The NYT’s Bits Blog spells out how the pricing for the iPhone basically turns it into a subscription, at least for people who want to upgrade their phone regularly. With the new prices and GS model announced Monday, there are now three tiers, as described by Bits:
- The $199-every-two-years plan. That gives you the base model of the most current phone hardware every two years. You have to suffer a year of jealousy when others have the newest phone and you don’t. There is a similar $299-every-two-years plan for the higher capacity phone.
- The $399-every-year plan (with an introductory rate of $199 the first year only). For four times the effective annual cost, you get the base model as soon as it comes out. Premium users may gravitate to the $499-a-year plan ($299 to start out) to be sure of having the very best model.
- The new $99-every-two-years plan, if you want to have last year’s model and keep it for two years. As I wrote Monday, this may go down to a $0-every-two-years plan next year.
Given that the average consumer gets a new cellphone every 18 months, this isn’t really different from what’s been going on for years, it’s just that the price-point is far higher. But it’s not out of line for other smartphones, and if anything Apple has been pushing prices down in the category — for launch prices at least. BlackBerry and Palm both had to launch the Storm and Pre, respectively, at the $200 pricepoint, or they wouldn’t stand a chance against the iPhone.
The difference is that in the past launch prices quickly dropped, sometimes to free, whereas Apple keeps them consistent throughout the life of a product generation. So while it puts pressure on competitors for their launch prices, it also opens the door for them to drop their prices over time, perhaps significantly undercutting the iPhone.
And for the record, I sympathize with a commenter on the Bits Blog post that it’s unfortunate that so many see resource-intensive products like cellphones as disposable on such a frequent basis. Granted, they get beat up a lot being handheld and portable, but upgrading is by far the most common reason. I have to plead guilty as charged here too, though I generally hang on to a phone for more like 3 years (my Sony Ericsson has a cracked screen, but otherwise I still use it).]
AT&T is still struggling to convey the fact that it is a seamless blend of two companies--the "old" AT&T with Cingular. Cingular was a brand sensation, having been created out of whole cloth and gaining massive market and mindshare in a very short amount of time. I remember the first time I saw an ad for it, in a subway station in San Francisco, and was struck by how fresh it was, from the name to the color to the lively logo. At the time I knew nothing of its provenance (a merger of SBC and BellSouth), and the impression it left was clean and hip.
AT&T's logo had been updated shortly before this latest merger, an uninspired update of Saul Bass' classic ("Hey, it's 3D!"). According to BusinessWeek, in trying to combine the two identities AT&T is struggling to find the right balance of its old self with young upstart Cingular:
"The new proposition sees the company heading back to basics in an attempt to convey the seamless blend of both merged companies. And, in a move that suggests executives may regret having been so quick to ditch all things Brand Cingular (its quirky but memorable "Jack" logo, often shown bouncing around the screen in ads, was officially retired in May) the wireless company's characteristic effervescent orange will now get more prominent play throughout AT&T's wireless operations."
The warm orange color is the only carryover from Cingular days, and really it doesn't work harmoniously with the cool hues of blue and white in the AT&T logo. The combination feels forced.
Living on a fence like this is dangerous territory for a brand. AT&T is going to have to pick sides, and do it soon. Its relative weakness in the brand balance with Apple shows that it is not dealing from a position of strength, and its lack of clarity on who it is as a company is a part of that.
These days companies must have clear personalities to connect with customers who are more relationship-driven in the way they relate to products and brands that ignite their passions. No one particularly wants a relationship with someone who has a split personality--it's too unpredictable and trust can't develop. AT&T is hurting what trust it had to begin with by staying on the fence.
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