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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  • 46 Posted by designswami on Thu Sep 3, 2009 3:41PM EDT Report Abuse

    I guess in the end, it all comes out the same. The iPhone is for people who can afford it, in addition to everything else we have to pay for in life. I have an iPhone, I'll purchase the white 3G on July 11, and the price hasn't crossed my mind once. Pretty simple.

  • 47 Posted by tiger_jng on Thu Sep 3, 2009 10:10PM EDT Report Abuse

    some countries already has 3G technology few years ago, and it can do video calls, for the people here happy to pay a little extra , do you know what else u r missing

  • 48 Posted by jonroachell on Thu Sep 3, 2009 4:40PM EDT Report Abuse

    Don't forget that the 200 SMS text messages were included with the old plan - now they will cost an additional $5. So the same plan as the old iPhone is $15/mo more.

  • 49 Posted by danzimnoch on Thu Sep 3, 2009 3:36PM EDT Report Abuse

    "I still would not replace my HTC Touch with 500 anytime minutes, unlimited data, and unlimited text for $30/mo with Sprint" what is 500 minutes during 30 days, absolutely nothing. 500 minutes a month would yield about 16.5 minuts of takl time per day. that is one phone conversations for a lot of people. wait till you go over the minutes and start paying over 65 cents per minute for additional usage. it's amazing what people would spend their money on with this new technology B.S. a lot of money is wasted on this B.S. technology that changes faster than your contract. manufacturers make billions off of this.

  • 50 Posted by alxra on Thu Sep 3, 2009 2:51PM EDT Report Abuse

    $10/mo extra = approx 17% ($10/$60) more per month for a 3G network much faster than the old EDGE network? Plus the up front cost is about 34% less for the 8GB model and . You're getting much better performance for a menial price increase with lower priced, and improved equipment. Unless you feel entitled, what's there to complain about?

  • 51 Posted by irvinered on Thu Sep 3, 2009 4:25PM EDT Report Abuse

    That is great, I bought my self the black jack II and love it since you can edit powerpoint, microsoft word and Exell but I rather have a larger screen and touch features, Please TELL US where to buy these phone at this price. My email is irvinered@yahoo.com Thank you. AC.

  • 52 Posted by viciousson on Thu Sep 3, 2009 10:34PM EDT Report Abuse

    can this iPhone be used with a different carrier like tmobile? i heard u can't unlock this new phone. please advice

  • 53 Posted by sandeepdalmia on Thu Sep 3, 2009 9:03PM EDT Report Abuse

    I don't get it....The old plan was $60 per month while the new plan is $70 per month, meaning it is $10 per month extra for 24 months which amounts to $240 over the course of the two years. How do you arrive at $40???

  • 54 Posted by w_digregorio on Thu Sep 3, 2009 10:51PM EDT Report Abuse

    Why not get real about the costs of this Phone and list some items that you can purchase with $2,000.00. Full blown desk top computer. Sound system for your TV and Stereo. A cruise in a warm weather climate. Some class at a local college Top of the line fishing tackle and equipment. A half hour with Sptizers companion

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

    Why is everybody crying over $199? If you don't use the phone feature, it's an iPod with wifi and a GPS device. It's cheaper than the iPod Touch. If you have a cellphone, the monthly costs are the same. The writer is making things up to make people not buy the iPhone. He must be a Blackberry fan. Blackberrys cost a lot more to use per month than an iPhone. Cellphones are not for the poor. They cost money to use. The iPhone is the new toy of 2008. If you have the money for a luxury item, the iPhone is the thing to get. I wouldn't listen to this writer, he doesn't know what he's talking about. There are so many features in the new iPhone that nobody knows what it can do yet.

  • 56 Posted by shadylane625 on Thu Sep 3, 2009 9:15PM EDT Report Abuse

    Yeah, The extra $10 a month is quite a disappointment. I know its not alot but it does add up and its just a sneaky way to make you pay more for practically the same thing. I'm sorry but I think $10 is alot to pay just for faster web browsing on the go, not like its 50x faster, just 2 to 3x faster at the most. Unless the 3g network really makes the apps and gps fly (outside of wifi) its not worth it. Luckily, I read that you can stick with the edge network and not pay the extra 10 for the GPS.

  • 57 Posted by nsree6336 on Thu Sep 3, 2009 7:42PM EDT Report Abuse

    Hi i want to buy this 3G iphone ,when can i expect in india(Hyderabad)please send me the mail to n_sree6336@rediffmail.com .......thks alot!lets hope very soon its lands in india.keep smiling every minute....take of u r selfs ....bye.......

  • 58 Posted by d_brucal on Thu Sep 3, 2009 3:50PM EDT Report Abuse

    i sent the old iphone in the philippines its compaatible and i can use it there.. is your 3g iphone is just almost the same? i mean an i use it in asiaan countries like philippines.. please let me know thru my email @ d_brucal@yaahoo.com, thaank you very much

  • 60 Posted by w_digregorio on Thu Sep 3, 2009 10:51PM EDT Report Abuse

    Riffman_prs $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. U R DA MAN! I vote u had the best POST!

  • 61 Posted by gambit_16746 on Thu Sep 3, 2009 4:05PM EDT Report Abuse

    I am pleased that apple and AT&T have released many versions of the Iphone, great!, here is where I wish they would get to. First lets break down the iPhone, it is, 1) an Mp3 player, I have one of those. 2) It is a cellphone. I have one of those. 3) It has internet, that is better than almost any phone. So all in ALL, I WISH, apple would make an iPhone that was just a phone, with internet. no MP3 player built in. I would just like a phone with better internet.

  • 62 Posted by gymluva on Thu Sep 3, 2009 4:15PM EDT Report Abuse

    i had a quick question: i already have an iphone, and i was wondering if we are able to trade in our old ones for the newer version without having to pay for an all new iphone.my dad figures that if he gets the new one itll basically be the same thing as having the original with beter features, plus he feels its not as fair if he had to pay 400 dollars for 2 iphones when he couldve gotten them at a lower pricw tih extra add-ons. so is it possible that they can be traded in like the other version that had problems for the better version, or do we have to pay an extra 200-300 dollars for all-new ones plus the added price of the bill we are already getting every month?

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

    Business users can also expense their monthly bill, but might not be able to expense the phone. My employer pays a % of the monthly but not the phone. This new pricing plan makes it easier for me. I was looking at the eNvy2 or Voyager to replace my envy, but $250 for a phone was swaying me towards the V2. Now, I might go for the middle ground and get a iPhone, which is really what I've always wanted.

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

    The writer is a moron. The iPhone is a mini computer, not a smartphone. When the applications start coming out by the third party programmers that is when you will see what the iPhone can do. The iPhone is a revolutionary computer not just a cellphone that is why it is worth the $199. I heard it has a piano keyboard program. What cellphone has that feature?

  • 65 Posted by jcizme77 on Thu Sep 3, 2009 4:30PM EDT Report Abuse

    Christopher Null and everyone, BEWARE this new plan does NOT include 200 text messgaes. 200 text messages is now $5 a month, an additional $120 within the 2 year contract!!!

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