If you’re into economics, a classic is the razor/razor blade model in which you give away or sell a product, and then make lots of money over time by selling other products (hopefully, high-margin ones) so they can continue to use the original product.
With the introduction of the new 3G iPhone, Apple has enthusiastically embraced the razor/razor blade model – a move that will see them to sell a gazillion to consumers, while setting the stage for AT&T to make billions and billions and billions of dollars from customers happily willing to pay more and more for data service so they can continue to use their iPhone.
It’s brilliant – unless you’re a consumer.
Think about it: there are millions of consumers who can’t wait to buy an iPhone and access all the wondering applications that will available on a pretty fast wireless network. It’s going to be a fantastic tool to surf the Web, watch video, make phone calls, play games, do some work.
You’re going to love it, you’re going to use it all the time, and you won’t be able to live without it.
Then, you’re going to learn the downside of the iPhone.
As the carriers looking to drive revenue growth and ARPU, iPhone users will be the proverbial cows led to slaughter. In the name of improving the wireless infrastructure to maintain a high-quality of service, wireless carriers will start to raise data prices – perhaps not dramatically but enough on a regular basis to make a difference.
Over time, your wireless bill will get bigger and bigger but you’ll be hooked on the iPhone so you’ll keep on paying much like you keep on paying for cable because you need 500+ channels. And don’t expect there to be wireless competition so you and your iPhone can move to another carrier. The iPhone is the golden goose, and no revenue and ARPU lovin’ carrier want to kill the golden goose.
My advice: love your iPhone but get ready to pay through the nose for it.
More: For a look at the new iPhone reality, check out AT&T press release that includes a 50% hike in monthly data fees to $30 from $20, signaling the death of low-price iPhone service. As well, Thought Gadgets offers some good insight into how the iPhone is all about boosting profit margins for Apple and AT&T.
Links: For people not focused on higher data prices, Mashable is all happy-happy-joy-joy about the fact the new iPhone comes with GPS. I’m sure the carriers will find a way for consumers to pay for that as well. The Financial Times has a good editorial on how the subsidies being provided d by AT&T to iPhone buyers are “an admission that the device has failed to change the [wireless] industry’s business model”. Oliver Thylmann has a post looking at location-based services.
Technorati Tags: iPhone
iPhone Mathematics: Consumers Will Pay and Pay and Pay
If you’re into economics, a classic is the razor/razor blade model in which you give away or sell a product, and then make lots of money over time by selling other products (hopefully, high-margin ones) so they can continue to use the original product.
With the introduction of the new 3G iPhone, Apple has enthusiastically embraced the razor/razor blade model – a move that will see them to sell a gazillion to consumers, while setting the stage for AT&T to make billions and billions and billions of dollars from customers happily willing to pay more and more for data service so they can continue to use their iPhone.
It’s brilliant – unless you’re a consumer.
Think about it: there are millions of consumers who can’t wait to buy an iPhone and access all the wondering applications that will available on a pretty fast wireless network. It’s going to be a fantastic tool to surf the Web, watch video, make phone calls, play games, do some work.
You’re going to love it, you’re going to use it all the time, and you won’t be able to live without it.
Then, you’re going to learn the downside of the iPhone.
As the carriers looking to drive revenue growth and ARPU, iPhone users will be the proverbial cows led to slaughter. In the name of improving the wireless infrastructure to maintain a high-quality of service, wireless carriers will start to raise data prices – perhaps not dramatically but enough on a regular basis to make a difference.
Over time, your wireless bill will get bigger and bigger but you’ll be hooked on the iPhone so you’ll keep on paying much like you keep on paying for cable because you need 500+ channels. And don’t expect there to be wireless competition so you and your iPhone can move to another carrier. The iPhone is the golden goose, and no revenue and ARPU lovin’ carrier want to kill the golden goose.
My advice: love your iPhone but get ready to pay through the nose for it.
More: For a look at the new iPhone reality, check out AT&T press release that includes a 50% hike in monthly data fees to $30 from $20, signaling the death of low-price iPhone service. As well, Thought Gadgets offers some good insight into how the iPhone is all about boosting profit margins for Apple and AT&T.
Links: For people not focused on higher data prices, Mashable is all happy-happy-joy-joy about the fact the new iPhone comes with GPS. I’m sure the carriers will find a way for consumers to pay for that as well. The Financial Times has a good editorial on how the subsidies being provided d by AT&T to iPhone buyers are “an admission that the device has failed to change the [wireless] industry’s business model”. Oliver Thylmann has a post looking at location-based services.
Technorati Tags: iPhone