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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  • 66 Posted by babytigger172k4 on Thu Sep 3, 2009 3:01PM EDT Report Abuse

    I personally dont think its that much of a big deal. $40 more a year for service ok and? big deal if it's too much get another contract with another phone carrier if not shut up and pay the money and move on. And If you get the phone with all it's capable of you wont be complaining too much.

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

    nice looking phone, but . . . just another dirty lying marketing gimmick. its faster but not cheaper, so don't tell people that there is a price cut. just tell us there will be $10 bucks more on the plan to make up your subsidize cut.

  • 68 Posted by nickjohn916 on Thu Sep 3, 2009 7:37PM EDT Report Abuse

    The main reason for this price drop is because of Sprint's samsung instinct comming out and it will be priced at around 200 dollars. ALso the iphone has not done well in comparison with the instinct

  • 69 Posted by veneena1 on Thu Sep 3, 2009 10:33PM EDT Report Abuse

    what about the price per month for apple members?

  • 70 Posted by boy_qa_man on Thu Sep 3, 2009 3:12PM EDT Report Abuse

    Have you ever heard of 3G service versus 2G. How can you discount that...

  • 71 Posted by jrbaker_98 on Thu Sep 3, 2009 4:42PM EDT Report Abuse

    I will never buy an iphone and don't really care how much they trim cost!

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

    Apple shouldn't have called the iPhone the iPhone. Apple should have called it "iMiniComputer". The iMiniComputer does things that no smartphone can do. There will be hundreds of applications coming out for the device. All the business applications will be made by Third Party programmers. Everyone will talk about the programs then everyone will want one. Apple should have more carriers especially in the USA to compete with Blackberry. All the carriers have Blackberry. Apple needs to get more carriers in order to grow.

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

    well what if you don't use at&t. i have an iphone and it's tmobile. so if i get the new iphone and i unlock it to tmobile, how will that cost me more?

  • 75 Posted by timbotantrum on Thu Sep 3, 2009 10:10PM EDT Report Abuse

    Addressed all the issues? Are you kidding? What about the simple copy-paste function? And you gotta pay for exchange? All I want is a way to forward contacts' info in an email. What about video? I won't be buying one- the old one was revolutionary- this one seems like a retarded stepchild that costs more to use. Yes I should shut up, I own apple stock.

  • 76 Posted by errolbritten on Thu Sep 3, 2009 3:56PM EDT Report Abuse

    It is not really a price increase per se. The unlimited data plan was already $10 higher for PDA phones on AT&T's 3G network. So now iPhone users will have to pay the same as the rest of the unlimited data customers.

  • 77 Posted by shashawings on Thu Sep 3, 2009 9:17PM EDT Report Abuse

    It seems a lot of people here can't figure out exactly $$$ you will pay in two years: Assumer you are in California with the min. plan: $39.99+$30=$69.99 monthly with around 15% tax/surcharge $199.99 phone cost with 7.25% tax in Californa $35 activation fee. ------------------------------------ Total in two years: $199.99*(1+7.25%)+$35+$69.99*(1+15%)*24 = $2181.21 Honestly, I think it is very expensive for a service plan w/ min. talk time and it is for individual only.

  • 78 Posted by veneena1 on Thu Sep 3, 2009 10:33PM EDT Report Abuse

    what is the price per month for apple members 4 the 3G

  • 79 Posted by lfpoldo on Thu Sep 3, 2009 6:50PM EDT Report Abuse

    The ATT charge aren't for the iphone alone , they charge the same for any 3g phone on the same plan.... from reading this blog and some of the responses sounds like only the iPhone is expensive and it is Apple's responsabiity, you have a choice you can stick with the $19.99 Motorola prepaid from ATT but ----- ing becasue this particular plan cost $40 more a year and make it sound like it's an iphone shortcoming is retarded

  • 80 Posted by rgvn888 on Thu Sep 3, 2009 8:38PM EDT Report Abuse

    But its twice as fast even tho it costs more.

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

    Lets clear some things up... Yes the data plans will cost more and yes the texting is not included in those plans. However, this is because the iPhone will now be more in line with the capabilities that other smartphones have. Texting can be added on for $5 for 200, $15 for 1500, $20 for UNL, or $30 for UNL for Family plans. There will be no "no-contract" price, you will either be activating it in the store or nothing. you have no idea how great this is. im sick of selling iphones that dont get activated. There will be discounts off the service. Unlike the previous model, any employee discounts you had through your company were not honored, now they will be. this helps to offset the higher cost of the plans.

  • 82 Posted by thompr33 on Thu Sep 3, 2009 10:08PM EDT Report Abuse

    Here is a big deal though, the original iPhone plans killed off your work discount, called a FAN discount. Now you get that discount. My account with 4 lines, with mine as the main account, will now get 20% off of the rate plan, the data plan and everything that is on my line. Biggest thing to remember, tell AT&T where you work, they have a lot of discounts...rt

  • 85 Posted by dlupold43 on Thu Sep 3, 2009 3:45PM EDT Report Abuse

    So what happens to people who just bought one of the older iPhones in the last month or two? Just curious if Apple will credit them or allow them to update for FREE or at a discounted price.

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