Apple’s new 3G iPhone might seem like a bargain at $199: more features, 3G speeds, and $200 cheaper than the original model. Great, except it’s not actually cheaper. The new $199 iPhone is actually $160 more than the $399 iPhone it replaces.
The iPhone itself may be cheaper, but the required flat-rate data plan now costs $30 per month, a $10 increase. Over the mandatory two-year contract, that works out to an extra $240. AT&T also now charges $5 per month for 200 text messages, which used to be free. That adds up to another $120.
Before you apply your generous $200 discount, you’ve already agreed to fork over $360. Two years from now, your new iPhone 3G will have cost $160 more than a current-model iPhone.
We’re usually not ones for math, but our tech-drunk brethren over at Gizmodo confirmed the numbers:
Gizmodo believes that the iPhone’s nifty new features justify the price bump. They may be right, but in unveiling the new iPhone, Apple zen master Steve Jobs argued in his keynote address that the reduced price was aimed at buyers who couldn’t previously afford iPhones:
Everybody wants an iPhone, but we need to make it more affordable. And we know this because we go out and talk to people who didn’t buy iPhones, and the number one reason, by far—they all want one—is they just can’t afford it. Some of them can’t afford it. So we need to make the iPhone more affordable.
The new iPhone is not more affordable. Anyone deceived by Apple’s lower price point is going to get a nasty wake-up call when they read their first bill.
(Photo: respres)
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I pay less on my cell for an entire year than the iPhone user pays in a month.
All of these portable devices are nothing but leashes. People always complain they’re so busy all the time these days. Throw the phones in the trash and go take a walk without being connected every second. It’s a great relief.
I didnt read through so forgive me, but:
3G is so much better than Edge that the $10 is more than justified. My fiance would pay an extra $50 to have pages load twice as fast.
The phone is now subsidised, Apple will not be receiving any of the AT&T subscription fees, at least not on the new phones.
The phone it’s self isnt more expensive, the service contract is. That’s like saying that when buying a home, heating, electricity and water should be calculated into the buy/sell price. Not a quality argument.
@mythago: I’ve never had that problem on my video ipod or on my iphone.
I want a phone as good as a Japanese phone. They come with even more features our puny American brains could even imagine for 10 years.
@Trai_Dep: Is that on “Planet Unicorn, heeeeeeey”
YouTube it.
@Angryrider:
Out of curiousity, which features in particular?
@Chune:
Word is the iPhone ETF may be substantially higher, as in $400 or thereabouts, pro-rated over your contract. No official announcement, as far as I know.
Regardless of whether the price is fair, it is a significant price increase. Jobs said it was a price decrease.
Not a huge detail, but fundamentally it’s dishonest. I’m not saying trickery, like people are being ripped off, but as a consumer of all things Apple, I like the fact that the company has a reputation for straight-shooting. This is not straight-shooting. Jobs should have just been honest and said they’re lowering the upfront costs, increasing the subscription costs, but believe it’s a fair price for what you get. That is true. What’s not true is that it’s cheaper. It’s not.
The only thing I find annoying is that the 3G data plan doesn’t include any SMS messages. If they would include 200 messages I wouldn’t mind the $10 difference in the data plan fee.
@Chune:
That’s only true if they don’t make you pay the first month up front at sign up.
If you have to pay 200 for iphone, 175 term fee, + 70.00 for first month it’s an extra 45 bucks more than the original.
I had AT&T and they had terrible service. They haven’t gotten any better. I was at lunch with a friend who has an iPhone, I was sitting next to her and she had no signal in the restaurant while I had full bars with my cheap old Verizon free phone. How is the iPhone worth that price tag?
@RINO-Marty: You have to understand, Apple has stepped back and they are now only a manufacturer. They have no part in the service aggreement any more. It’s you vs AT&T, from apples perspective they have dropped the price.
SMS is data. Why does AT&T need to charge for data and text when the
Data plan is “unlimited”? Because they are worried about the bottom
line. Ridiculous.
Definitely, Steve Job did not lie!!! He said that THE PHONE is more affordable. He was not talking about the plans!
@calvinneal: My son wants the new iPhone, and he’s short-sighted and only sees the initial price. It’s a challenge to really teach kids the true cost of things when they only see the surface and marketing.
@Wormfather: But when you buy a new home, you have to consider utilities, upkeep, insurance, taxes or else you might still end up with home you can’t afford. Just like my son – he sees the price of the phone, but doesn’t consider the overall cost of ownership.
And it gets even more expensive if you want the corporate data plan to sync your iPhone via ActiveSync to your Exchange server. What a ripoff!
Wait wait. They’re charging $5 for 200 SMS for even the older iPhone users? Um does that count as a material change bc if so Tmobile here I come…
@RINO-Marty: Yet he said during his presentation, while on stage to an audience of millions, that the per-month charge would bump up as we’ve been discussing. Words out of his mouth explaining the rate bump.
How is that “fundamentally dishonest”?
Geezus, people…
3G is definitely nice (although AT&Ts 3G network is generally considered to be the weakest of the big 3 domestic wireless providers.)
The iPhone’s nice and all. But as a cheap bastard I hopped on the SERO train several months ago and haven’t looked back. $30/month for everything I need.
Thanks, Consumerist, for pointing-out that the new iPhone will cost me more than the old iPhone, despite what Steve Jobs said.
@goodcow:
“Maybe with the 20% work discount on every bill it’ll be manageable…”
The iPhone isn’t eligible for work discounts, unless they are changing the rules for the 3G iPhone. You can only get AT&T discounts on everything BUT the iPhone (what the AT&T people told me when I tried). Typical Apple.
@TinkishDelight: Nope, we get to keep our old plan for 200 sms and unlimited data for $20! One of the main reasons, I’m keeping my first gen iphone. 3g is nice, but not worth the extra cost (in the long run) plus the additional 2 years of contract. Plus, charging extra for the SMS seems scandalous to me, since I use the shit out of them.
I have a Sprint SERO plan (thanks to consumerist) and with tax each month I pay roughly 55.00 for unlimited text, data, 1250 anytime mins, nights/weekends start at 7pm, unlimited sprint to sprint, picture mail, which I guess the iphone can’t do, you have to email pics….anyway 2 years of service will cost 1,320.00$ I’ll stick with Sprint.
@Cranky Customer
“despite what Steve jobs said”
Steve Jobs never said the phone would cost you less after a 2 year contract. As a manufacturer, he’s telling you what the phone costs NOW, and that’s half the price of the original. After 2 years, everyone’s total cost will be different, depending on their add-ons, etc..
My guess is that most of the posters here do not have an iPhone, and just want to play with numbers. I have an iPhone, I understood what Steve jobs said, I know how to read the charges for a service plan, and he didn’t deceive anyone.
It’s all out there in black and white. If you couldn’t figure out the true cost of ownership after 2 years, who’s fault is that?
Hmmm…you’re making the wrong comparison. First, show me any 3G data plan that is less than $30 a month.
You need to compare the $199 iPhone price to any other 3G phone with comparable data plan.
Then, you need to compare the old iPhone price to other 2.5G phones with comparable data plan.
You’ll see the the new 3G iPhone is more price competitive to other 3G phones, than the old 2.5G iPhone was to other 2.5G phones.
THAT is the correct price comparison. NOT between models of iPhone, but between the iPhone and comparable competition.
Apple fooled almost everyone. If you want to prove me wrong, go find me a headline from the day after the press conference that says “Apple raises iPhone prices.”
Every headline from Wall Street Journal to New York Times said that they cut the prices. Nobody could do the math in their head to figure it out. Except me. And whoever submitted this story.
@PeteyNice: I was going to point out the SERO plan as well, but a friend of mine tried it out a week ago and was unable to get it using the email addresses that have been circulating the web. Now you have to have an actual sprint address in order to get it.
Though I wonder if you could use an exec address from Consumerist’s EECB database….
I blame AT&T.
The original 8gb Iphone was $600 dollars at time of release. So early adopters of the “old” iphones are still paying more. this is only applicable if you bought after the price drop, or the 4gb
First off, scrap the text messaging for $5 a month, what do you need it for with a device that can do actual email?
Oh right, you like typing and spelling like a first grade drop out.
Blackberry FTW. No AT&T/Steve Jobs douchebaggery here.
Look people. First of all, you have to be with ATT to have the iphone in the first place. So who cares if you have to have a contract or not. For someone like myself who has a 30yr mortgage, two brand new cars with 5yr financing terms and a 24month agreement with Directv not to mention other contracts, honoring a 2yr cellular contract with ATT is not a problem. It is the responsible thing to do as an adult. And just for the record, ATT blows all other cell phone companies out of the water. No wonder APPLE only sells the iphone through them.
Also, “OMG the iphone doesnt send picture text. What am I, like, going to do?” GET A LIFE.
I have owned many different phones from ATT including, blackberry, palm one, motorola razor and krazor, lg, sony ericsson, etc. and the iphone that I have is by far the best phone I have ever owned. I have the original iphone and love it. It has come in very handy when I needed it. It is an incredible phone. I recommend it 100%
As far as it costing less or more for the new one. WHO CARES!!!! Chances are most of you (and this includes me in the past) upgrade your phone everytime a new fancy phone comes on to the market. Since I bought my iphone, I will never ever by another cell phone again. So in all actuality it will save me thousands over the next several years because I wont be spending 3 or 4 hundred dollars a year on a new phone. And neither will you if you actually take the time to see what it can do.
Bottom line, I love my iphone and I love ATT. And anyone who says otherwise about either is a DUMBASS. Verizon, Sprint, TMobile, Altell – they all suck. I have NEVER had a dropped call with ATT and I have been able to use it in places like Mexico, Jemaica, Sydney Australia, New Zealand, China, London, Paris and I could go on and on. My wife and I travel alot and have always been able to use our ATT service with no problem at very inexpensive rates if any at all. And I also have two more words for everyone. ROLLOVER MINUTES. What a novel idea. You get to keep whatever minutes you don’t use but paid for. HMMM. I paid for it and I get to keep it. Wow. This must be a new idea or something. And it can also save me money if I go over my anytime minutes this month.
Look, get the iphone, don’t get it, whatever. But you people are not making any sense what so ever. Stop and think before you write a bunch of junk that just doesnt add up.
Thx. PTFFL Commish
@JennQPublic: You’ve paid for ”cuteness”, you like the phone, and you paid for it. I’m perfectly fine with that.
What I hate is ”There is no such phone as iPhone!” that I hear regularly from hard-core Apple fans and ”fashion-whores” that I know. It’s annoying.
I don’t think people realize the grand scope of things here. And it’s funny because all this negative banter is very similar to when the first iPod was released and look where that is now…
Whether you want to believe it or not, the iPhone changed the cellphone industry as we know it, and they did it for the better. They brought a welcomed change in a market that had stagnated, and become overrun with terrible “free with plan” phones that made you want to rip your hair out from it’s terrible usability.
This is mobile computing at it’s finest. This is a computer in your pocket running a full OS that is soon to be supported by an onslaught of 3rd party developers and their ingenious software applications.
I think $35 a month is a small price to pay for one of the most top of the line phones in the entire cellphone market that every other cellphone aspires to be. Look at all the other companies with touchscreen phones now. That was never mainstream until the iPhone came onto the scene a year ago. And since then it’s been a disappointing game of catch up and no one has still even come close…
I would glady pay the 35 bucks just for the usability of the phone itself. Performing any task is simple, clear, intuitive, and at the same time beautiful.
Once the app store is open for business, people are going to flock to the new 3G iPhone.
1. Full 3D Gaming (comparable to a PSP or Nintendo DS)
2. Innovative 3rd Party apps that will take advantage of the full potential of the iPhone’s capabilities.
3. Enterprise Support
4. Integration with new Mobile Me push services
5. 3G Speeds
6. Multi-language keyboard you can change on the fly
Just to name a few
You all complain, but no other phone has true multi-touch support and can match the usability of the iPhone.
Just because the iPhone doesn’t have a feature that your 5 year old flip phone or your blackberry has had for years doesn’t mean that your phone is a better phone. A feature or application is only as good as it’s design and ease of use. From what I have seen, most phones just tack on features without any extra effort just to be able to say it does more than another phone to entice buyers. Doesn’t mean it was designed well or as easy to use as something comparable on the iPhone.
Trust me, whatever is missing on the iphone will be added by a 3rd party developer or by Apple with a firmware upgrade.
That’s another thing, this phone is barely a year old. Give it time to grow. It’s barely got it’s feet wet and it’s already got people scrambling to make something that can compete with it. It’s unfair to constantly compare the Apple to other cellphone companies who have loads of experience in the cellphone industry. As well as their phones that they have refined for many, many years. In five years lets compare the iphone to a five year old blackberry. It would prob make you cry…
yeah SERO is the way to go, even my lil Samsung M520 will run java apps such as Gmail, Google Maps, Opera, and MGmaps (free GPS) and anything else I can load on it… and 2 year cost? $720 for unlimited 3G data, MMS/SMS, 500 anytime, N&W start at 7. If you have a Touch or Instinct its an even better deal, but I didn’t want to layout the cash upfront, I’ll buy a better phone off ebay in 6 months.
this is just misleading. The high speed data plan is reasonably priced. That you get better service with the new iphone is a given. you pay more for such data plans regardless of what smart phone you buy!