iPhone 3G and The Subsidy Dilemma

The original iPhone brought an interesting and effective concept to the mobile phone industry. The iPhone activation process was regarded as on of the greatest things that Apple brought to the mobile industry. Customer can buy the iPhone and activate it at their own time through iTunes. No more wasting the precious time at the store waiting for the phone activations. There were some problems with the activation process for the first few days as record numbers of people trying to do the same thing at the same time. After all the hickups the iPhone set a new standard for the mobile phone industry, the activation process in particular.

Since its introductions in January 2007, the iPhone was criticized by the so-called-tech-journalists who didn’t even have access to the phone. They screamed and yelled about the lack of 3G network support and the pricing of the iPhone. Let’s take a look at the two factors.

  1. 3G Network Support.
    Having a faster wireless network on the iPhone is a definite advantage. Some said that the 3G network support requires more power consumptions thus shortening the battery life. The so-called-tech-journalists declared that the iPhone is severely behind the times for not having 3G network support. The irony of this argument is that the same “tech journalists” were saying that the 3G support in the iPhone is pretty much useless because of AT&T’s lack of 3G network in the United States. Honestly, why would these so-called-tech-journalists criticize the original iPhone for not having 3G network support? That’s a rhetorical question.
  2. iPhone Pricing.
    In the United States, the iPhone was originally priced at $499 and $599 for the 4GB and 8GB iPhone respectively. The so-called-tech-journalists screamed and yelled for the lack of subsidy on the iPhone. Fast forward a year later, AT&T is now subsidizing the iPhone 3G with a few caveats. Based on the available informations, iPhone 3G requires in-store-activations and a two-year-agreement. Whatever happened to the easy-to-do activation process through iTunes? It’s now gone because of the subsidy. The pay-as-you-go plan is currently not available for the iPhone 3G. AT&T wants to deter all the unlocking by forcing the in-store-activation. For sure they are losing money for subsidizing phones that are not bound to their service contracts.

What have we learned here? We can’t have the cake and eat it too.

Eight more days to go, and we’ll see if how Apple would handle the iPhone 3G sales in their own retail stores. Until then, we could only speculate.