A free ride for Cingular's iPhone users?
Over at Tech Trader Daily, Eric Savitz valiantly tries to dispel a rumor that AT&T's (T) Cingular wireless company is going to give away service to users of the new Apple (APPL) iPhone that comes out in June. (Cingular is the exclusive distributor of the iPhone.)
Besides being untrue, the rumor makes no sense: Why would Cingular, after scoring a big coup in winning exclusive iPhone distribution, then give airtime away for free? Airtime is the only thing Cingular can make money on. It doesn't make money selling phones - in fact, Cingular probably is subsidizing the iPhone so that it doesn't cost consumers even more than the eye-popping $499 or $599. And there's certainly no profit to be had in providing customer service to the random iPhone user who can't figure out how to turn the thing on, or needs help when the device inexplicably seems to lock up. (You scoff, but I can assure you some users will need hand holding, no matter how intuitive Apple believes its phone is.) Now, we do expect Cingular and Apple to team up on some special pricing plans tied specifically to the iPhone, perhaps an all-you-can-eat data package that is priced especially low to entice customers to play with (read: get addicted to) all the data features on the phone. You might even see Cingular throw in an introductory "free" month of data service for the iPhone. But one of the big reasons Cingular wooed Apple so aggressively is that the carrier would like to start attracting a better quality customer. In the fourth qarter of last year, the carrier added more than two million net new customers, but as Katie Feherenbacher at Gigaom notes, a lot of those new customers were lower-end subscribers. If Cingular is serious about attracting high-end users, it probably won't be giving service away any time soon. iphone or whatever...all these phone companies whether it be cingular or verizon, they're just out to get the US consumer's money. I personally would invest in a european GSM phone.
I don't know much about Stephanie Metha, but here poor written little story sounds like zero knowledge about the industry. Mostlikely she is using an inferior carrier, like Verizon or Sprint, with no access to a new toy. Stuck with her provider and jealous to the bone.
What is intriguing about the iPhone though is that it does not run on 3G - seems absurd for a device that is focused on data. There will probably be limited corporate level purchases and ceratinly the growth segment of Cingular is not going ot rush out ot buy the device. That leaves the high end consumer market and the SMB market. I can't imagine a consumer or SMB purchasing a $600 device, witha 2 year contract, only toi run it in a data network that is already a generation behind.
I am in the likely target segment for the initial iPhone purchasers and after all the homework I've done, I almost find I'd be better off with a 3G device that is functionally poor rather than an iPhone that creeps at a snails pace for data. Let me start by saying that I also don't believe the AT&T wireless will give away service. However, I'm a marketing professional in the industry and the idea is intriguing. The iPhone has the potential to swing 6M+ subscribers from other networks to AT&T almost overnight. The one thing that will get in the way in termination fees. If AT&T offsets these fees by free service for the first 6 months ... wow. That could really change the current landscape.
Jersey, you're kidding right? What do you think any european company is in business for? It ain't to perform a public service.
Cingular is a GSM provider.
ummm...this is America. Everyone is out to get US consumer's money. It's called free enterprise.
Probably more to the rumor than you think. Apple talked to Sprint Nextel and was turned down because the arrangement Apple wanted would not have been profitable for Sprint. AT&T may have a longer term goal for this partnership, but short term profit will not be much if anything. Subsidies provided by T on 10 million phones in the first year certianly doesn't look like a way to make money off this in 2007.
Too bad for Apple iPhone users that T only brings a 2.5G data network to the table in this deal. Gonna be a lot of unhappy users when they finally the thier hands on one. and.....of course the european GSM phone manufacturers are not out to get the consumer's money. Thier busines model is totally non-profit ... right?
It's true, even with the simplest of phones, people do need hand holding. Some just aren't that smart, others may have valid reasons, others just lazy. Most though I guarentee if they just play with it for an hour without giving up will learn more than any customer service rep could tell them. especially over the phone. That said, I got the cingular 8525 and it works great, just as many features if not more than the iphone. 3G, WiFi, Word, Excel, Camera, Push to talk, bluetooth, miniSD, the works.
What differnce does it make whether it is a European phone or a US phone. If its GSM and you use it in the States, you are going to be paying roaming fees to Cingular or T-Mobile.
Ummm Cingular does use GSM
DT......Cingular doesn't charge roaming.
What Cingular should really do to woo customers over is to offer to buy out their current plans so those users with other carriers (like me with T-Mobile) can switch over.
Seems the only people eager to dispel this are Verizon,Sprint, Moto & Nokia ... it's a rumor like any other - until the right 7 people from Apple or AT&T confirm or deny it, it's just a rumor. It's not so impossible to believe - it might be sign up a data package and get 18 months free - for MANY reasons that would be true - because the numbers are NOT that different. A typical phone costs $400 which they sell to you for $50-$100 bucks - with that $300 difference coming from you over the life of the contract - so, presuming it's $300 over 24 months, how is 18 months "free" for a $600 phone + data services that much different AND they get to stab one of their competitors - maybe enough to crush Sprint?
Right now, there are less than 1 MM users on 3G - yes, people want it but not many are willing to pay for it ... so, it's like saying hovercar - people want it but if it's cost $3 millon and you might crashj and plummet 150 feet? Nobody doesn't want 3G ... but several hundred million in the US are willing to forego it at $60 a month ... once again, - if you don;t want an iphone for whatever reason - that's fine. step off - the rest of us have decided we want one - you are NOT pointing out anything we can't read ourselves. Cingular may not charge roaming, but they will kick you off if you roam too much. That's just what they did to me. I bought the nationwide plan because I traveled a lot to backwater places and now they are going to boot me off because I am more than 50% on "partner networks". What a load of cr*p. Pay for nationwide no roaming, you should get it!
My two concerns about the iPhone: it may not make its 6/07 release date (Apple has been notorious for this in the past and several iPhone apps are still incomplete); if Cingular doesn't initially offer a very desirable economic perk of some kind in the iPhone's user plan(s) (Steve Jobs wanted a portion of user fees from Verizon in past talks, so that seems unlikely unless Cingular is willing to take a MAJOR hit up front), sales of the iPhone will be limited to the high-end market. Obviously, a phone priced between $500 and $600 will be limited to the mid-to-high-end market, but a very good plan could make a dramatic difference in unit sales. We'll see.
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