As an urban-dwelling yuppie that spends the majority of my life in front of screens, I’m certain that I’ll soon be the proud owner of a new iPhone 6. I’ve decided that my post-Keynote hand-wringing as I debate the merits of buying a new device is worthless: I always give in. It’s downright amazing how quickly I can convince myself that my phone is a total piece of shit the moment I learn that a new device is on the horizon. I wish I could be more principled in my buying habits, but I’ve simply surrendered. Every fall, I quiver with delight as I drive to the Galleria Mall to snatch up a beautiful, crisp, shiny, perfect, wonderful new iPhone. Apple might as well sign me up for a subscription.
Then there’s AT&T Next.
AT&T Next is a program that requires no money down for a new phone but instead bills monthly for it. For example, a 24 month contract on a new iPhone 6 16GB bills at $27.09/mo. Here’s why this sucks for you but rocks for AT&T:
1) Carriers have set a precedent of pricing iPhones at $199/mo with a new 2-year contract. They’ve traditionally recouped their costs through customers’ monthly plans but they’ve always known that there’s more money to be had. Steve Jobs was adamant that consumers pay the lowest possible price for the iPhone and demanded exclusive contracts with carriers to keep it that way but, well, he died.
2) Customers can still do it the old way by signing a new 2-year agreement, but prices are $250 higher per unit if you’re still under contract.
3) $27.09/mo x 24 months = $650.16 for a phone that’s outdated by the halfway point of the contract.
4) AT&T’s “yeah but” proposition encourages you to trade in your new phone after 12 months to wipe away the remaining payments on your plan.
4a) $27.09/mo x 12 months = $325.08. That’s $126.08 higher than customers have been trained to enthusiastically pay, and they still have to trade in their old phones.
From AT&T’s perspective, it’s brilliant. We use the same rationale across all sorts of purchases. A $9,000 apartment lease is only $750/mo. A $30,000 car is $500/mo for 60 months (plus interest, of course. This is America). Now a $650 iPhone is only $30/mo (or something, I don’t know, they just bill my credit card. I’ll pay that off with my tax return).
Here’s the best part: we all know the truth and we’re not fazed by it. At all. The new iPhone sold 10 million units in the first weekend alone. And every one of those units amounts to $126.08 more for your phone company than their predecessors did. Screw it, I’m in.