As each day passes another cellular provider announces that they will be featuring the iPhone in their lineup. Deals appear to be everywhere and now the pre-paid providers are joining the fray. As of this writing, T-Mobile is still sitting on the sidelines, watching as customers abandon their T-Mobile service, seeking an “official” iPhone service provider.
Meanwhile T-Mobile tries to support the occasional T-Mobile customer who buys an iPhone outright and integrates it into their T-Mobile plan. T-Mobile recently made the effort to show their service was iPhone friendly when Apple was presenting at WWDC. The T-Mobile network may not be fully iPhone compatible, but it’s getting there. But right now there’s little incentive to buy an iPhone at full price and use T-Mobile.
The “official” companies like Sprint, Verizon and AT&T subsidize the costs associated with an iPhone, offering it at a greatly reduced price and recouping their costs by locking the customer into a 2 year plan. A new iPhone costs about $700 without activation. That same iPhone costs the consumer about $200 if they sign up for a 2 year plan with the “official” iPhone providers, except for the prepaid providers. The prepaid providers are charging full price. So the “official” iPhone cellular provider is out $500 that they need to recoup, possibly less since they probably get some kind of bulk discount. Hey T-Mobile, why not offer people who buy their own new iPhone a $500 credit they can apply over a 2 year period in monthly installments. Actually, let’s make it $504. The math is easier. Divide $504 by 24 and you get $21 a month. So T-Mobile, rather than take a $500 (actually $504) hit up front, you take it a little bit at a time over a 24 month period. Use the credit as an incentive to get people to stay or switch to T-Mobile! Family plans? The more the merrier! Heck, customers are customers…right?
So what happens? Apple sells some more iPhones and T-Mobile keeps customers, at least for 2 years. And maybe, just maybe T-Mobile picks up a few customers more along the way. Yes, I know people can buy refurbished, used, get a hand me down iPhone, etc. But hey, maybe after the 2 years are up if you treat them right, those customers might stay with T-Mobile. Heck, you got that multibillion dollar cancellation fee from AT&T. That should make this financial hit a bit less traumatic.
So what do you say T-Mobile? Better make up your mind. Your customer base is shrinking….FAST!