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Apple Turning Cell Phone Market Upside Down?

Zonk posted more than 7 years ago | from the please-keep-right-side-up dept.

Apple 320

joek writes "This MacRumors analysis puts some of the iPhone/Cingular pieces together and suggests that Apple may be turning the the cell phone market upside down. Everyone assumed that Apple's $499/$599 prices for the iPhone was subsidized by Cingular. But, it appears that Apple is not allowing mobile carriers to subsidize the iPhone. Why? Because when Apple comes out with the Touch iPod, they don't want it compared in price to a discounted/subsidized iPhone. Add to that rumors that Cingular may heavily discount service (but according to a Cingular rep, they will not be giving away service, as previously suggested) to attract Verizon customers. Without kicking in $100-$200 against the price of the phone, Cingular can discount the service as an incentive. Other cell phone manufacturers will certainly be interested in the outcome of this new model."

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I much prefer... (-1, Offtopic)

Creepy Crawler (680178) | more than 7 years ago | (#17774246)

Going over 70 cm to my autopatch hooked up to Vonage. Yes, 10 voice lines, as long as you have a license for amateur radio.

I dont carry a cell phone cause I despise the cell phone companies (well, and the phone co's they come from). The only true way to stick it to them is to go amateur radio instead.

Re:I much prefer... (3, Informative)

TodMinuit (1026042) | more than 7 years ago | (#17774292)

But anyone with a scanner can tune in and intercept your calls. Amateur license forbids encrypted communication of any kind.

Re:I much prefer... (2, Insightful)

Creepy Crawler (680178) | more than 7 years ago | (#17774386)

What makes you think that Cell Phone conversation is safe as well? We just understand that it all is open, whether the laws prevent "listening" or not. Encryption and obfuscation can be cracked, so whats the point. Just dont say things that are inappropriate.

Re:I much prefer... (3, Insightful)

TodMinuit (1026042) | more than 7 years ago | (#17774446)

Do you lock your doors at night? Because I can zip through that lock in 2 seconds, and if I can't, you have some mighty nice windows. Therefore, what's the point? In fact, might as well remove the door altogether.

Re:I much prefer... (1)

Creepy Crawler (680178) | more than 7 years ago | (#17774606)

Well, if the criminals bodies are being propagated throughout the house, there'd be no need for locks.. However people arent EM.

The difference is each cell phone and tower emanate strong signals in which go through almost everything, including your property. The difference is you can build a radio that picks up this signal from inside your house, vs some weird-ass story of locking windows. The bad part is that Congress made it illegal to "pick up 800 MHz cell data". This is a legal block, not a technological block. Now, if the cell phones rotated a cipher every 2 seconds, then maybe we'd have a stance to go by, but they dont.

Re:I much prefer... (5, Informative)

squiggleslash (241428) | more than 7 years ago | (#17774864)

You make it sound like cellphones have only legal locks and can be listened to in the clear, or just with the help of a particularly powerful computer.

CDMA (both CDMA2000 and W-CDMA based systems like FOMA and UMTS) conversations are practically impossible to evesdrop upon. Even if you have the key (close to impossible), the timings and need for location information make evesdropping unbelievably hard.

On a technical level, the GSM system is easier to tap, but on a practical level it isn't. Early GSM networks used relatively breakable algorithms (at the behest, believe it or not, of British Intelligence who clearly hadn't heard of phone taps...), but after this was cracked most networks were upgraded to much more secure algorithsm. And just to identify a specific handset you need information only exchanged when the phone is turned on. These algorithms are publicly known, and there are as many people who want to break it as, say, SSL.

For all practical purposes, the only time your (post-analog/post-D-AMPS) mobile phone is going to be intercepted is if someone is working at the telco and has a tap on your line. Casual evesdropping is probably non-existant.

You HAM based system on the other hand can, and probably is given the frequencies, intercepted by casual evesdroppers all the time.

I know which I consider more secure.

Re:I much prefer... (3, Interesting)

MysticOne (142751) | more than 7 years ago | (#17774538)

Because it's more or less guaranteed that somebody is going to be listening to your QSO on the radio, but less likely (not impossible) for them to listen to the cell phone conversation. Plus, 70cm (with typical power) is going to transmit a bit farther than a cell phone at a higher frequency and tens or hundreds of milliwatts.

I think phone patches are cool, though I've never used one (I am a ham). But I don't see them as any sort of replacement for mobile phones. Plus, you can't use amateur frequencies to run your business, so any type of commercial communication is right out. No profanity (on both sides), no commercial communications, absolutely no privacy whatsoever, half duplex, and you're still going to need a phone line at the other end to communicate on the PSTN. No, not a replacement.

Re:I much prefer... (1, Interesting)

Anonymous Coward | more than 7 years ago | (#17775044)

Use steganography. Who'd know the difference? Just record some of your normal conversations and turn them into digital info. Then you would basically do the digital equivalent of modulation of the recorded conversation and send the real conversation hidden within the fake one. No one could tell.

Re:I much prefer... (1)

MysticOne (142751) | more than 7 years ago | (#17775290)

You could do it, but it's against the spirit of the amateur radio community. One might also say to simply include obfuscated, GPLed code within your closed program, and nobody would ever know. Just because you can do it doesn't mean it's right, especially when it flies in face of the terms you've accepted by having your license. If you want a private conversation, don't use amateur radio. If you want to talk to other hams, experiment with new radio modes and such, talk to people on the ISS, help with communications in times of emergency, or do a number of other cool things, welcome to amateur radio.

That's the problem right there (1)

Travoltus (110240) | more than 7 years ago | (#17774628)

Why do we need a license for that?

As long as you don't interfere with someone else's communications, there's no need for a license.

Big Brother is bad enough with not allowing encryption, but requiring a license, well that itself was the foot in the door.

Re:That's the problem right there (1)

MysticOne (142751) | more than 7 years ago | (#17774730)

Because amateur radio operators have access to a large number of frequencies, and they have a lot of flexibility with their own equipment. The FCC would like to ensure that you're at least somewhat knowledgeable about the rules and regulations of operating on the air. If you don't want a license, that's what all the part 15 stuff is for, where it's highly unlikely that it will interfere with anything important.

Re:I much prefer... (2, Informative)

Creepy Crawler (680178) | more than 7 years ago | (#17774324)

And as I should note, We hams use distance of the wave to indicate frequency. 2 Meters is 144-148MHz, and .7 Meters is 420-450 MHz . The reason I specify a distinct band is that our rights only extend in those bands (and not, say 143.8 MHz or 452.1 MHz).

To grasp what rights we ham operators have, look at this PDF CHART [doc.gov] to understand the spectrum here in the US.

Re:I much prefer... (1)

RzUpAnmsCwrds (262647) | more than 7 years ago | (#17775268)

We hams use distance of the wave to indicate frequency
Well, technically, you're indicating wavelength, but considering that the speed of light doesn't change very much when going through air, it doesn't really matter.

Re:I much prefer... (1)

the_humeister (922869) | more than 7 years ago | (#17774420)

While interesting, that's just not feasible for the 99% of the rest of population, hence why we still have phone and cellphone companies.

Re:I much prefer... (1)

Creepy Crawler (680178) | more than 7 years ago | (#17774504)

It isnt? Check out ARRL.org

Technicians Handbook: 25$
FCC Tech License test: 14$
2m/70cm radio : 150$
Unlimited geographical talking area with no contracts: Priceless

And now, the FCC has eliminated Morse Code from every test, so all you need is basic RF and electronics theory. Easy stuff.

Re:I much prefer... (2, Insightful)

MysticOne (142751) | more than 7 years ago | (#17774670)

Add to that the cost of a tower on the end with the repeater or phone patch (since it's going to need to be high enough for you to get to it from a reasonable distance), the cost for the phone lines themselves, worrying about it all getting zapped by lightning when a storm is brewing, etc. Is it a cool thing? Sure. But it's hardly a replacement, especially not for the majority of the population.

Re:I much prefer... (0)

Anonymous Coward | more than 7 years ago | (#17774586)

Do you mind if others make calls through your autopatch?

Re:I much prefer... (2, Funny)

mustafap (452510) | more than 7 years ago | (#17774996)

>Do you mind if others make calls through your autopatch?

Not at all, go ahead.

While I would love an iPhone (1, Interesting)

MyNameIsEarl (917015) | more than 7 years ago | (#17774334)

I don't see myself leaving T-Mobile which I am perfectly happy with and switching to Cingular/AT&T. I have 5 lines on a family plan with T-Mobile. No one wants the freebie phones so the cost to switch is even greater than just the iPhone price which is a big obstacle already. And imagine if others on my plan wanted iPhones as well. Just not gonna happen.

Re:While I would love an iPhone (3, Informative)

pyite (140350) | more than 7 years ago | (#17774660)

Unlock all the phones in your family. T-Mobile and Cingular are both GSM so all their phones will work with the new service. Problem solved.

Re:While I would love an iPhone (1)

MyNameIsEarl (917015) | more than 7 years ago | (#17775060)

Interesting, now about that price. If only I didn't buy that Xbox360 and HDTV for Christmas.

Re:While I would love an iPhone (1)

Aladrin (926209) | more than 7 years ago | (#17775534)

That'd be great if it was free. It typically costs $20-50 to unlock a phone, and that's IF you trust random-online-phone-unlocker.

Re:While I would love an iPhone (1)

alphakappa (687189) | more than 7 years ago | (#17775546)

"T-Mobile and Cingular are both GSM so all their phones will work with the new service"
Only if your T-mobile phone is a quadband phone. T-Mobile and Cingular do not generally use the same frequency bands for GSM.

Snowball's chance..... (4, Insightful)

LehiNephi (695428) | more than 7 years ago | (#17774346)

Without kicking in $100-$200 against the price of the phone, Cingular can discount the service as an incentive.

Okay, everyone who thinks this will happen, raise your hand. Nobody? That's what I thought. Cell phone companies do not base the price of their service on how much it costs them to provide it (including the cost of the phone). Rather, they price their plans purely on how much people are willing to pay. As long as people are willing to pay exorbitant amounts to lock themselves into multi-year contracts, the cell phone companies will continue the practice. And if you're willing to pay $500 for the phone, chances are you'll be willing to pay full price on the plan.

Re:Snowball's chance..... (0)

Anonymous Coward | more than 7 years ago | (#17774508)

Good point...

Re:Snowball's chance..... (1)

neoform (551705) | more than 7 years ago | (#17774528)

Hmm, seems to me this practice applies to a lot more than just cell carriers.. maximizing profits tends to apply to most businesses these days.

Re:Snowball's chance..... (4, Funny)

KingOfGod (884633) | more than 7 years ago | (#17774574)

It's just a fad, I think.

Service Probably Not, But ETF? (4, Insightful)

SlashdotOgre (739181) | more than 7 years ago | (#17774682)

I think an interesting move may be for Cingular to offer to pay the Early Termination Fee (which happens to be in that $100-200 range) for people who'd consider getting the iPhone but are stuck with another carrier. Obviously they'd need other incentives for customers not in that situation, but I definitely think that would be a big shot against Verizon, etc.

Re:Service Probably Not, But ETF? (1)

mr_zorg (259994) | more than 7 years ago | (#17774722)

That would be really smart. I'd go for that. Or, if the phone isn't subsidized, let me buy it myself from Apple with no contract required...

Re:Service Probably Not, But ETF? (1)

iamhassi (659463) | more than 7 years ago | (#17774890)

"That would be really smart. I'd go for that."

agreed, that'd definitely get me over too if the iPhone is as great as I'm hoping it is, but yeah, if I like the iPhone and they're willing to pay the disconnection and phone number transfer fees I'd go with cingular.

Re:Snowball's chance..... (1)

gstoddart (321705) | more than 7 years ago | (#17774742)

As long as people are willing to pay exorbitant amounts to lock themselves into multi-year contracts, the cell phone companies will continue the practice. And if you're willing to pay $500 for the phone, chances are you'll be willing to pay full price on the plan.
Actually, in a bit of a roundabout way, this could actually make customers less locked in.

Most companies will give you the phone either free or at a greatly reduced price if you'll sign up for a multi-year contract. By having you locked in, they get the money for the service and can offset the subsidized phone.

Wouldn't a full-price/unsubsidized phone give you greater freedom to not have a multi-year contract? I know with my carrier (Rogers in Canada) if I pay full price for a phone, there is no contract to sign.

Cheers

Re:Snowball's chance..... (1)

DesertBlade (741219) | more than 7 years ago | (#17774768)

Agreed BUT,
If you buy the Iphone with a $50 a month plan, who is to say that they don't toss in Internet access for free.

Re:Snowball's chance..... (1)

Jartan (219704) | more than 7 years ago | (#17774792)

Obviously Cingular wouldn't lower their prices if it was left up to just them. The real question is has apple really convinced them to offer cheaper service. If the answer is no then is Apple might actually in a bad spot. The reality might be that apple is up against a wall and can't get the providers to offer cheaper service instead of subsidizing the phone.

I tend to think Apple has convinced them to lower prices though.

Re:Snowball's chance..... (3, Insightful)

Ungrounded Lightning (62228) | more than 7 years ago | (#17775238)

Since apple's phone isn't subsidized by the cell companies they have no leverage on how its firmware operates. This means:

  - It's not locked into a carrier. You can switch in a heartbeat and/or put more than one plan on it.
  - It's not locked OUT of using other systems than cellphone - like VoIP over WiFi or WiMax.

This means that the cellphone carriers are not just in competition with other cellphone and cellphone/data carriers. They're also in competition with Wireless ISPs (WISPs).

Even between the cellphone carriers the lack of the lock-in means they're in straight competition on price of service. (They had to do the lockin and early termination fee to pay for the handset tie-in.)

This will produce significant downward market pressure on cellphone companies.

Market forces don't produce a heavy drive toward marginal cost until there are at least THREE competing providers of the good or service. (For two the strategy is to track each other's prices and split the market about 50/50. For three or more the incentive is for the little guy to try to undercut the two biggest players and steal market from the pair - and for them to retaliate using their economy of scale.)

While there are several cellphone players now there are typically only two dominant players in most markets. The original bandwidth licensing regime was set up for "competition of two" (the incumbent phone company and ONE competitor) and the early rollout gave two players incumbent status in most markets. They then had an analog of the government-subsidized copper buildout of the wireline phone companies that gave them an advantage in coverage as the upstarts started up - leading to sickly third players and rounds of consolidation.

This device lets WISPs with significant coverage play in the cellphone space - and use their bandwidth cost advantage to become major players. If Verizon is smart it will try to head this off by dropping prices to where they're just covering network connectivity rather than subsidizing the non-existent "free" crippled phone.

Re:Snowball's chance..... (3, Insightful)

Ungrounded Lightning (62228) | more than 7 years ago | (#17775418)

If Verizon is smart it will try to head this off by dropping prices to where they're just covering network connectivity rather than subsidizing the non-existent "free" crippled phone.

Oops! Meant "Cingular".

And if Cingular/ATT and Verizon are BOTH clueless and leave the plans at regular cellphone rates, watch for users to start migrating to WiFi hotspot operators and WISPs.

(Watch for that anyhow, once people start hacking. B-) Even if Apple doesn't support it - or doesn't support it well - nobody in their right mind with a VoIP account and a WiFi AP at home is going to chew up cell minutes when at home when they can make the iPhone use their broadband and existing accounts, getting hax from their VoIP providers or third parties to make it work well.)

Re:Snowball's chance..... (0)

Anonymous Coward | more than 7 years ago | (#17774876)

Another thing to consider is that if Cingular discounts a phone by some amount, they have several years to amortize the cost. This means they can offer a bundle of money (or free phone) up front and pay for it over time. Or more likely, let you pay for it over time. If they discount the service, then that means they take it in the pocket every month for 2 years instead of the one shot.

Let's say the price is 75 dollars a month for service and they discount it 200 dollars (in cash or free phone) for a 2 year deal. They a). do what they do today and make up for that 200 (and then some) over 2 years, or b.) Apply that discount to you in service over two years. If they discount the total cost of the service by the same amount (200.00), then you'd get about 8.33 off each month. Wow, big deal. You get discounted service at 67.00 instead of 75.00 a month for buying a 500 dollar phone? No way.

My point is,

1. If they discount service, it'll be by such a small amount, that it won't be much of an incentive.
2. The phone is way overpriced for the general cell phone (even for the apple devotees).
3. The phone may very well be apple's first flop since the newton.
            Which, by the way, would be classic of apple living up to their reputation of building an unsellable handheld device.

Re:Snowball's chance..... (1)

Tiro (19535) | more than 7 years ago | (#17774886)

Not me. When I realized that a cut rate Cingular plan could save me over a hundred dollars, I seriously began to consider the iPhone.

This after I initially balked at the lack of 3G and proprietary features.

The reason is that with a subsidy, I can then afford to buy the updated 3G model later. I don't care whether the subsidy comes as a big rebate up front, or as a long term discount to service, because, you know, I'm rational.

Re:Snowball's chance..... (1)

Mononoke (88668) | more than 7 years ago | (#17775262)

This after I initially balked at the lack of 3G and proprietary features.
You're balking at an Apple product's LACK of proprietary features??

Marketshare and subsidy (4, Insightful)

SuperKendall (25149) | more than 7 years ago | (#17774900)

Okay, everyone who thinks this will happen, raise your hand. Nobody? That's what I thought. Cell phone companies do not base the price of their service on how much it costs them to provide it (including the cost of the phone). Rather, they price their plans purely on how much people are willing to pay. ....

The math doesn't add up though - if they are selling smart phones with a large subsidy today, that subsidy money comes from somewhere. That somewhere is the guarantee of fixed income for a certain period of time, in other words the service cost is not just what people are willing to pay but also builds in the subsidy of the device you are getting for a discount with that service.

There's no reason why it does not make as much sense to say, that they would provide service for a reduced cost for a set period of time as well. All sorts of things already work like this - you pay less per year if you pre-subscribe for a longer period of time.

I think the argument that Cingular might want to use this opportunity to really pull in marketshare away from other carriers to be compelling, and with the iPhone at a fixed price it leaves them no choice but to use service pricing incentives as a tool to obtain that marketshare.

Re:Snowball's chance..... (1)

That's Unpossible! (722232) | more than 7 years ago | (#17774960)

And if you're willing to pay $500 for the phone, chances are you'll be willing to pay full price on the plan.

Yeah, and the only flaw in your logic is that most people WON'T be willing to pay $500 for a phone. Thus you either lower the price of the phone (subsidized by cell company), or the cell company keeps the margin on the phone that they'd have normally given up, and discounts the service for a certain time period.

not "either or" -- duh! (0)

Anonymous Coward | more than 7 years ago | (#17775588)

A third, very common, approach that's used is for the wireless carrier to offer a rebate and the phone manufacturer to contractually require that advertising never show an "after rebate" price.

Verizon does this quite frequently when new phone models come out. Voila -- carrier-funded subsidy without the possibility of seeing disconcertingly different ad prices for iPhone vs. widescreen video iPod.

It will not be Cingular's decision alone (3, Insightful)

Per Abrahamsen (1397) | more than 7 years ago | (#17774994)

Unless Apple is totally nuts, they will have negotiated the contract terms in advance with Cingular, and threatened to go to one of the other GSM providers if the terms were not as favorable to the customers as possible. They should in fact be able to negotiate terms that makes the iPhone a loss-leader for Cingular, as the iPhone exclusive will be of great promotional value to the company.

If Apple is totally nuts they might have let Cingular in a position to decide the fate of the iPhone. Cingular might then very decide that iPhone is the perfect low volume high margin product, as the most determined Apple fans will buy it at any price.

Re:Snowball's chance..... (2, Interesting)

trcooper (18794) | more than 7 years ago | (#17775018)

Just like they *could* not tie users into contracts because they aren't subsidizing a device.

The real new business model is now instead of getting cheaper equipment for agreeing to a contract with a provider, now you must be tied into a contract with a provider for the privilege of owning a particular phone, this one a very expensive one. That's awesome!

I find the idea that Cingular is suddenly going to become the nicest company in the world, and start offering people great discounts and probably free puppies because they buy an iPhone amusing.

I can see it now:
"Your phone doesn't get a signal at your home? Oh, that's totally our problem, and we'll refund your money and let you out of the contract even though it's past the grace period, and take this cuddly puppy for your trouble!! His name is Sebastian and actually has been genetically engineered to poop milk chocolate, here try some!"

Re:Snowball's chance..... (1)

kfg (145172) | more than 7 years ago | (#17775200)

And if you're willing to pay $500 for the phone, chances are you'll be willing to pay full price on the plan.

Does spending $2000 on a computer imply you'd have no problem paying $100/month for dialup, you profligate spendthrift you?

Of course not. The reason to pay $500 for a phone is to actually own your own phone and avoid the expensive, locked in, plan subsidizing the cheap phones.

TNSTAAFL; phones cost you $500. Even the "free" ones.

In any case I've never understood the arguement that if you spend what appears to be a lot of money on something you must have lots more, and you're willing to just burn it. In point of fact, when most people spend a lot of money on something the implication is that they don't have much left; and if your desire is to sell them something expensive you should have got there before the other guy.

KFG

About time (2, Interesting)

sinij (911942) | more than 7 years ago | (#17774348)

I never wanted/needed video camera, mp3 player or camera on my phone but I always wanted cheaper service and shorter term contract. I realize that iPhone has all of these things, but I'm hoping that service-discounted business model will succeed and move to other offerings, so we finally can get affordable no-frills phone and basic service for cheap.

This would also mean (2, Insightful)

wiredog (43288) | more than 7 years ago | (#17774350)

That Apple (and Apple phones) would not be contractually (for Apple, anyway)tied to Cingular.

Re:This would also mean (1)

needacoolnickname (716083) | more than 7 years ago | (#17774600)

No phones are contractually tied to Cingular. Oh yeah, you only get them for cheap if you sign a contract with them, but they do nothing and I mean nothing if you have a phone issue.

Have a phone problem? Do you have phone insurance through the outside company all of the ones use (Lockline I think)? If not, tough. Cingular sells you a phone that they but their little orange man on but does nothing to make sure it works. Problem? Lockine or ebay are the only options.

Resale price maintenance (1)

Ralph Yarro (704772) | more than 7 years ago | (#17774380)

But, it appears that Apple is not allowing mobile carriers to subsidize the iPhone.
Aren't such price fixing schemes generally illegal?

Re:Resale price maintenance (1)

ardyer (816606) | more than 7 years ago | (#17774468)

IANAL, but I think it is only illegal if you have been legally declared a monopoly.

Re:Resale price maintenance (1)

squiggleslash (241428) | more than 7 years ago | (#17774622)

In the US, only if you're declared as having some kind of monopoly power. For example, organizations representing publishers of music and books have gotten into trouble for setting price floors (usually in order to prop up independent sellers against companies like Wal*Mart) because by roping in all their members, they're effectively creating a cartel that's setting prices.

This obviously doesn't apply to Apple, though it would if Apple, Nokia, Motorola, Samsung, et al, joined together and all (as a group) told Cingular where to stick its subsidies.

Now, in Europe, the law is (generally - the EU is a collection of jurisdictions after all) stricter. Nobody can force a retailer to sell their products at a particular price, because doing so constitutes a "Restraint of Trade". This is regardless of whether they do so as a single manufacturer, or as a group.

Re:Resale price maintenance (1)

nelsonal (549144) | more than 7 years ago | (#17774962)

They were, but the courts changed their mind in the 70s when they figured out that really sucks to be Ritz camera who keeps having to do all the work of selling a camera with a markup only to have your customer learn all about it and go buy it from a discounter. The law specifies intent to monopolize, what that means is an exercise for others to interpret.

Hopefully the 2 year contract will go away too (3, Interesting)

LaughingCoder (914424) | more than 7 years ago | (#17774394)

Since the phone is not subsidized, there *should* be no 2 year contract requirement. That would really spur competition among the mobile carriers if people weren't forced to stick around for 2 years under penalty of paying full price for their phone. Of course the fact that some use CDMA and others use GSM complicates this a bit - we need phones that support both for true service portability. In fact, a *smart* carrier would offer either non-subsidized phones at a monthly service price of X, or subsidized phones at a monthly service price of X + Y (where Y basically recaptures the phone discount over the life of the contract).

Re:Hopefully the 2 year contract will go away too (1)

elrous0 (869638) | more than 7 years ago | (#17774756)

Since the phone is not subsidized, there *should* be no 2 year contract requirement.

Yeah, right. I'm sure they'll happily hand it to you unlocked. While you're dreaming, why not dream even BIGGER? Maybe they'll GIVE the phone away.

-Eric

Nope, contracts come with unlocked phones too (1)

interiot (50685) | more than 7 years ago | (#17774816)

Nope. If you acquire a phone by yourself, and sign up for a plan with an unlocked phone, they'll still lock you into the exact same contract. I'm not really sure sure why, they just do.

Re:Hopefully the 2 year contract will go away too (1)

Gavin86 (856684) | more than 7 years ago | (#17774970)

I agree with you that situation would be excellent from the consumer end, but what do cell carriers have to *gain* by such a move? Perhaps if I wasn't AT&T wireless and, in some hypothetical situation, the iPhone manages a death-grip on the market, I might try a scheme to lure customers away like that. But really it changes their entire business model, and, from the position of power in which they now sit (as many have pointed out), why are they going to throw away a plan that lets them stick it to customers by luring them in with high subsidies, then recouping the costs on lucrative multi-year contract deals?? Not that I like it, but from a business standpoint they currently have a pretty good thing going for them, and I in *today's* market I cannot imagine this changing to that drastic degree.

Things have changed (1)

michaelmalak (91262) | more than 7 years ago | (#17775004)

With phone number portability, the 2-year contracts are no longer tied to just phone subsidies, they now exist for their own sake. Even if your phone is "paid off", most carriers now have one monthly fee if you agree to a 2-year contract and another, higher, fee if you want month-to-month.

Re:Things have changed (1)

nasch (598556) | more than 7 years ago | (#17775428)

Even if your phone is "paid off", most carriers now have one monthly fee if you agree to a 2-year contract and another, higher, fee if you want month-to-month.
What is all the bile about this practice? If you sign the contract, you're giving something of value to the provider - an assurance that you will continue to pay their monthly fee. In exchange, they give you something of value - lower prices. If you do not sign the contract, this exchange does not occur, and instead each party keeps the valuable thing. You keep your ability to switch to another carrier, and they keep their higher prices. What is the problem, other than "I want it all and I want it for cheap"?

Wouldn't bet on it... (-1, Troll)

ChrisZermatt (892665) | more than 7 years ago | (#17774436)

...because we all know that Apple is going out of business in the next three months -- it won't even be able to release the snazzy iPhone in June.

I'd put my money on Dell buying out Apple's assets and renaming the iPhone to the *Dell DJ Inspiron 1250 Phone Thing [tm]*

Re:Wouldn't bet on it... (0)

Anonymous Coward | more than 7 years ago | (#17774894)

It would be more like the Dimensiplex Inspitude Ditty Phone P2380.

also (-1, Flamebait)

User 956 (568564) | more than 7 years ago | (#17774438)

Everyone assumed that Apple's $499/$599 prices for the iPhone was subsidized by Cingular. But, it appears that Apple is not allowing mobile carriers to subsidize the iPhone. Why? Because when Apple comes out with the Touch iPod, they don't want it compared in price to a discounted/subsidized iPhone.

Also, they want it positioned as a "premium" product, and they know idiots will pay full price regardless.

iphone cost and pricing... (1)

Kildjean (871084) | more than 7 years ago | (#17774466)

I think if the phone itself is going to cost lests say $600 and its not being subsidized by cingular, it should mean the ipod videos are going to cost much less.. I am still considering it... I dont mcare mouch about the pphone but i really want the resat of the features.... either way its a sweet deal.

If there's no subsidy, why require the contract? (2, Interesting)

ahg (134088) | more than 7 years ago | (#17774472)

If Cingular cannot subsidize the phone, then why did Apple give them the exclusive and require that all customers sign two year contracts? Usually the two year contract requirement is to pay back the subsidy... without the subsidy, there's usually no incentive to sign a contract. If that's the case, I think Apple botched this one for the customer.

Re:If there's no subsidy, why require the contract (2, Insightful)

nonsequitor (893813) | more than 7 years ago | (#17774692)

There was no subsidy, but there was a considerable amount spent by Cingular updating their software to support things like the visual voicemail and other new and innovative features that you can only get with the iPhone. The 2 yr contracts will help them recoup the development costs for this effort.

Please... (1)

jpellino (202698) | more than 7 years ago | (#17775284)

visual voicemail?

Little Callwave is doing it. For free.
Big Cingular makes things seem hard when they aren't.

Re:If there's no subsidy, why require the contract (1)

Churla (936633) | more than 7 years ago | (#17774724)

They may have botched it for the customer, but it's sweet as all get out for them and Cingular.

And who do you think they care more about? heh

I just don't get it, if cingular is not subsidizing the phones then why any contract at all? It makes no sense since they would have greater market penetration with a more open phone. Unless of course Cingular is paying them a kick back on each service package sold. This would be a back door way of subsidizing without actually saying they were subsidizing.

...for the customer? (1)

ClayJar (126217) | more than 7 years ago | (#17774778)

Apple didn't do this for you. Apple did it for *Apple*. Cingulattr did it for Cingulattr.

You are merely a pawn with disposable (heh) income.

Re:If there's no subsidy, why require the contract (2, Insightful)

truthsearch (249536) | more than 7 years ago | (#17774954)

Along with the specialized features that someone above points out, Apple gets some very targeted marketing out of it. They realize that today no one goes to Apple looking for phone service. But they do go straight to providers. So when Cingular markets this phone with their service they'll target many many more customers than if Apple did all the marketing independantly. I imagine they also expect some people on their current Cingular plans to upgrade to these iPhones once it's marketing by Cingular. So Apple gets more customers through more targeting marketing, and Cingular gets more premium customers.

What a stupid non-story! (0)

Anonymous Coward | more than 7 years ago | (#17774510)

This is based on an idiotic misreading of a hearsay forum post. A guy says in a forum post that he heard from a friend at Roger's that they will be offering the iPhone in Canada. This was later confirmed by other sources. The article writer then seizes on this (totally unconfirmed) part of the forum post:

"Apparently, the prices won't be much higher than the US versions (just currency conversion I guess) and that they aren't allowed to subsidize the cost of the phone relative to your contract (ie you won't save more by signing a longer contract)"

What he obviously is trying to say is that the service providers aren't allowed to vary the subsidy on the iPhone price with different-length contracts, changing Apple's chosen iPhone price point, not that the fixed iPhone price isn't subsidized by the service providers. This is totally non-surprising. It is almost certainly true.

The stupid reporter, however, took this to mean something ridiculous: that the iPhone price isn't subsidized by the service provider at all, and apparently Apple was totally happy to lock the iPhone sales to a few providers who won't sell it unless it's tied to with a years-long contract, despite those providers kicking in no part of the hardware expense. This is shocking and makes no sense. It is almost certainly false.

Thank goodness! (0)

Anonymous Coward | more than 7 years ago | (#17774560)

First off, obviously there is no such thing as the phone company subsidizing phones. You're the one paying for it (via installments and higher phone rates).

Anyway pedantics of semantics aside I been waiting for this one. With subsidized phones, the carriers locked up mobile phones. But if they aren't subsidizing the phones .. we can slowly move away from vendor lock in. And that means you can hax0r your phone and put your own ring tones and custom applications. Maybe you can add home automation features to your phone? Would be nice to turn off the lights that way etc. Maybe turn it into a TV remote control too? Maybe have a single phone that can switch carriers on the fly (wifi to CDMA to GSM etc). The possibilities are endless.

The point is, since you own the device .. you can finally do more crap with it.

http://www.companyfuckups.com/ [companyfuckups.com]

Verizon? (1)

edmicman (830206) | more than 7 years ago | (#17774658)

Ummmm, I'm on Verizon and Cingular would need to dangle a heck of a lot of discounts to make me want to drop 600 bucks on a phone, switch carriers, PLUS pay for a service plan. Not the least of which would be steady coverage EVERYWHERE I go. The main reason I stick with Verizon is that pretty much everywhere I've gone, Verizon's coverage will work where others won't.

Re:Verizon? (1)

aesiamun (862627) | more than 7 years ago | (#17774938)

Never been to Stowe, VT huh? Cingular works pretty well there...verizon? sucks.

Agreed! (1)

FatSean (18753) | more than 7 years ago | (#17775392)

My wife had cingular and a nice samsung phone, I had Verizon and the cheapest/no-frills kyocera phone. Her phone would constantly get drop-outs...but not hang-ups...heh. Mine just always worked. It was weird...

Re:Verizon? (1)

markov_chain (202465) | more than 7 years ago | (#17775466)

I wish Verizon had worldwide service. For this I go with T-Mobile: $30/month plan and free worldwide phone.

Re:Verizon? (2, Informative)

cyngus (753668) | more than 7 years ago | (#17775582)

My experience is that Cingular and Verizon have roughly equivilant coverage. There are places, however, where ones works and the other doesn't and I think these just about wash out. If you happen to be one of those people that live or work in one of their dead zones, of course you're going to think it sucks. So, pick the service that works best for you in your tiny subset of the coverage area, but don't extend this to make general conclusions about coverage. Besides, EVERY company in the US sucks incredibly large donkey balls compared to the coverage offered by European carriers.

I'd LOVE to see phones separated from service. (3, Insightful)

dpbsmith (263124) | more than 7 years ago | (#17774696)

The current system essentially amounts to anticompetitive bundling. It frosts me that I cannot take "my" phone with me if I change carriers.

It also makes the overall package so complicated that it's fairly hard to make a cost comparison between competitive carriers.

It also creates an incentive for bloated, overly complex phones since it is in the carrier's interest to be certain that you are capable of using any cost-added services they provide.

Just as Consumer Reports advises that you should always negotiate car price, car financing terms, and tradein as separate deals, what I want to do, and what I think is best for the consumer, is simply buy my phone as a separate transaction from buying service... and be able to change carriers whenever I feel like it, while continuing to use the same instrument.

If the iPhone moves us toward that model, good.

Re:I'd LOVE to see phones separated from service. (1)

BenFranske (646563) | more than 7 years ago | (#17774910)

If you have a GSM provider and purchase unlocked phones you can already do this, I've been doing it for years and some of my favorite phones have been European imports.

Re:I'd LOVE to see phones separated from service. (1)

popo (107611) | more than 7 years ago | (#17775020)


FYI: http://www.gsmliberty.net/shop/ [gsmliberty.net]

'Worked for me.

Rebate? (1)

revlayle (964221) | more than 7 years ago | (#17774714)

Cingular will sell the iPhone for "full" price, and give you some sort of rebate for contract of service, would be my first guess on how they handle it.

The headline is wrong. (5, Insightful)

MarkusQ (450076) | more than 7 years ago | (#17774716)

If this is true, and the pricing will be based on the actual cost to produce them and the number sold will be determined by how many people are willing to buy them at that price (supply and demand, anyone?) without all sorts of shell game market manipulation, the headline should read:

Apple Turning Cell Phone Market Right Side Up

It's sad that we've gotten to the point that a rational straight forward pricing model, without games, is considered "upside down."

--MarkusQ

Re:The headline is wrong. (1)

adamstew (909658) | more than 7 years ago | (#17774892)

Here here.

There are whole forums dedicated to understanding cell phone service plans (http://www.howardforums.com) because of their screwed up pricing structures for equipment, service, rebates, add-ons, etc.

Interesting, since unit price is the hurdle (3, Interesting)

jratcliffe (208809) | more than 7 years ago | (#17774780)

The barrier to getting people to sign up for wireless service (or a lot of other subscription services) has always been equipment cost. Even though a customer is likely to pay $1k or more in service fees over the course of a 24-month contract, consumers focus on the $300 upfront for the phone, not the monthly fee. Cut the phone price, and more people sign up.

BTW, for you folks who don't want to sign up for a contract, you don't have to. Get your own phone (paying retail price), and Cingular or Verizon or Sprint will put you on a month-to-month contract, no problem. There's no way the economics work, though, to have free RAZRs and no contract.

Why the iPhone won't matter (1, Insightful)

popo (107611) | more than 7 years ago | (#17774828)


First, this is not flamebait. I think the iPhone looks beautiful and I genuinely
adore everything Apple does from a visual perspective.

But...

For all of Apple's design strengths, physical UI is not one of them. I could go into
a million examples but take Apple's history of the mouse for one: Sure, Apple pioneered
the original mouse. But Apple's desire for minimalism ultimately hurt development. The
physically contoured 3 button wheel mouse looks hideously complex compared to all of Apple's
designs which have ranged from the "hockey puck" iMac mouse, to the multiple single-button
ultra symmetrical designs they've come up with. But truth be told -- I use a 3rd party
logitech mouse because its just plain superior in terms of interface.

You can look at the history of Mac keyboards and reach similar conclusions. (Although my
clear acrylic keyboard looks sweet, its just not as usable as the 3rd party, uglier,
keyboard that I use).

So, back to the iPhone: There's no keyboard. Yes, there'll be an onscreen keyboard. Will
this be usable? Will it be as good? No one actually knows yet, but I'm going to have to
guess "no" on both counts. Sleek minimalist, symmetrical design is fantastic (and I've always
been a big fan of it). But the reality is that human beings aren't sleek, minimalist and
symmetrical in their UI needs. We're multi-digited, mono-dextrous creatures with clumsy
fat appendages and pre-wired for physical feedback.

Ultimately I think the iPhone is going to be one hell of a sexy device, but I don't think
its going to have any place in my life because I "live" on my Blackberry, and its a workhorse.
I wish it weren't the case because I'm a sucker for most things Mac in terms of design
and aesthetics. But this is about my fingers and my messaging. And, well... neither of those
things is terribly sexy.

Re:Why the iPhone won't matter (0)

Anonymous Coward | more than 7 years ago | (#17775104)

Sure, Apple pioneered the original mouse

The original mouse [wikipedia.org] was developed by Xerox at parc. See wiki for details on who actually pioneered the mouse.

Re:Why the iPhone won't matter (0)

Anonymous Coward | more than 7 years ago | (#17775604)

They don't get it right everytime, but I think they nailed it with the iPod. There isn't any point speculating on this until you can get a production model and try it out. For now I'll just say sometimes they blow it (hockey puck mouse), and sometimes they get it absolutely right (iPod). At least I think they always do a good job aesthetically and that matters (see Postrel's book The Substance of Style for a good argument on this).

I don't get it... (1)

ryanw (131814) | more than 7 years ago | (#17774840)

So the $499 / $599 isn't subsidized, so why the hell are people going to be stuck in 2 year contracts? So they get a phone for a primium price AND locked into a 2 year contract. Doesn't make any sense, one or the other.

#1 Reason to Buy iPhone...It Works (2, Informative)

BoRegardless (721219) | more than 7 years ago | (#17774854)

I have no doubt the integration between Macs & iPhone is going to be ABSOLUTELY UNBEATABLE. I know Apple will keep the interface simple, even though I know they will upgrade it over time, I know from experience, I can rely on Apple to DELIVER easy to use functionality. I don't have countless hours to study new equipment and software for dozens of hours a month.

I have had so many phones that had crap that didn't work, every new phone had a different keypad buttons and menus & icons, and menu structure, and non were consistent or easy to sync (if possible at all) and the bluetooth earphone reliability was iffy.

Physically most wound up with so much lint in them, I'ld have to figure out how to disassemble them to blow the lint out. Antennas would break, battery cover doors would not latch right, and tape was the norm, and god help me if I had to read a screen in open sun.

I expect to buy 2 iPhones, one for my wife who can barely figure out how to do basic uses on her "LG" phone, so for once she can have her entire phone book on the iPhone along with calendar and notes, etc. This may be the godsend that finally means I can get her to stop using the inch thick phone & calendar book with the pages that get torn out.

For me to be able to move on and off the the phone, & web means I can simplify keeping in touch as just a starting point.

Re:#1 Reason to Buy iPhone...It Works (1)

InsaneProcessor (869563) | more than 7 years ago | (#17774986)

I can beat it as long as the price is absurd. When I can get my phone for $0 and a valued MP3 Player for under $200, what value is the iphone?

Re:#1 Reason to Buy iPhone...It Works (1)

VGPowerlord (621254) | more than 7 years ago | (#17775126)

even though I know they will upgrade it over time,
for $129 a pop after the first upgrade. ;)

They won't sell well (0, Troll)

szembek (948327) | more than 7 years ago | (#17774906)

The iPhone is doomed to be a failure at that price. Sure, they'll sell some to the high tech crowd, and the "have to have it all" crowd. But everybody I know gets the cell phone that's free (or at least $100) with a 2 year agreement. You can get a razr for free every two years, or a comparable phone.

Re:They won't sell well (0)

Anonymous Coward | more than 7 years ago | (#17775050)

So, how many people do you know who are business executives? They're not aiming this at Joe Schmoe, they're aiming this at the same crowd that buys expensive Blackberries and Palms.

Re:They won't sell well (1)

squiggleslash (241428) | more than 7 years ago | (#17775422)

No they're not, if they were, it'd have Exchange support.

Bizarre as it might sound, this is aimed squarely at the iPod crowd.

Not another... (1)

riceboy50 (631755) | more than 7 years ago | (#17774968)

...ridiculous wireless service flame war. I totally understand the motivation of fanboy-ism, but I am just so tired of the console/wireless/editor/distro/OS flame wars. They always say the same things and nobody makes any progress. Can we give it a rest?

is it too soon? (1)

atarione (601740) | more than 7 years ago | (#17775048)

to start calling the iphone (tm Cisco Systems) the Newton 2 instead ??????

I'm always surprised at the US's cell prices (2, Interesting)

Hektor_Troy (262592) | more than 7 years ago | (#17775174)

You live in a non-regulated market with regards to cell phones (as I understand it at least).
I live in a fairly heavily regulated market (Denmark).

Here, with the most expensive plan being prepaid phones, I pay about 4.3 cents/SMS including a 25% sales tax. About 14 cents/minute to make phone calls I think (I don't make that many - others call me)
Sure, we may not get as "awesome" a phoneplan as you guys do, and thus we probably don't get the phones as cheaply as you do.
But we don't pay for incomming calls or SMS' at all, which is rather nice - especially on a prepaid phone.

Also, when we go shopping for a phone, the sellers are required by law to tell us exactly the minimum price of purchace including the minimum price of any required plans (which can't go beyond 6 months btw).

Example:
Sony Ericsson W810i
Cheapest I can find is US$ 247 (minimum price during the 6 months)
This is 104$ for the phone, 17$ for the start-up fee, 125$ for a 6 month plan (and a bit of rounding).

Those 125$ (20.84$ a month) are simply the minimum cost - if you call, SMS/MMS etc for less than that per month, they'll just charge you the full monthly price.

Long live the free and unburdened market.

Doesn't this present the danger of fair pricing? (2, Insightful)

frovingslosh (582462) | more than 7 years ago | (#17775210)

Without kicking in $100-$200 against the price of the phone, Cingular can discount the service

But wouldn't this lead others to want discounted service if they supply their own non-Apple phones? If an Apple Iphone user gets a discount for supplying his own phone, shouldn't a user who just wants to use a less expensive phone be able to supply it and buy the service at a fair price too? That would ruin the business model of the cel companies. The current business model of all of them, even though they are prohibited by anti-trust laws from all agreeing on how to screw the consumer. Isn't going to happen. Sure, there might be some claims of this, but new ways to screw the consumer will be created at the same time to make up for it.

Come on, the industry knows that the iPhone people are exactly the people who have too much money, they are not going to be giving them a break, at least not a real one.

If... they offer a kickback for the iphone (1)

zakezuke (229119) | more than 7 years ago | (#17775236)

Righto, if I buy my own iphone at $400-$500, I get a service discount of $100 to $200, I presume for the first year, or first two years.

Ok, what if I screw the iphone and just buy my own. Can I get the $100-$200 kick back, as in premium service for $23 to $30 a month? If not, why not?

Not that I mind getting a new phone every YEAR, batteries do cost tens of dollars. But if they offer this deal for the iphone, the way I see it, they should offer the same deal if you bring your own phone.

The iPhone IS Subsudized (5, Informative)

f1f2f3 (66764) | more than 7 years ago | (#17775252)

The people at MacRumor need to work on their reading comprehension. From TFA:

aren't allowed to subsidize the cost of the phone relative to your contract (i.e. you won't save more by signing a longer contract
Emphasis in the original. This doesn't say Rogers/Cingular can't subsidize, it says Rogers/Cingular can't change the subsidy based on contract length, meaning they can't charge one price for a one-year contract and another for a two-year contract. That still lets them subsidize the phone overall, and sell it cheaper than it's "street" price

Have you seen the iphone? it's nothing special (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#17775342)

They couldn't PAY ME to use that phone and switch to AT&T......

You can already do this (0)

Ancil (622971) | more than 7 years ago | (#17775358)

Already I see a few dozen replies along these lines:

"I should be able to buy my phone and my service as two separate transactions!!"

I don't know about other carriers, but Cingular already does this. Go look at their website. They list a price for the phone, and a price for the phone with a 2-year contract.

For example, a brand new Moto KRZR will set you back $400 with no contract, or $200 with a 24 month contract and a rebate form to fill out. You decide for yourself if 2 years chained to Cingular is worth an $8.33 discount every month.

Most people do commit to the service because they want the discount, and a cell phone isn't much good without service anyway.

You can still get the discount if you don't want a free phone. If your 2-year commitment is up and you want to make some money, go get a new phone at the discounted price, then sell it for a smaller discount on Ebay.

Buy an in-demand phone like the KRZR or Blackjack for $250, then sell it for $350-$400 and pocket the difference. People do this all the time -- go look on Ebay for yourself. You get to pocket some money in exchange for committing yourself to another 2-year contract. The person buying your phone gets a discounted phone, new-in-box, with no contract to worry about.

Did Apple pay to have this article written (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#17775594)

I mean the word is that this iPhone is widely considered a failure already. It's on cingular to begin with which is probably the worst of the major network providers. Sprint and Verizon offer better phones with better reception and better customer service and at the same prices as cingular.

There is just no real selling point for an iPhone right now. It's almost certainly going to function at lower quality than competing cutting edge technology from LG and Motorolla. It's on the cingular network which means much lower quality coverage and probably call quality. Cingular may drop less calls but that probably because they make less calls or simply a payed for statistic/lie.

It looks to me as if the iPhone is cingulars bitch. There is a reason why half the people in the US have the same phone.. because it was the free model on phone upgrade day. There is also a reason iPod sales have died off, which is because it was a trend. Apple is retarded to be wasting it's time on the iPhone. They are investing into an infrastructure they don't own AND keeping their investment closed to third party developers. They could hardly do more to ensure the iPhone is going to fail. People don't especially want mp3 players and they don't especially want them built into their phones either. I mean think about how useful this option actually is. Beside high school kids and gadget freaks portable mp3 players aren't really as popular as people think. Apple music sales isn't much of a hit either. Proving that Apple supposed hold on the portable music industry doesn't really exist. It's just not a market that truly under high competition and for good reason. A lot of companies don't want to help perpetuate the MP3 problem. Why make mp3 player while at the same time trying to remove MP3 availability. People don't want mp3 players unless they are getting the music for free. I don't have the time to PLAY with my phone. I'd rather have advanced features that are actually useful like better apps with voice recognition and of course the ability to use or create third party apps is a must. If I wanted an overpriced mp3 player I'd just buy an iPod which are proven and mature instead of investing into some gimicky gadget that doesn't do what I want it to but looks cool in the process. If I'm gonna drop 400 bucks on a phone it sure as hell better have a real OS on it like Windows CE and third party app support. Plus LG is going to beat Apple to the market with an iPhone look alike. So, Apple is screwed on this inestment. They are too late to market and people just don't care. They need to get that product to market a year ago and not limited to one network. Most cingular users are on cingular because it WAS cheaper because of roll over minutes, but their competitiors have closed the gap on that one. You won't find many people claiming cingular is a better phone company than Verizon or even Sprint. I've seen it's users first hand and dealt with the customer support which is horrible. Their phones seem to break more than any other network also. You could argue Cingular needs something, but I certainly can't see it being an iPhone.

What's Apple plan here anyway. Do they really plan on competing as a major phone providers like LG? Somehow I doubt they can keep up and profit with that business model. Phone sales are already cut throat it's really not a business with a lot of profit margin left. Selling the network, of course, is where you profit. You can see apple is already crunched with the cost of making the phone they can't even offer sign up deals. That are backed up against the wall and LG hasn't even released the competition which of course will be offered at deals and probably much better ones than Apple can provide.

I mean have you guys noticed that bluetooth and/or cell phones don't have good audio quality to start with. Unless you plugged up to headphones your listening to some mono low quality crap over bluetooth. When am I supposed to have time to plug headphones into my phone so I can listen to music. I mean why not turn on the radio, or play a CD. I don't want to listen to music through headphone unless I really have to. Why is an MP3 player really all that useful in real life. I don't use mass transit which is about the only time I could really use an MP3 player. Why carry an mp3 player around for the few times that I actually need it. I consider my life not too much different that most peoples. Most people don't use mass transit and prefer their car radio over headphones.

So whats the mp3 player really for.. so I can hook it to my stereo in my car. I'd kinda rather have someone else managing my music for me to be honest. I find when using these mp3 player people tend to just listen to the same set list forever. Once the initial gadget thrill wears off at least.
If I'm doing so little that I can sit back and throw my headphone on and listen to music I'd rather have a laptop or some productive device. If I'm on the run I mean I'm probably a lot safer and more alert when I'm not wearing headhpones. So the only time I'd actually find a need for an mp3 player is either when the drivers music sucks realy bad and I can't get away OR when I was jogging or exersizing in some similar way that wasn't too intense so I could still use my headphones.

iPods aren't known to be very reliable either and Apple return deal SUCKS BALLS. They are total slackers when it comes to returns. Most kids get these and play with them for a couple months and they throw in a drawer and pile shit on it until the screen is scratched up. Then ONE day they'll pull it out when they are going on a long trip or something. iPods NEED to do a lot more for their cost to continue to sell because people want more than a stupid mp3 player or mini crappy video player. That shit just isn't really useful or practical. It's just like hey look at me I can play porn at work now.

One of my main desires out of a cell phone is great reception and long battery life. I bet the iPhone has neither. So when my iPhone won't make a call cuz I'm in the subway (and only verizon covers the DC metro) or the battery goes dead I'm just going to wish I had a real phone. People who sign up for vcast and all that shit are just suckers. If you want to watch movie get a portable DVD player, they are MUCH better than an iPod or iPhone and you get a WAY larger screen for anywhere near the price of even a cheap iPod. If you want to listen to music get one of the reasonably priced players and deal the reality that you don't need your entire music collection when you go out jogging for 30 minutes.

Apple screwed itself on this one people, just watch.
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