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AT&T hikes iPhone 3GS to 99 cents for unknown reasons

updated 06:20 pm EST, Fri November 18, 2011

ATT raises iPhone 3GS price up from free

AT&T in an unusual decision raised its price for the iPhone 3GS on contract. Previously free on contract like Apple set, the entry iPhone now costs 99 cents. The company didn't have an explanation for the hike, but in a statement didn't expect demand to change.

"iPhone 3GS is still available at an incredibly low price and we're confident consumers will agree that this remains one of the best deals for a leading smartphone," it said.

The price increase might be to curb demand. AT&T's wireless chief Ralph de la Vega warned of sellouts and shortages for the now 2.5-year-old iPhone, most of all after it dropped to free. The extra revenue from the 3GS would be small given that the iPhone 4S and iPhone 4 are still more popular as a whole, but it might discourage those who look for the first available free phone.

No other carrier in the US sells the iPhone 3GS because of its GSM-only nature, letting AT&T raise the price without fear of competition.




by MacNN Staff

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Comments

  1. Lifeisabeach

    Joined: Dec 1969

    +3

    Or maybe...

    … maybe they just figured that they may as well squeeze one last buck out of it.

  1. bjojade

    Joined: Dec 1969

    +12

    It's about taxes.

    It is in no way to adjust 'demand' for the phone. Free and 99 cents are pretty much the same thing. If 99 cents on a $2000 contract makes a difference, you weren't getting that phone to start with.

    In many states, such as Wisconsin, if you give away an item, the SELLER is responsible for the sales tax, totaling the original purchase price of said item. If the phone is costing the carriers $500, that would mean they owe $27.50 in taxes (5.5%) If they sell the phone for $.99, the customer pays $.06 in tax. As you can see, raising the price to $.99 makes a lot of sense.

  1. esoterica

    Joined: Dec 1969

    -5

    Advertising

    It's because AT&T has completely stopped advertising the iPhones. Even the first weekend after the iPhone 4S was released and the 3GS price dropped to $0, AT&T ran a big ad for free smartphones and didn't include the 3GS. This way they can avoid that discrepancy in the future.

  1. JEB

    Joined: Dec 1969

    -1

    The Price Is Right

    Honestly, they should really be charging:

    $0.3GS

    to identify product inventory

    Just my $0.02 . . .

  1. wrenchy

    Joined: Dec 1969

    -3

    iFans


    can brag "It's not free anymore".

  1. coffeetime

    Joined: Dec 1969

    +3

    Well, it says....

    "The price increase might be to curb demand."

    You got me, AT&T. Now I can't afford it. I will re-consider it if it's 49 cents.

  1. qazwart

    Joined: Dec 1969

    +2

    AT&T's Free Phone List

    When you sign up for AT&T service, they show you the "free" phones first, and then the others. It could be that they don't want the iPhone to show up as one of the "free" phones. AT&T makes marketing agreements with the manufacturers on promotion deals. Putting an iPhone on the same page as these other phones may have violated this agreement.

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