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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  • 6 Posted by dehnger2u on Thu Sep 3, 2009 3:40PM EDT Report Abuse

    Hiya Christopher.... Why aren't you updating in MyYahoo anymore? Tried deleting and reinserting the feed? Anyway, enjoy your stuff, thanks.

  • 7 Posted by jhschlak on Thu Sep 3, 2009 4:34PM EDT Report Abuse

    Yea why aren't the yahoo tech blogs updating in MyYahoo!?!

  • 8 Posted by collarncuffsboy on Thu Sep 3, 2009 3:28PM EDT Report Abuse

    The RSS Feed for Gina Huges on my My Yahoo page updates, but the feeds for Christopher and Ben dont.

  • 9 Posted by ka7aok831 on Thu Sep 3, 2009 4:46PM EDT Report Abuse

    By raising the data package monthly cost not only does AT&T get the iphone buyers, they also get all other new smart phone buyers. Gotcha!

  • 10 Posted by kprochilo on Thu Sep 3, 2009 4:53PM EDT Report Abuse

    ben.dekko, its $2,000 for 2 years, so its only $1,000 per year.

  • 11 Posted by tha3govna on Thu Sep 3, 2009 10:02PM EDT Report Abuse

    I don't really get why this warrants an article.... It actually makes 100% (business) sense. It's both good for the consumer (short term) and the supplier (long term)....most people live in the NOW. -Gov

  • 12 Posted by jarmuzewski on Thu Sep 3, 2009 4:28PM EDT Report Abuse

    Check your text. New iPhone: $199 (for 8GB of storage).... I thought it was 3G?

  • 13 Posted by sparky1524 on Thu Sep 3, 2009 9:35PM EDT Report Abuse

    ben.dekko, the thing clearly says the average cost is $2000 for 2 (TWO) years. Maybe you examine why you don't have any disposable income...

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

    2 grand for a stinking fone! You got to be kidding me!

  • 15 Posted by shifflettl on Thu Sep 3, 2009 9:19PM EDT Report Abuse

    Did anyone realize that they still can just buy the iphone at full retail value instead of the contract??? Then activate the service.

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

    What's all the fuss about this new popcorn machine?

  • 17 Posted by emailjonp on Thu Sep 3, 2009 3:54PM EDT Report Abuse

    I didn't get the first iPhone because of the ridiculously high minimum monthly price. I guess I'm not getting this version either.

  • 18 Posted by jwagmangpa on Thu Sep 3, 2009 4:45PM EDT Report Abuse

    Considering the extra speed and features, a few extra dollars over two years is well worth it.

  • 19 Posted by chaseguy17 on Thu Sep 3, 2009 3:22PM EDT Report Abuse

    Nice one. Except you are walking around with Near Cable Speed internet instead of dial up. The GPS is nice too. If you don't like it...buy the old one. I'm sure ebay will be flooded with them.

  • 20 Posted by efren803 on Thu Sep 3, 2009 3:52PM 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.

  • 21 Posted by in_hollywood on Thu Sep 3, 2009 4:24PM EDT Report Abuse

    What this "journalist" does not mention is that all other carriers charge $40 for a 3G data plan -- ATT's is cheaper by $10 at $30. So its actually a really good deal.

  • 22 Posted by kj3044 on Thu Sep 3, 2009 4:52PM EDT Report Abuse

    ben,dekko, The almost $2,000 is a two-year total, not one year.

  • 23 Posted by weezedog79 on Thu Sep 3, 2009 10:42PM EDT Report Abuse

    Don't forget the new plan doesn't include the 200 SMS messages included in the old plan. If you want that, it will probably be $5 more a month. That makes the new iPhone $160 more over the course of 2 years than the old one.

  • 24 Posted by extreamgopedder on Thu Sep 3, 2009 3:57PM EDT Report Abuse

    Wow this phone is going to be awesome. Need a credit card?come get a credit card at realcreditoffers.com

  • 25 Posted by nathalia985 on Thu Sep 3, 2009 7:34PM EDT Report Abuse

    I wanted one and i even went as far as putting my current iphone on sale on ebay and then i saw the $10 extra fee and said forget it... $10 here $10 there, it adds up at the end of the year, and it's not like they improved it a whole bunch... i'll stick to my refurbished unlocked unit that i've been happy to have for 3 months now... when the next one comes out, MAYBE i'll think about getting it... but i doubt it... its cool but im spending like $100/mo on a cell, i think that's enough.

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