It's Apple. They overcharge for a label and avoid all chances to help the consumer by keeping prices astronomicly high and attacking products they don't directly compete with. It's par for the course for Apple, except for the part where they helped another company.

Okay, I have to totally disagree with almost everything you said in this post...

First up. Sim cards. Sim cards and the rest of the world work primarily on GSM. The only two major carriers in the US to use GSM would be AT&T and T-Mobile.

Second, subsidy unlock codes are very easily gotten, legally. And with the new Library of Congress deal about the disallowance of Subsidy locks... this should soon be a moot point.

Third, look at the pluthera of other devices that only work on one specific network... i.e. the T-Mobile Sidekick.

Fourth, if you're not already a customer, you can buy the iPhone and have service without a contract (I just quit working there, and as of a month ago, this was allowed. you just have to get someone that knows what they're doing). The only thing you don't get is rollover minutes, and maybe mobile to mobile. But just like overseas, there has to be some give and take with certain features, etc...
The contract only gives you the discount on the phone and the "special features." But there are most certainly plans that are in the system for specific customers that don't want to sign a contract. And I'm not talking about "go phone/pre-paid" either. There are full account plans that allow no contract. Of course, you'll have to pay full retail.

Fifth, as far as cost... It's just like anything else you buy. A car for instance. It doesn't cost $20K to build a new Chevy Malibu... but there are advert costs, development costs, and many many many other costs. Yes, they're still making a ton of money, but quite a bit comes from Apple. The rest, of course, AT&T gets their hands on. Of course, they make it back over time with that contract if they're giving you a discount.

Yes, it sucks when a shiny new product comes out that only works with something other than what you have. But that's corporate America. Heck, that's Corporate Earth!
But like everything else, there will be copies.
No, it won't be Apple, but isn't Apple just copying other products out there? Sure, there's not anything exactly like this out there already, but all the components are there.

Okay, I'll get off my soapbox for now... but I just had to point out some of the flaws in your reasoning.

P.S. Shouldn't we have expected this... Since everything Apple does is proprietary to SOMETHING! I'm honestly surprised they didn't start up Apple mobile! Even if it was like Disney Mobile, Ampd, or even TracFone... where they work off some other network and charge you more for the same services offered by the real network...
[an example of what I mean is how when their computers first came out and they only used Apple components, or how the iPod only worked with iTunes, etc...]

P.P.S. I love this blog and don't/didn't really mean to be offensive.

Apple really screwed up with this one, locking it to AT&T was a stupid move that got them what? Video voice mail? As far as I see AT&T brought nothing else to the deal so why lock themselves to them...?

FTLNewsFeed

"The iPhone costs Apple about $250 to manufacture, so there's a 50% profit on every unit sold. "

Isn't it 100% profit?

Just because no one else remembered to mention it, I will. Visual voice mail. Let's not forget that this requires upgrades on both ends. I'm sure that there may have been at least one other carrier willing to do this for a single phone (with more manufacturers jumping on board later) but others likely just did not want to invest in such a thing.

Sure it's not the only reason but one worth mentioning.

I'm sure that later down the line carriers will see the potential and Apple will manufacture the iPhone or the iPhone v2 or whatever with other carriers in mind. After all the Moto Razr was once a Cingular exclusive too.

I don't really follow your oppinion on this one. Most people in europe do sign up for two year contracts to get their phones more or less for free (1-50Euros depending on model), at least in Germany this is the normal proceadure. Mostly you must pay something extra for the latest models but the prices drop farily fast (if you get the phone with a contract). Sure you can buy the phone without a contract and pay the full price but that happens very rearly.

Amazon.de is right now offering sign up for the coming iphone. Something like 899 Euros for one of the models (without a contract) the price for the device with a contract hasnt been set yet by any provider (as far as i know). I have checked eplus, vodafone and t-mobile.

To be quite honest, I dont see the difference in the process at all..

Please don't affirm things about Europe when you obviously have no idea of what you're talking about!

In France or Switzerland for instance, nobody ever buys a full price cell and you choose a 1 or 2 year contract depending of own much rebate each solution offers. It's amazing how you try to make a point while fishing arguments out of nowhere.

Besides, even if you bought the iPhone without a contract, you would need to subscribe to one in order to actually make phone calls...

I guess the bloggers of this site don't respond to criticism... as they've had over 2 days to respond to our comments...

Apple Rules! Any thing they choose to do should be understood as pure genius! All PC owners I know are scared to even use their computers for fear of a crash, virus, or some other God-forsaken thing they face on the internet. It really makes no sence to me why people still buy these dianosaurs! Apple on the other hand has always thrust us into the future. Where Sci-Fi becomes a true reality! They never cease to Amaze me. I have Cingular thank God and look forward to the iPhone upgrade soon. Will I be able to create a worm-hole to other planets? Who knows? I will have to wait and see.

And another thing; Where do you get they overcharge for anything? I am sure they are in the business to make money, but the technology and extras they give you is well worth it and really a great consumer bargain.

I'm so sick of cell phones I hope the industry rips everyone off so badly they rebel and quit using the things anyway. i-anything is the media telling people they should like a product because they say so, not because it's a better product. People lap up the junk, why shouldn't they lap up the gouging prices too?

Disappointing. Very Disappointing. Everything I've seen on this supposedly amazing gadget is nice, except for one fact. It has no high speed wireless other than WiFi.

If this doesn't come with a UMTS capability, then it's a pretty brick.

It's not surprising at all that a new phone is locked into one carrier for a length of time as exclusive (look at the Palm Treo agreements over the last few years). There are plenty of cool gadgets at CES and related showcases that never make it to US markets because the carriers in this country control the airwaves. It's not that the FCC has much control over what they do or charge, either. So expect the iPhone to move to other carriers after 6 months with AT&T with different versions, etc.

One limiting factor is that companies have to really negotiate with the carriers to do things that might be new or innovative. The carriers have a lot of infrastructure to pay off and new tech comes at a price, unfortunately. I read something in a telephony tech rag about how the copper installations of regular phone have still not been paid fully off after 30 years. They assumed no changes, and were bitten by that. New, emerging sectors go all wireless and have none of the back costs that the US carriers have.

When mobiles hit the scene, people demanded coverage everywhere, and that removes demand from the old-style copper phone connections. When new tech hits, the carriers charge premiums because they can and sometimes because they need to.

There is no black and white. The Apple zealots will love iPhone no matter what faults it has and it will smell like roses to them. Now that's consumer loyalty.

After reading the commentary and all the blogs I decided this time I would have to reply...

I sincerely have to agree with the original article Adam wrote. I am from Germany and I have lived in most countries in Asia as well. I also know quite well the differences between the USA, Europe and Asia. Therefore I concur with Adam. It is "apparently" true about video services here in the USA. South Korea for example is light years ahead of us in every hardware/software technology, especially in Video and 100mb internet to every household, not to mention Japan's 10 Years of cell phone video technologies. I have tried several providers trying to get service without a contract, very difficult indeed, whether it be incompetence or whatever.

My resolve, I have started a company that will hopefully provide free or VERY cheap communications to everyone via POWERLINE, infrared and wireless. I believe it should NOT cost anything to communicate! We are born with a voice and the monopoly on communication will not prevail, sooner or later people will get smart.

Nice article Adam!
Mike - PLC-Connect

This is stricktly speculation, but here is what I believe. I bet you that apple made their iPhone pitch to all the majior US carriers and asked them all "what would you be willing to pay to have exclusive rights to the worlds most revolutionary phone?" And AT&T was the one that paid them the most money. Think about it. To be the company that you have to have service for to use i-anything is huge. Expecially if you sign up for a 2 year contract. So they really only need rights for about 6 months but they truly have exclusive rights for however long people sign up with their contracts. It isn't apple's fault, they are just in it to make a pretty brick that will make them a lot of money. AT&T just made them the most.

P.S. Don't flame me, this is all purely speculation, but it makes sence.

mike_amata: I agree with what you are saying about communication should be free, but it isn't practical in the world we live in. Everything costs money. So unless you plan on building cell towers from nothing and paying people to service them with fake money, then you are going to go very broke very fast.

blzrd,

Obviously my company is making money from the commercial use of other services provided on the same networks we have, such as security cameras along borders, for example. Voice, internet, personal video Communication is a piggyback on a very high tech network and doesn't cost anything additional. Also, Cell towers are not ever needed in our network, so we negate the "fake money", to quote you. By the way, I am one of the original 7 engineers that created GSM. Regards.

First, for this to be a real issue you must desire to own an iPhone. I do not, and currently doing just fine with my Razr.

Second, from what I have read about the iPhone I do not see any real benefit for me (a business person who uses a cell phone like a phone....duh).

I have an iPod Nano, and sometimes listen to it. I don't need to listen to tunes on my phone.

Besides, I would not buy the first generation anything (look how the iPod mini morphed into the Nano). So, in about 2 years the second or third generation may be out, and probably the price will have dropped considerably.

That's all.

Apple is a cult. Apple consumers are a bunch of lemmings.

How can you "think different" when you all think alike?

:-)