AT&T Is to Blame for iPhone’s Selling Methods

I’ve always wondered why the iPhone just doesn’t sell like the iPod: sell it to anyone and everyone who is willing to pay the cash, and let them worry about the carrier afterwards.

Apple actually did that with the original iPhone, which pleased many users and Apple. However, it doesn’t seem that AT&T was too happy about it. With the iPhone only available in the USA at the time, many iPhones were being bought and shipped overseas for other carriers. T-Mobile USA also has a significant amount of iPhone users because of the ease and availability of purchasing an iPhone without a contract, and it was estimated that one in six iPhones were not activated with AT&T. 

As the iPhone was sold to other countries, Apple followed the same pattern and strategies as it did in the USA: sell it exclusive to one carrier and require its users have an AT&T contract. This may have worked stateside, but not necessarily in many other countries. Many foreign countries sell cell phones much like the iPod. I’m sure Apple did its research on each country and determined what would be the most effective way to sell the iPhone, but why continue bundling a contract with every iPhone?

The answer would be the carriers, specifically AT&T. Now that we live in a world where communication is nearly instant worldwide, those carriers have a lot to lose from a foreign country’s unlocked version flooding their own markets. This is currently China Unicom’s problem in selling the iPhone 3GS. For years “black-market” iPhones have been available in China for a similar price including Wi-Fi, so why would anyone consider signing a contract for what is a crippled version of the product? 

iPhone users elsewhere do not have it better off. In Australia and Hong Kong, for example, the iPhone is available unlocked outright for around US$730, over triple the costs of an iPhone with a contract! A simple search on eBay finds similar prices. Buying a locked iPhone outright in the United States requires an existing AT&T iPhone contract, and is a steep US$600. 

The current method of selling the iPhone, therefore, is due to the influence of AT&T on Apple. The carrier knew that releasing unlocked iPhones to other countries would affect its own sales, and determined that Apple would have to sell the product worldwide with a contract to a carrier unless local laws prohibited it. If the product would be sold unlocked, then Apple would discourage its users from buying it and raise the prices. Today, it is nearly impossible to purchase an iPhone without signing a contract.

I’m sure that when the iPhone loses its exclusivity with AT&T, Apple will begin selling the iPhone in other countries off the shelf, like the iPod. Prices worldwide will drop, since I really doubt the iPhone can continue to sell at the price of a Mac mini and succeed. Until then, all we can do is wait.