Why the iPhone 3GS upgrade approach is stupid.

This post is focused on the (large) group of strong iphone supporters: mainly people that bought an initial iphone at launch and immediately upgraded to the iphone 3G when it came out.

Here is what it says on the AT&T site when I check for an upgrade:

iPhone Upgrade
As a valued AT&T customer, we can offer you a discounted iPhone upgrade at a higher price, along with a 2-year commitment and an $18 upgrade fee. Please proceed with the online upgrade process for pricing details. You may qualify for a full discount on a standard iPhone upgrade on 07/13/2009

I can currently get the iphone 3GS for $499 – which is apparently the midrange of available prices. So it is sort of an upgrade price. But I can get the full upgrade price ($299) on 7/13 (which I’m guessing is the 1 year anniversary of my purchase of the iphone 3G.)

The annoying thing here is that the iphone 3GS will be released on 6/19 – so I can wait 24 days to upgrade and, presumably, save $200 or I can upgrade now. This is where it gets stupid.

Or I could game the system by buying an iphone 3GS on launch day, return it on 7/13, pay the 10% restocking fee ($49) and then buy a new one for $299. That saves me $150 on the get it now price (or I rent it for $50, depending on how I look at it) and creates a giant hassle for me and a lot of waste for Apple and AT&T. (The iphone has a 30 day return policy with a 10% restocking fee if it is used.)

I understand why AT&T doesn’t give everyone an upgrade all the time, that’s not good business. But sometimes a company should apply common sense, which they have clearly not done. Apple is partly at fault for this – the 24 day gap was created because the iphone 3G shipped a month after its announcement and the 3GS is shipping 2 weeks after its announcement. Apple could have avoided this whole brouhaha by just shipping the 3GS on the 1 year anniversary of the iphone 3G. Sure, some people would have whined about having to wait that long, but no one would be pissed that they aren’t able to upgrade to it.

Or, even more easily, AT&T could say “we’re going to let anyone who is less than 30 days away from their upgrade date” to upgrade on launch day. This would have won a ton of fans and some positive feedback for AT&T being good sports and rewarding the people who buy the upgrade every year and who are presumably great AT&T customers. The cost of letting these users upgrade 30 days in advance is insignificant and it does not set a significant precedent that would damage how phone upgrades are sold in the future. It’s a one time thing to resolve a timing anomaly.

The other benefit is it would likely reset upgrade dates in such a way that there is a lower probability of an 30-day upgrade gap next year assuming Apple continues to release iphone upgrades at the WWDC.

AT&T: if you’re listening (and you’re probably not for a myriad of reasons):

Create some goodwill among your most rabid consumers! It’s 24 freaking days!


  • Reply Dean Cruse |

    I (probably) bought my currrent iPhone 3G on the same day as you (the day it was released). Yet, my upgrade price on the new one doesn’t kick in until December 12 (18 months later, I assume).

    So, not only is the 24 days stupid, they seem to be arbitrarily applying the upgrade rules to different customers. I haven’t called them to gripe yet, but say I can’t get it changed to now (or July), I’ll then be looking at purchasing a 3G S 6-months into a 12-month Apple release cycle, and toward the expected end of AT&T’s exclusivity.

    The is horrible marketing on so many levels it’s unimaginable.

  • Reply Mark |

    Dude, like you said, it’s 24 freaking days! Just wait! You sound kinda yuppie and entitled.

  • Reply Cesar Torres |

    I never got around to upgrading to a 3G from my 2G phone (mainly because the new phone wouldn’t charge in my car when the old one did), so I get the announced prices.

    I definitely agree about the upgrade system being really botched. Hopefully 1) AT&T will get their acts together after the feedback from this upgrade and 2) hopefully Apple will sign with Verizon as a partner once the AT&T exclusivity is up.

    It’s insane to think that a 24-day exception could mean the difference between loosing a customer or keeping them for life. Some companies will just never learn…

  • Reply busey |

    It irritates me on a personal level, but I wrote this post more to look at the stupid aspects of how they rolled this out and portrayed it to their customer base (which is rabid for the iphone, but not generally fond of AT&T – so building some good will would be a good idea for them).

    It’s not about entitlement. It’s about stupid marketing. These guys just don’t think about keeping customers happy or long term customer retention because they grew up as monopolies.


  • Reply Kyle Simpson |

    Great article. I highlighted it over here on my blog: http://ifail3gs.com/complain/

    AT&T really is making no sense on this topic. This whole 30-day return policy is golden for us, but a giant pain for them I’m sure because they have to deal with people who use logic and reason to operate.

So, what do you think ?