It costs Apple an estimated almost $200 to manufacture the iPhone. That doesn’t include R&D, software development, advertising, packaging, etc. Part of that “subsidized” contract with ATT pays Apple a portion of every phone sold, or rather every contract signed. This is how Apple are making money. ATT is still just providing service and making money in your 2 year service plan (minus Apple’s fees).

If you get a phone at Apple’s cost every year and all you do is add another year to your contract, then each year ATT is making less and less off of your contract as they pay Apple out. The alternative is that ATT pays Apple less for each add-on contract signed. For what you are proposing, the math doesn’t add up and this is why they don’t do it. Someone will lose money. It’s simple dollars and sense.

If you remove the contract portion of it completely, you are getting a device that should cost the consumer as much as $4-500.

Not perfect but very easy to do and AT&T OK’s it.

Why is it that all these discussions of ETF’s is about? Why carriers started feeling pressure to reduce the cost of early termination? It’s because customers are pissed off and want a way out. And the surest sign of stupidity in this process is that it is possible to exit our current contract and get the new device (on a new contract) for LESS than what they’d charge us for an upgrade on contract.

Lunacy, pure and utter lunacy. And it doesn’t /really/ make AT&T more money, except for the sheep who do as their told and pay more unnecessarily. So all this discussion about “well they have to make money” is moot… by pissing off customers and having loopholes that let customers find cheaper options by work around carriers’ processes they only further demonstrate that the actual contract/process needs fixing.

The fun part in all this is that /corporate/ contracts generally bypass all this stupid ****… and through negotiating more sane deals manage to get us affordable upgrades without all this mess. Why carriers find their way to treating consumers like this is beyond me. Smells a lot like healthcare in our country.