AT&T is starting to see a substantial amount of backlash regarding the latest iPhone pricing. It appears there are actually three different pricing levels as follows:

New and qualifying AT&T customers:

  • 16GB iPhone 3G S (black or white) – $199
  • 32GB iPhone 3G S (black or white) – $299

Early upgrade customers (iPhone 3G owners):

  • 16GB iPhone 3G S (black or white) – $399.00
  • 32GB iPhone 3G S (black or white) – $499.00

No-contract, no-commit or non-qualifying customers:

  • 16GB iPhone 3G S (black or white) – $599.00
  • 32GB iPhone 3G S (black or white) – $699.00

The real complaints are coming from existing 3G customers who are unable to get the lower tier pricing (in addition to a lack of support for MMS and tethering). Those customers signed a 2 year contract to get a subsidized iPhone 3G and have only fulfilled 1 years of that contract. This may make sense from a numbers standpoint, but it does take into account the core early adopter crowd. These are the people they are annoying. The core crowd. The loyal iPhone fans. Are they crazy!

Many first generation iPhone customers upgraded to a 3G without penalty due to the first generation having no subsidy. This is not the case when upgrading from a 3G to a 3GS. I am sure if the pricing was the lower tier many 3G customer would upgrade (including myself) but are now going to hold off until the magical 18 months are up on the current 3G contract that allows for the lower pricing option, or moving to a different carrier and phone platform.

Apple should be forcing AT&T to think out of the box when it comes to pricing. If Apple are going to release a new handset every year yet AT&T are locking you into a 2 year contract, that doesn’t seem to gel well with the early adopter and core apple fan crowd. What if they were to offer a trade-in program on existing hardware or a flat yearly upgrade fee that guaranteed a new handset when released (even if not every year).  There are many options outside of the conventional pricing model that apparently they refuse to consider. Any others anyone can think of?

Role on the days when the iPhone is no longer tied to the AT&T monopoly and there is some healthy competition. Apple, please make it sooner rather than later!

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