhone 3G costs $770 and $877 unlocked for the 8 and 16GB versions.

He goes on to kick the telcos heartily in their nether-regions as well, pointing out their exorbitant monthly charges, but takes issue with the sense of "entitlement" in modern consumer culture.

If you don't like it? His advice is to not buy the new iPhone 3G S and wait until next year when you can get a subsidy.

(I'm locked into a 3 year contract which currently has an early termination fee of ~$500, so I feel that pain...)

And in the mean time?

do the rest of the world a favor and stop whining about what you are entitled to. We don't live in your pretty me me me ME world.

NB: Delayed MMS deployment and lack of anything approaching information on tethering, however -- totally AT&T hate worthy...


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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Gizmodo to AT&T Upgrade "Whiners": You Got Your Subsidy Last Year


THANK YOU JESUS both GOD and the writer!!! IT's about time the incessant whining and bitching after this keynote has been nauseating at best!! The phones the same, we didnt get enough, not what we wanted, why cant we pay the 199 whaaa whaa whhaaa

Gizmodo is garbage. It amazes me that anyone reads the crap that jesus or any of their awful writers post

I never got any subsidy. I bought my iphone initially when they first came out two years ago in june. I camped out overnight in El Paso, Texas. I was not able to buy insurance on the first phone. last year i purchased two iphones at full price, 599, as gifts for my cousin and my brother, for xmas and in may. I later had my iphone stolen last year in october and had no help online in tracking it and the police and walmart were no help along with apple. I also have a macbook pro. My contract ends this month with at&t and I will probably have to pay for another iphone again at an increased price. I was never able to get insurance on my first phone. I never got any subsidies but I sure had some high phone bills.

I'm so glad I didn't get a 3g last summer over my 1st gen 8gb. Worked out perfectly for me since I'm only 15 months into my contract but because I have the first gen iPhone I'm getting the $199/$299 prices. It will be like a whole new phone for me since I've never experienced 3g speeds. But come next year I won't be able to get the iPhone 4g hd 64gb at a low price but I won't whine about it.

Its Star Wars Theme time!
I hope you didn't let that one guy stampede you into re-doing all your artwork.
Still, nice change.

This issue is likely going to be exactly the same next year if Apple continues their annual "upgrades." It is also why I might just stick with my 2G for another year (if it holds up) since I expect the next step to really be a new model as opposed to this modest 3.5G upgrade. It does make me wish I had taken the "free" upgrade offer to the 3G last summer since it would be easier to wait another year with that phone than mine!

Here's my question though:
I have an iPhone 3G right now that I got at the subsidized price last year. If I were to buy the 3GS at the non-subsidized price of 499.99 (32GB), would I still be eligible for a subsidy next year for the next model iPhone?
At that point, I will have gone 2 years without AT&T subsidizing a phone for me.

Do you think the price would be the same if there was competition among carriers for iPhone users? Of course not. Grow up, it's not a sense of entitlement it's a sense of fair play that service providers actually compete for our business.

@HelloiPhone, I think the $499 is a slight subsidy price. I think the full retail is $599 or $699 for the 32GB.

Regardless of WHO wrote it, great job.
I'm so sick of Apple whiners myself that I could almost use Windows 7 sometimes.
It goes for every damn update Apple creates.
You name it.
Recession? You'd never know it with the number of spoiled brats whining about how Apple "screwed them"
Be gone, whiners!

The problem isn't we are being asked to pay more... it's that we are being asked to pay more AND to extend our contracts again. They can't have it both ways. And they are not fulfilling the promise of fully supporting the iPhone that their CEO made years ago.

It's funny how Americans whine and whine when something isn't available them to NOW. They get things quite often first and some things continue to be theirs only, like Hulu and still, this feel of entitlement remains.

Only problem is that AT&T is pissing off their installed base of 40 million already iphone using clients. Not really the way to keep your existing customers happy. All the more motivation to go to verizon when it gets the iphone. The pre is not a good enough replacement.

These people are driving me nuts. It's like they've never purchased a cell phone before.

I went to an ATT Store and pre-ordered. I got the 3G last year at the subsidized price and the 3G(s) at this years subsidized price - was I just luck??

The writer is but whining that he can't get the iPhone 3GS becuase he's locked in for 3 years. Just another public way of whining. I'm not getting the iPhone 3GS because there is simply not enough differences to justify upgrading from the 3G. Ill wait until next years iPhone.

@ MacFan, Sorry to burst your bubble but if you think AT&T is bad are you blind with Verizon? Verizon is the single worst company when it comes to phones. All they do is cripple phones with there crappy branding. Not to mention they will do the exact same thing to AT&T is doing with the contracts. Its a contract for a reason and all carriers should stick to it. If you want the phone that bad then pay the extra $$ for it. If you don't want to be in contract then pay the extra $$ for it.

totally agreed with Jesus! it's been driving me nuts listening to the masses moan about the high price they have to pay while they're under contract. AT&T is no different than Sprint, Verizon, etc., etc. they all get their money back from you over the life of the 2-year contract.
just because you buy 'the latest and greatest' phone model, doesn't mean the manufacturers stop developing new technology! doesn't mean they cease to improve upon the last model. it's called a business. new phones come out every year. deal with it.
right after i bought the BB curve, Verizon came out with the Storm (not that i cared). now i'm just lucky enough to be out of contract with Verizon so i can jump all over this iPhone 3GS bandwagon! w00t

Good job Diaz! However I'd like to add that there is still lots of confusion concerning the price of the 3gs for people still under contract. Yesterday when I checked at AT& I read the "get ready" doc put out by AT&T and it said that current customer could get an early upgrade for $200 extra. Then this morning I get an ad from AT&T for the 3gs and it said current customer can buy it out right which is $400 extra or $699 for 32g 3gs. I hope AT&T clarifies whether or not there will be early upgrade options.

OK. There is only one little problem with this story. His claim is that you get the phone at a reduced price, then "re-pay" ATT monthly in your bill to make up for it. Last July, I paid full price for a 3G. My phone bill did not go down. I am still paying the same thing I did before I bought the phone. If you chose to go into an ATT store and buy a phone out right, they do not offer you a reduced monthly plan, now do they?? The only difference is you are not locked into a contract. But, you pay the same charges monthly as the guy that gets the discount. And, another thing. Since you pay your bill in advance, they are getting their money BEFORE you use the service. So, there is no risk to them at all. Now this brings us to the question: I have a bought and paid for iPhone 3G.
ATT is telling me that I have a 2 year contract extension from the date of purchase. They did not subsidize that purchase. Why can't I get the upgrade price this time, and extend my contract 2 years again?? They didn't lose anything on me. Another thing, I don't see this phone selling anything like the last one. Apple has gotten themselves a problem. If you are locked into a rock solid 2 year deal, then you are only allowed to buy a new phone every OTHER year, unless you want to pay full price. I have read alot of people are going to do just that. Wait for the next one, when their contracts are up. Apple has laid the ground work for a new phone every year now, so why pay a premium when you will get a better one, cheaper, next time??

It is what it is...either way you cut, it's an upgrade over the previous generation iPhone. You're getting the compass whether you need it or not, the video camera, CPU and RAM upgrades and they kept the prices the same. They gave people enhancements without a price increase. What more do people want them to do?
If you expected an 32GB iPhone with an HD screen, video recorder, 802.11n support at the same price points, you're living in a dream world. If they raised the prices, everyone would just moan and groan about not that and how they're not getting enough bang for their buck.

The "un-subsidized" price that the carriers quote is always the Manufacturers Suggested Retail Price.
The wholesale volume-discounted price that the carrier paid for the phone is either at or below the "subsided" price you pay.
So the carrier ends up profiting from the phone right away, in addition to the profit from the service plan you've now locked into.

According to the value on AT&T's UPS shipments, the replacement value is 575 and, they do not pay below the subsidized price LOL...this is apple we are talking about.