How the half-price iPhone 3G actually costs you more

Mon Jun 9, 2008 11:20PM EDT

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Not mentioned in today's you-can't-get-away-from-it iPhone 3G announcement: AT&T's service plan jumps $10 a month. What's this? Did Apple finally figure out what the rest of the retail world did: That when you give away the razor you can charge through the nose for the blades?

Let's look at the math.

Old iPhone: $399 (for 8GB of storage), plus $60 per month for 450 voice minutes and unlimited data. Two-year total (since you'll be signing a two-year deal for either handset): $1,839.

New iPhone: $199 (for 8GB of storage), plus $70 per month for a basic voice plan (presumably the same 450 minutes) and unlimited data. Two-year total: $1,879.

That's $40 more over the course of your contract, which is really not that bad in the grand scheme of things. Had AT&T and Apple raised monthly fees just another $5 per month, the total cost of service would have hit almost $2,000 over two years (not including taxes and fees).

"Business users" get the shaft, big-time, with a minimum of $85 a month for service. That's $15 a month extra just so you can get email via Exchange. Boo. Other annoyances: iPhone 3G will have to be activated in stores instead of at home, like before, and the phone won't be available to purchase online at launch.

Still, like I say, this isn't too bad. Putting aside the business user issue, $40 extra over two years doesn't sound like much, considering all the extra features and services the new iPhone packs in.

In fact, on paper the iPhone 3G has addressed almost all of my complaints regarding the original model from a year ago. But then again, don't forget those accessories (a charging base, for example, is no longer included).

UPDATE: For those who've written regarding the time value of money, I did the math based on the present value of the iPhone to Apple at a 3% annual interest rate. The numbers: Original iPhone nets Apple/AT&T (and costs you) $1,795; new iPhone gets them $1,828.  So the new phone still costs you $33 in the end if you invest that $200 you would have otherwise spent on the hardware.

UPDATE 2: Several readers write to mention that text messages are no longer included in the iPhone package, so add another $5 a month for 200 SMS messages. Upgrade to the 16GB iPhone and you're hitting $2,100! 

Related:
What's there, and what's missing
Is it worth upgrading?
iPhone 3G questions and answers
Killer applications coming to iPhone

Comments on How the half-price iPhone 3G actually costs you more

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  • 26 Posted by riffman_prs on Thu Sep 3, 2009 8:40PM EDT Report Abuse

    I'd much rather spend $2000 on beer in the next 2 years than on some stupid phone...lol.

  • 27 Posted by rpm06121980 on Thu Sep 3, 2009 8:53PM EDT Report Abuse

    what a suprise, lower the price but they find another way to screw us over with extra fee's.

  • 28 Posted by tomt_2002 on Thu Sep 3, 2009 10:16PM EDT Report Abuse

    The article is correct about the math, but considering AT&T spent a lot of money to build out their 3G network nationally, and the fact that the typical iPhone user uses a lot of data, the $10 increase seems very reasonable to me. It is funny, though, when you look at the total cost over 2 years it is more than you realize!

  • 29 Posted by johndoe086 on Thu Sep 3, 2009 4:38PM EDT Report Abuse

    After the first 2 years your still screwed, since the service still stays at $30 for data. So beyond 2 years instead of $40, it will amount to alot more. So basically it's long term screwing. Whoever falls for this trap is a moron!!!

  • 30 Posted by javankl on Thu Sep 3, 2009 4:29PM EDT Report Abuse

    Yeah, the present value calculation won't make a huge difference, particularly with interest rates as low as they are. However, in an article that purports to "look at the math" it still should be included in the calculation.

  • 31 Posted by redones98 on Thu Sep 3, 2009 8:34PM EDT Report Abuse

    It's a waste of money. Ya time value of money my rear end. Look at the PL of AT&T and the others...it's called sticking it to you. As far as the iphone...over rated gadget.....you have to own one to be important!!!!!Silly toy.

  • 32 Posted by csmctrauma on Thu Sep 3, 2009 3:31PM EDT Report Abuse

    I'm still hard (as a rock) waiting for the upcoming release of this phone !!

  • 33 Posted by nismo21z on Thu Sep 3, 2009 7:39PM EDT Report Abuse

    It's going to be cheaper with an Upgrade eligiblity. And the 30 dollar per month is like every PDA package AT&T provides. It's going to be at every At&t corp store July 11th. I'm not sure of pricing for non-eligible upgrades. Probably going to stay same price as now for non-eligible upgrades.

  • 34 Posted by ds_0001 on Thu Sep 3, 2009 3:49PM EDT Report Abuse

    I hate it when stupid writers write about things they don't know anything about and calls themselves experts. The new iPhone uses the new 3G network. That is why there is a $10/month increase. Everyone wanted 3G but you'll have to cough up the money if you want to use it. Extra speed costs more. If you want cheaper, stick with the old iPhone.

  • 35 Posted by pasion76 on Thu Sep 3, 2009 8:00PM EDT Report Abuse

    Well what I heard was; these phones are not at their best when keying in sometimes keys in wrong key some manufature problem that surge thru the first iphone and what not. I was going to buy the last iphone until a Verizon dealer told me the problems of phones like this one. Well good luck to all you who are interested, cause I'm not;-0

  • 36 Posted by candjcheff on Thu Sep 3, 2009 3:17PM EDT Report Abuse

    will they ever get any cheaper? i don't know about you bot 1800 is too much to pay for a phone!!!!!!!!!!

  • 37 Posted by jasonanderse on Thu Sep 3, 2009 4:29PM EDT Report Abuse

    does anyone know, will the 3g iphone do picture messaging? I have an iphone right now and it is more than annoying to try to log into the viewmymessage website and type in the password & code to view a message. Am hoping the new 3g phone will send & receive picture texts??

  • 39 Posted by fwbprobin on Thu Sep 3, 2009 4:04PM EDT Report Abuse

    Thats just retarded all you need is the free phone that comes with most plans, most people dont use a quarter of the functions that those expensive cell phones offer. Just punk kids trying to look cool....losers

  • 40 Posted by nn432100 on Thu Sep 3, 2009 7:40PM EDT Report Abuse

    Don't forget that 3g is in major markets only. Its not coverage all over the states so be sure to check out coverage before you sign the contract. Otherwise your not getting much of an update over the older model.

  • 41 Posted by tyler52242 on Thu Sep 3, 2009 10:25PM EDT Report Abuse

    $40 more over 2 yrs for 10 times the speed and more features? Sounds fair to me.

  • 43 Posted by riffman_prs on Thu Sep 3, 2009 8:40PM EDT Report Abuse

    $2000 for 2 years? For a cell phone??? I'd rather spend the 2 grand on beer over the next two years... See, i have my priorities in order...lol.

  • 44 Posted by schmelkus on Thu Sep 3, 2009 9:08PM EDT Report Abuse

    actually, ben dekko, the $1800+ is over TWO years, and includes the one time cost of purchasing the phone.

  • 45 Posted by rtdbphoto on Thu Sep 3, 2009 8:55PM EDT Report Abuse

    Obviously business users have to pay more. it is the same with any other service provider. The $85.00 a month is still cheaper than the prices verizon hits business users with (i pay $100.00). The main goal was to bring the price of the phone down. they did an amazing job. Everyone who is complaining about the price of a phone over 2 years obviously has never used a calculator to see what they pay. $60.00 a month (assuming a resonable amount of minutes and low taxes) x 24 months = $1440.00, an extra $500 over two years for what is essentially a full service laptop in your pocket with 3g wifi is great deal!

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