From the article: If you have an iPhone 4S, getting an iPhone 5 would mean breaking your two-year carrier contract and paying a painful penalty; maybe not worth it for the 5’s collection of nips and tucks. But if you’ve had the discipline to sit out a couple of iPhone generations — wow, are you in for a treat.
Response: That is not correct. If you have the iPhone 4s, you can simply pay full price for the iPhone 5. The retail cost of the iPhone 5 is $649. The new customer or qualified upgrade price is $200. You’re not really paying less and the one who pays $649 is not really paying more. The $200 price is subsidized by the fact that you are committing to two years with that carrier. When you pay full boat you are not committed to a contract. Mr. Pogue is saying that you will be hit with a penalty, but this is only if you are under contract and switch to another cell phone company to get the iPhone 5 at the $200 subsidized price. An ATT or Verizon customer, switching to the other carrier would typically pay a cancellation fee of $350 (at worst) plus the cost of the subsidized iPhone $200 with their new provider. Again, if you stayed with your current carrier and were not qualified for discounted pricing you would be looking at paying $650. Some customers, especially Verizon customers, really like their carrier more than their phone. It’s no distortion of reality to say that many ATT customers hate the ATT network but have only stuck with it because of the iPhone.
Once again — everyone needs to know — the retail cost of the iPhone 5 is $650. If you really want the phone and don’t qualify for the subsidized pricing, you can either switch carriers or pay retail (or close to it) with your current carrier. It’s not a $200 phone. Not everyone qualifies for that price, just like not everyone qualifies for subsidized housing.
When the iPhone first came out it was a $500 phone. It was being sold at full retail, unsubsidized. Most people buy their phones in Europe and Asia that way. If Apple went back to charging a fixed price and no contractual requirements, I think it could be a very positive step toward breaking the cycle of 2 year contracts and $100 a month cell phone plans.