Wednesday, January 19, 2011

Don’t forget: We’re litigious.

Everyone is speculating about how many people will jump from AT&T to Verizon, to escape all those dropped calls on their iPhones. It’s obvious that many people who never tried an iPhone will buy from Verizon, and some people who just have to try the newest tech will switch, regardless of cost.

The cost is considerable, something like this (don’t trust my figures): $300 to terminate your AT&T contract early; $200 or $300 to buy what feels and seems like the same iPhone from Verizon; and then an investment of your time to set it up just like your old iPhone, with the same apps and options. (Will you have to repurchase some of the apps?)

Leo Laporte mentioned one of the most important scenarios: it’s April, and people are pretty excited about the Verizon iPhone, but they won’t risk buying it until they find out what the Apple iPhone 5 will be (in June). How would you feel if you jump to Verizon, and then you just HAVE to have an iPhone 5?

I’ve identified a more important scenario, which will also kick in around April: class action lawsuits. If Verizon demonstrates that you can have an iPhone without dropped calls, people will want to reduce that early termination cost from $300 to $zero. The lawsuits will target a basic aspect of sales: implied merchantability, the requirement for a product to perform the basic task you bought it for. In the case of PHONES, the basic task is to make phone calls. And since the AT&T iPhone is regarded as an “almost phone,” it fails the merchantability standard. So it must be acceptable to return it for a full refund and no termination fee.

I’m not saying that such lawsuits will succeed; only that they are inevitable. And they could save you nearly $600.
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