Wednesday, September 19, 2007

Technical stupidity

The iPhone was launched in the UK yesterday, and already the bollocks has started flying in the MSM (and elsewhere). One of the more frankly ludicrous claims is this one in The Times.
Apple’s iPhone, the year’s most hyped gadget, arrived in Britain yesterday with a starting price tag of £899.

The basic handset will cost £269 – £69 more than in the US. But Britons must also sign up to a contract costing £35 to £55 a month with O2, Apple’s chosen network partner, for a minimum of 18 months. That puts the cost of the handset and contract at between £899 and £1,259 over 18 months.

I mean, what the fuck? I have an O2 contract, and my usual monthly spend (including data transfer, which is unlimited under the iPhone contracts) is around £40: does that mean that my Nokia N73 (which came "free" with my contract) costs £720 over 18 months?

No, of course it fucking doesn't.

You see, what the contract pays for is talktime, texts, etc. plus, of course, the subsidisation of the handset itself. Except that, with the iPhone, you are also getting all of your data transfers unmetered.

It is true that my data only costs me about £1.50 a month, but I only use my phone to check my GMail account. Were I to have a decent browser, I would no doubt use far more data.

A SIM-less Nokia N73 costs around £230, so let's assume that that cost is defrayed over my 12 month, roughly £480 contract. Which would mean that, over the life of the contract, roughly 47% of my costs are paying for the phone. Even this is not accurate, since O2 will get a bulk discount on handsets, so let's assume 40% (and I suspect that even that is too high).

So, assuming 40% over the 18 month £55 highest contract, that is £22 x 18 months = £396. Add to this the retail cost of buying the handset (£269), the most that you can say the iPhone costs is £665.

As I say, I think that that is actually way too high an estimate but it still comes well under the idiot journo's lowest cost of £899.

But, fundamentally, here is the fucking point: if you think that the pricing is too high, you do not have to buy the iPhone. This also applies if you do not like the terms on which it is offered, Guido.
Now hackers have figured out how to unlock the phone and connect it to any network without the high-priced monthly charges. Apple have put their U.S. lawyers on the case, trying to enforce some kind of corporate communism. You buy the phone, but it is not your property to do with as you please if Apple get their way.

That isn't really how it works, is it? When you join a mobile network—even if you pay a charge for the handset—you aren't really paying the full cost, so you don't actually own the phone. The full cost is being defrayed by the network in order to get your business. Rightly or wrongly, this is how mobile phone companies and networks operate.

And this is not anti-competitive because the iPhone is not the only smartphone out there. It may be the only iPhone, but that's a different matter. As I said, if you do not like the price, or the terms on which it is being offered, then you do not have to buy it to get the same capabilities.

The fact that the iPhone is locked into one network in the US (AT&T) and was going to be locked into one network in the UK has been widely and continuously reported, in all media, for well over a year now; so it can hardly come as a surprise to anyone. So, it is not as though Apple could be accused of cheating anyone by concealing this fact.

But, just in case you haven't read any newspapers or blogs over the last year or more, here's Apple's Press Release: just to summarise, you can only operate the iPhone legitimately—that is without hacking it and running the risk of your shiny new iPhone exploding—on the O2 network, and you need to have a monthly contract.

No, don't thank me: I consider it a public service.

UPDATE: more from that Times article.
Some analysts questioned whether the gadget was too expensive to have mass-market appeal. In Britain, one of the world’s most competitive mobile phone markets, most handsets are included in the price of a contract.

James Barford, of Enders Analysis, a telecoms and media research group, said: “Charging £269 for a handset with a contract is very expensive. This is not mass-market pricing.”

For fu... Have you analysts ever heard of Apple before? Yes? Apple simply isn't interested in competing in the low-end market—it's wares have always been pricey. Yes, even the iPod.

I like to think that this is mainly so that fucktard analysts don't buy them and ruin the experience for the rest of us who prefer to pay a premium for better, easier-to-use technology. It's called informed buying, you twats.

Whether or not you agree with me that Apple products are better, I know why I buy them and that, really, is all that matters.
The handset has already been snapped up by more than a million Americans – with 270,000 sold within 30 hours when it first went on sale in June.

Erm... well, what would you call mass-market appeal? Smartphones are something of a specialist market anyway—the vast majority of people in Britain just take whatever phone comes free with their contracts. Will the iPhone change that?

Well, I am seriously thinking about buying one and I have never paid for a handset in the ten years that I have owned a mobile, so maybe it will.

UPDATE 2: CNet's Macalope lambasts another silly iPhone article.
Look, the horny one does not expect the iPhone to do as well in Europe as it has in the U.S. and for several of the reasons Berlind lists. The price and, yes, the lack of 3G. But Berlind refuses to look at the iPhone as a package and instead focuses on what he perceives to be deal killers.

And the last two and a half months have proved that they're not. They may be for Berlind, but one of the biggest problems with the current state of punditry is to confuse what the public wants with what the pundit wants. The two are not necessarily the same.

Very true. After all, most of the tech writers and analysts kept wanking on about how the iPod would be a failure because it was more expensive and lacked some of the features of other MP3 players.

My, but they're looking pretty fucking stupid now, aren't they?

UPDATE 3: for what it's worth, I think that this article—amplifying the theory that Jobs had actually anticipated and welcomed the iPhone hack—is likely to be fairly spot-on; the author does, at least, understand Apple's business model.
Steve Jobs is probably one of the most intelligent and forward-thinking CEOs who has ever graced the tech industry. Jobs understood that AT&T service plans were a disposable by-product of iPhone sales and realized that the iPhone was just another piece in the puzzle of Apple's complete domination of this industry.

Apple anticipated consumers' next move [the various hacks] and did so in a way that would make any businessperson proud. The iPhone was never meant to be a standalone product, it was designed to make Apple the most complete technology company in the world. And with an unlocked iPhone, this could very well become a reality.

This follow-up article is almost fawning in its praise for Jobs, but it is also, largely, correct. After all, this is more or less the same thing that happened with the music companies—it was, after all, Apple that surrepticiously leaked the way to get around the FairPlay DRM restrictions.

UPDATE 4: the BBC have a little follow-up article about the latest update.
On Monday Apple issued a statement in which it said many of the unauthorised iPhone unlocking programs caused "irreparable damage" to the device's software.

The company said this would "likely result in the modified iPhone becoming permanently inoperable when a future Apple-supplied iPhone software update is installed".

That warning has now proved correct as many owners are reporting their phones no longer work following installation of the update.

Oh, what a pity, how sad. A bunch of people are bitching and moaning because they did something that they were not supposed to do, mostly out of bloody-mindedness as far as I can make out, and now they don't have an iPhone; they have an iBrick.

My heart bleeds.

UPDATE 5: welcome to readers of Daring Fireball. Please excuse the bad language; it's by way of being my unique selling point, here in merrie olde Englande...


DISCLAIMER: I own Apple shares which are, at time of writing the latest updates, still making me a nice profit at $141.86 $153.47.

12 comments:

Longrider said...

I've always avoided buying handsets locked into a contract. I am happy enough to buy the handset unlocked without any discount. I then shop around for the best deal I can get on a SIM only contract. That way the handset is mine.

The iPhone looks like a nice piece of kit if you are into a multi-use device; but I wouldn't buy one on those terms.

Anonymous said...

Gosh, you spent a long time missing the point.

For the monthly tariff you pay O2 to get an iPhone, you could get ay other high-end phone for free. You could have a Treo for free. You could have an N95 for free. No, these devices do not have the same feature set, but they are expensive, high end devices, and the are free.

An iPhone costs a UK consumer GBP269 more than any other phone they might consider. All these journalists are doing is pointing that out.

Moreover, the reason it costs that much more is that is that O2 is taking the value it would normally use for handset subsidies given to the consumer and giving it to Apple in the form of a revenue share.

I love the iPhone. I will buy one. But, it is FAR more expensive than comparable devices. You ned to move on from denial to acceptance :)

Devil's Kitchen said...

I was complaining because the Times article was essentially saying that the entirety, the entirety, of the £35–£55 that you pay monthly is actually the cost of the iPhone. It is not.

As I said, the iPhone is expensive; in which case, don't buy it. 'S called market forces...

DK

Anonymous said...

Good to see a fellow Brit calling bollox on the newspaper articles. Anything to make a headline, right? (even if it's not true, misleading or a blatant lie)

Look at it this way mate, the more people are turned off getting an iPhone means the higher the chance we can grab one on Nov. 9 when they're out, eh?

cheers,
R.

Anonymous said...

you can get an e90 for something like 100-200£ on a contract similar to iphones contract.

iphone costs 269 up front.


e90 costs unlocked(this is about the real cost of the device) £659.95. so it is quite easy to end up at iphones price being at 800-900£ scale.


and your n73 probably cost you around 300-350£ and the rest was for service.

if you regard that you got your n73 for "free" and just paid for service then.. well then it's hopeless to try to get you to understand how and where you actually pay for your stuff.

and higher chance? tsk tsk.. you can just walk in and buy one.

Devil's Kitchen said...

Anonymous,

Did you actually read my article?

You know, past the bit where I made precisely the point that you made above?

DK

owen said...

I'm a DF reader, and British, and I stopped reading a few paragraphs into your abusive, subjective rant. You sure know how to turn a potentially valid point into something that serves to undermine yourself, don't you?http:

Anonymous said...

I'm also a DF reader, and British, and carried on reading a few paragraphs into your funny, pertinent rant. You sure know how to turn a valid point into a funny rant that serves to drive the point home.

This is the kind of thing swearing was invented for. Nice job.

And oh, I'm a fanboy, and I'm not buying an iPhone because I need email and more capacity and stuff. I looked at the capability and the price and thought 'no, I'll leave it, though they do look nice'. Unfortunately, this kind of decision seems not to be an option for some people, so I'm booking myself into a shrink so I too can rant about how Apple ruined my life when I bought something of theirs and I did the hacker's version of putting it in the washing machine.

Anonymous said...

clarification on above - 'I need email'. I need email that is more flexible than I will get on an iPhone (Palm, Word (spit) attachments, serious editing for a Dvorak keyboard user). Before I get accused of something by some idiot.

Devil's Kitchen said...

Owen,

As I said at the end, the swearing is my USP; sorry about that.

Anon,

Thank you, I aim to please (alas, one cannot please all of the people all of the time, etc.). I don't think that I'll be buying an iPhone just yet, simply on grounds of cost (although I'm already on 02); actually, I think that it is Safari that I would use the most, for rebooting servers, etc.

DK

reverie1979 said...

The Times also forgot to look at VAT when comparing US and UK price points. US prices are always quoted without taxes, European prices always with taxes. If you leave out VAT, the iPhone is only £30 more in the UK than in the US, not £70.

tom said...

This isn't too surprising. Here in the U.S. when the iPhone hype reached it's peak, journalists were going to desperate measures to get in on the action.

One jackass actually claimed the iPhone cost something like $12000 because, get this, if you INVESTED the money you would otherwise spend on an iPhone and contract with AT&T that's how much your investment would be worth in 30 years or something.