July 24, 2007
1 Infinite Loop
Cupertino, CA 95014
I would like to congratulate you on the release of the iPhone last month. All news indicate that the product lived up to most of the hype and sales are strong. Great work! There is however, a problem.
What you’ve done is set the bar high for other device manufacturers. That’s great. The problem is that you’ve somehow managed to convince America that spending $600 for a phone is suddenly no big deal. I applaud this accomplishment and yet am concerned that the age of affordable devices is over.
Since you started this mess, I expect you to fix it. I see only one satisfactory solution: free iPhones for all. I thought about this a great deal and decided that anything over $200 would be too much while anything less than $200 would be too irresistibly close to “free” for the marketing guys to resist. Thus, I propose that beginning this fall, iPhones be given away.
While I’m at it, let’s talk about the cost of service plans, too. A standard entry-level plan will run you about $60/month. This is slightly cheaper than it was a few years ago, plus you get a lot more for the same dollar now (more data, web, etc.). But still, $60/month…forever? I don’t think so.
Let’s not kid ourselves with the $60 sticker price. If you manage to stay under all the limits, it’s really more like $75 including taxes. At this rate, mobile service can run you $900/year. Hypothetically, if you applied that $75 to a $150,000 30-year fixed mortgage at 7%, you’d knock almost 6 years off the payments. I’d like to see the $40 basic tier move to $25 and the $60 data plans slashed to $35. While I’m making up prices, let’s go ahead and cut the cost to add a line down from $20-40 to $10 flat fee—all plans, just $10 (and no trying to charge extra for data or messaging for the extra lines!).
In my naïve college days, I though the federal law enabling number portability would change everything. I thought we’d see the inception of new and innovative products, plunging prices and an explosion of exceptional customer service. While handset capabilities have improved for high-end devices, it’s hardly true that any of these has improved markedly.
You, Apple, were supposed to change all that! The iPhone is an excellent piece of technology but you’ve done nothing to address the core problem with the industry: cost and service. While it may be that pieces of your master plan have yet to be revealed, it’s still disappointing that you locked in with a single carrier (not well regarded for their network or customer service) and offer only high priced service plans with your device.
You’ve done a better job in other industries and lived to tell about it. Take the iPod, for example. The long running dominate player in the market, the iPod has enjoyed unimaginable success. Even though I can’t figure out why a few megabytes of downloading from iTunes costs the same as a comparable number of tracks purchased as a CD, you’ve remained firm with $0.99/track pricing (somehow this is competitive for online music sales). I’m sure working with the music industry to sell digital copies of their precious property is no picnic but if you can do that, surely you can do more with the mobile carriers.
If you can’t save us, who will?