It's OK to Say No to the New iPhone
Columnist Rob Enderle hopes Apple and AT&T aren't starting a trend with the pricing tricks they're pulling with the next-generation iPhone. Sure, the device is cheaper upfront, but a price increase in the data plan and other hidden costs are putting more of your money in their pockets, he writes.
07/07/08 4:00 AM PT
There are many things to admire about Apple, but like every company it has a dark side. One of the things I personally find more than annoying is the Apple fan base that will attack you if you honestly don't want to buy an Apple product and talk about your choice. But the thing to be concerned about, because Apple is a company that others now emulate, is its increasing habit of tricking you into paying more than you thought you paid for its products.
At a time when, thanks to our addiction to oil, individuals and families are having a hard time putting food on the table, this is one practice I don't want to see widely adopted. In addition, particularly with the iPhone, there is this tendency to tell you what you want rather than give you what you need -- a practice that the market generally rejects but Apple has been successful selling around. With elections approaching and the patriotism running high this week, I think it is time to declare independence from firms who think we are too stupid to figure out we are being tricked.
Since my mind is on not being tricked, cars and saving gas this week (I've put off buying a new gas guzzler and am instead shopping for a three-wheeled 60 MPG motorcycle) -- I've chosen a company that can save you on your auto repair bills as my product of the week. We'll talk about the Can Am Spyder motorcycle, if I buy it, in a future column.
Disclosure: I'm Anti-Fad
As fads go, I tend not to participate and take pleasure in driving different cars, and in wearing different clothes; even my home is done in black, purple and stainless steel down to the black carpets. At my wedding the bride wore purple and we had only one attendant, and it was a robot. I probably will never use an iPhone, and Steve's ability to sell me on something I don't actually want or need has never overcome my own need to be unique and to think through a purchase. For instance, I don't use an iPod either; I currently carry a Slacker player. For my needs, it is better and it kind of has a Harley Davidson vibe going.
Just because the iPhone is a fad isn't a positive for me. I'm one of the original Crackberry addicts, so they'll be peeling my keyboard smartphone from my cold, dead fingers.
The Danger of the iPhone Example
As I've mentioned earlier, a lot of companies are now emulating Apple. It is leading to improved user interfaces from Dell and HP, more color choices from Dell, and better-looking products across the tech and consumer electronics segment. That is all for the good. But there's something else Apple does that I don't want to see emulated, and that is the "creative" way it increases its margins.
On computers, this comes from charging 200 percent more for upgrades, and on the iPhone it comes from telling you that the price for the iPhone went down when it actually went up.
In the computer space, I'm less worried because HP will keep Dell honest and vice-versa, but this phone thing could catch on, and during these hard times I don't want to see a broad practice of creatively shifting dollars from the consumers' pocket to the vendors', regardless of how badly Steve Jobs needs that new Gulfstream so his jet is bigger than Larry Ellison's.
How they did it with the iPhone is, while they reduced the cost of the phone significantly and seemed to reduce the price by US$200, they increased the cost of the service by $10 a month, or $240 over the two years you are required subscribe to it, for a net increase in price of $40 (total price for phone and service is a whopping $1,879). In addition, the bundled texting is now extra, which is an additional cost associated with the new phone. It evidently is worse in Canada, where the folks seem to be a bit more resistant to Apple tactics anyway.
This has caused some of the financial analysts to point out that the new iPhone will be the most profitable product that Apple has ever brought to market. That will likely get other phone vendors to start thinking "creatively" as well, and we'll wonder where all our cash went.
On the other hand, the first iPhone was expected to be the most profitable product that Apple brought out, but demand cratered after the first week and Apple had to take a pricing adjustment to get people buying the phone again. The same could happen this time, but the social engineering practice Apple is using (make the audience think they are getting a big discount on one hand while concealing the price increase on the other) is solid behavioral science, and I'm not convinced there are enough of us yet pointing out the math to offset this effort.
Independence From Manipulation
I have a dream that one day vendors and politicians will level with us and not try to trick us into doing things that aren't in our best interest. That dream requires we actually sweat the small stuff and read the fine print. At a time when a lot of us will be having trouble buying milk and gas, it would seem a $2,000 phone would be low on the priority list and a company that was trying to trick us into buying it lower still. I don't think it is in any of our best interests to let this Apple attempt stand as an example of accepted behavior.
If you buy an iPhone, do it for the right reasons. If it isn't the right phone for you, the right time to buy a new phone, or if you can't afford the price right now, it is OK in this country to say "no." I like that.
Product of the Week: RepairPal
As I mentioned at the outset, my plan was to replace my Infiniti FX 45 with an FX 50 this year, but with gas prices where they are, I'm keeping the old car and maybe picking up a motorcycle. That means I'm going to need to keep that car running, and you would think that as an ex-mechanic myself I'd have a clue how much things cost. Well I don't, and I'm as likely to be taken advantage of as anyone given how much things have changed since I actively worked in a car shop.
A new service, RepairPal, just launched, and you can look up the cost of a planned repair to determine if your mechanic is funding their early retirement on your gullibility. They base their costs on regional charges for similar work and fall back on book rates. While this probably won't identify folks who are uplifting prices by 10 percent, it will clearly identify those charging several times the going rate for a repair, and it points out what you should be doing.
Unfortunately the auto repair industry (including some dealers as I personally found out one year) has some less-than-honest folks in it, and during these hard times it's best to be prepared. By the way, if you find someone overcharging, find someone else to get service from -- there are a lot of ways to bilk you (substandard parts, for one) that they still can do if you press them on price.
Because people are pinching pennies, hard times are likely to make some folks less than honest, and Repair Pal protects against that. It is my product of the week.