The great Apple iPhone rip-off

Business Spectator‘s Tony Boyd writes:

After months of hype, the great Apple iPhone rip-off is now in full swing.

Apple and the local telecommunications carriers have joined forces to cook up the sorts of tricks that hardened cynics in the telco and convergent devices world have come to expect.

A quirk of timing means that today Australia is one of the first countries in the world to sell the 3G iPhone. That is fitting because this country’s telcos have been known to lead the world in commercial behaviour that is weighted against the consumer.

Who can forget the 600 page AAPT mobile phone contract that enabled the carrier to unilaterally vary its contracts, suspend services while continuing to charge consumers, impose immediate termination conditions, and change suppliers, products or charges without notice?

AAPT withdrew the contract voluntarily but is now suing Consumer Affairs Victoria in the Supreme Court to overturn the finding of a tribunal judge that the contract was unfair.

The iPhone joke started on June 9 when Apple CEO Steve Jobs announced to instant applause that the 3G iPhone would sell for $US199 for the black 8GB model and $US299 for the 16GB model in black or white.

What he neglected to say at the time was that this price would only apply if the user signed up for a 24-month contract with Apple’s exclusive telco partner AT&T.

The reality is that if you live in the United States and want to go out and buy a 3G iPhone with no contract you will pay $US599 for the 8GB model and $US699 for the 16GB model. The iPhone will not be allowed to undercut sales of iPods.

In Australia, if you want to buy the iPhone outright then Optus is selling them on prepaid plans for $729 for a 8GB model and $849 for a 16GB model. But as with all telco contracts don’t forget the asterix and the magnifying glass.

The Optus asterisk points you to the fine print which says that to unlock the phone and use it on another telco network you will have to pay $80 either through a direct unlocking fee or one minimum initial prepaid plan of $80. So the cost of a 3G iPhone in Australia is really $809 for the 8GB model and $929 for the 16GB mode or about 30 per cent more than it costs in the US.

An early adopter or gadget guru who is contemplating buying a iPhone 3G outright from Optus and then popping in a Sim card from another carrier should probably think again. If you are already on a contract then you will have to pay the early termination penalty fees which usually amount to three quarters of the cost of the remaining monthly payments.

The iPhone 3G is “free” if you enter into a 24 month contract with a minimum monthly payment of about $80 or total cost of about $2000. The next leg of the iPhone 3G rip-off in Australia is the pricing of the data downloads.

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More thoughts on the iPhone …


Mark Pesce, Future Exploration writes:

Never in my five years in Australia have I seen such a complete failure in marketing. Three Australian telcos — Optus, Telstra and Vodafone — have the device. All of them have completely failed to recognize the pent-up demand for the device, and the way it will change network usage. This was revealed – beyond all doubts — in the way they released their pricing plans, and the specifics of those plans.

Most striking, perhaps, is that this is the device the network operators have been waiting, dreaming and praying for. Seeking every opportunity to increase ARPU (average revenue per user, the gold-standard calculation for all network operators), carriers have done their best to charge for ringtones, games, and other effluvia, as well as the normal carriage of SMS (which costs them next to nothing, being a standard part of the GSM network protocols), and voice traffic…

Let’s run some numbers here. The front page of the Sydney Morning Herald clocks in at just about a half a megabyte. That’s fat, but also fairly typical. The widespread deployment of broadband has lead to a proliferation of media-rich pages. Now, if I hit the SMH page (or a similar site) sixty times a day, I’d reach my 1GB cap. (Keep in mind that the SMH home page auto-refreshes, so that is hardly an inconceivable figure.) Add in any Google Maps activity, or push email, or what have you, and the figure could easily double. Now, instead of $179/month, I’d have that bill plus potentially hundreds of dollars in data charges.

Outsourcing iPhone marketing to the AFR

Adam Schwab writes:

That the News Limited tabloids and the Smage fell under Apple’s public relations spell is no surprise. However, we expected more from the world’s most expensive financial rag, the Australian Financial Review. The AFR produced a tidy little free advertisement for the iPhone on page three, declaring the iPhone the “New Thing in Corporate Bling”. In an article that couldn’t have been written better by the Apple marketing department, the AFR claimed that “high powered executives are among those clamoring for a 3G iPhone as the coveted handset goes on sale across Australia today.”

The AFR’s Ben Woodhead then noted the comments of Gartner telecommunications analyst, Robin Simpson, who provided the breaking news that “corporate information technology departments were already fielding requests from anxious executives who’d like to connect an iPhone.” Simpson also claimed that the iPhone is “an object of desire … definitely something to do with status … they’re not cheap and that’s actually part of the appeal.” Not sure where Simpson got his research from — iPhone’s are free on a $79 plan, and are 30% cheaper than an iMate Ultimate — hardly an expensive piece of equipment. But if executives reading the AFR knew that, they might just stick with their Blackberry.

Bigger than Jesus?

Our friends at Media Monitors have provided Crikey with the following comparison over the past seven days…


















There’s more on the Media Monitors website.