The New $199 iPhone Is $160 More Expensive Than The $399 iPhone It Replaced. What?

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)

Comments

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  1. mgy says:

    For 3G, an extra $10 a month isn’t as off-putting as it seems. An increase in the price of the data plan probably would have occurred even if Apple didn’t lower the price. Then the real bitching would commence.

  2. ConsumptionJunkie says:

    This is like razors. You can practically give away the razors but charge an arm and a leg for the blade refills.

  3. calvinneal says:

    No One was deceived. Most of us in this country can read, write and perform rudimentary math. What a ridiculous headline. I won’t be buying one, but the data plan is in line with what Verizon is charging.

  4. Concerned_Citizen says:

    Can’t you just buy the phone unlock it and use an non iphone price gouging plan? Do you lose any features even if you stick with AT&T but use their non iphone plans?

  5. Mr_Human says:

    And for all that, it _still_ doesn’t do picture text.

  6. donTHEd says:

    @Concerned_Citizen:
    You’d lose the internet.

    $30 is what they charge for all PDA phones.

  7. Paul D says:

    Progress, bitches.

    It’s a better phone, with better services. It should cost more.

    Is anybody seriously surprised by this?
    Seriously?

  8. JennQPublic says:

    The iPhone plan was a deal at $20, and $30 is a completely reasonable price for unlimited internet access. Charging an extra $5 for 200 text messages is not.

    /Sticking with the original iPhone for a couple more years.

  9. Mudpuddle says:

    You’ll have to give an eye for that phone>

  10. johnva says:

    Not that bad if you don’t actually use SMS. I think the most SMS messages I’ve ever used in a month is like 10. So most of that price increase wouldn’t matter much to me.

  11. freejazz38 says:

    Cost me NOTHING. I’m not stupid enough to buy one, or any other IPud, for that matter. Fool and his money…

  12. oldtaku says:

    >> Some of them can’t afford it. So we need to make the iPhone more affordable.
    > The new iPhone is not more affordable.

    When he says it needs to be more affordable he just means up front, because dumb people don’t budget more than a few weeks in advance (if that). Something that’s $200 cheaper right now is cheaper even if it costs you $160 more in the long run. This is why poor people stay poor.

    So everyone wins! Apple/AT&T make more money, dumb people think they’re saving money, everyone else excuses the price bump for the privilege of using the Jesusphone. Rainbows and unicorns for all.

  13. TheDude06 says:

    errr im currently paying $30 for my iphone data plan…. wtf?

  14. johnva says:

    Oh, and while we’re on the topic, SMS is the biggest scam imaginable as far as overpriced wireless services. It costs them next to nothing to provide that service (the data is miniscule), and yet they rake in the dough for it. Why should I pay so much to send less data than like 1 second of voice?

    AT&T also recently appears to have quadrupled the price of “pay per use” SMS, to $0.20 each.

  15. LatherRinseRepeat says:

    I don’t think it matters. People that want the iphone will pay whatever Jobs/ATT want them to pay. Being a member of the Apple Cult ain’t cheap. LOL.

    But the new pricing isn’t that big of a deal. It actually brings the iphone data package up to the same level as the other non-iphone data package that ATT offers. Currently, you can add unlimited data to any calling plan for $30 a month, no SMS included.

    I think people should wait. The 3G iphone is supposed to launch worldwide in the same week. In some countries, there are laws against selling SIM locked phones. So if you don’t want to be locked into a 2 year contract with ATT, then buy a grey market unlocked iphone on ebay. Just don’t expect to pay $199.

  16. PeteyNice says:

    @JennQPublic: I agree that $30 a month is perfectly reasonable for unlimited internet access on your cell phone. As long as that $30 also includes 500 daytime minutes, unlimited night & weekend minutes and unlimited text messages.

    Sprint SERO FTW!

    [www.fatwallet.com]

  17. Nev-in-NYC says:

    All I can say is: iSheep…

  18. ShirtGuyDom says:

    So if I don’t buy the SMS plan (as I almost never text), I’ll only be paying $40 more for the 3G iPhone. That sounds perfectly okay to me.

    Still misleading of Apple though.

  19. TechnoSmurf says:

    @Concerned_Citizen:

    ATT learned from the previous iphone model and the “hoardes” that they claim bought the phone, unlocked it, and went to another carrier (or replace it with another ATT phone chip). Now they’ve apparently demand that if you buy the 3G variant of the phone, the phone must be activated in store only (not through itunes like the last model). Furthermore, if you were to buy it in a way that you could get around this (apple store perhaps?) then they’ve been working on penalites for not activating your phone on their service. I dont know what the exact figures of these penalties are but you’d be losing alot more than the $160 price difference this article metnioned.

  20. Depends on the country. They’re just plain cheaper here and in the UK; the plan still costs the same, while the phone is from half the price to free depending on plan. There’s more of a history of heavy operator subsidy in Europe, though; my understanding is that AT&T doesn’t do it to any great extent.

  21. TeraGram says:

    @sarusa:

    The rainbow can be delivered any time, but could you please make sure the unicorn is delivered Monday or Tuesday between 9am and 2pm?

    Kthnx, bai!

  22. Parting says:

    I never understood iPhone hype.
    It’s just a FRIGGIN’ PHONE!

    It does not do your dishes, walks your dog. Also, it doesn’t do anything more that a Blackberry or a Palm. It’s cute, but forking hundred of dollars for cuteness?

  23. madog says:

    @calvinneal: True. Most people CAN do the math, but most people do not. I’ve only been on this earth for 25 years and it didn’t take me that long to realize that there are a lot of stupid, gullible people out there who take things at face value. If they heard it’s more affordable then that must mean it’s fact. As an example, I work at a small, local computer store with about 10 machines on display. Every week someone walks in, passes by all of the machines, looks around for 30 seconds, walks up to the counter and asks if we even sell computers here. It drives me absolutely insane and makes me wish I could enforce darwinism with an aluminum bat. If something that simple is beyond many people then adding up some numbers for 24 months of service would cause their heads to spontaneously explode from the intense heat caused from thinking beyond that initial impulse.

    @Concerned_Citizen: Doubtful. Unlike the original iPhone, you MUST SIGN a 2-year contract in order to purchase the new iPhone. Even at Apple’s online store they say that the iPhone 3G can be purchased at “any one of the Apple retail stores and AT&T stores around the nation”. I wouldn’t be surprise that you couldn’t order one online and have to purchase it at a retail store therefor forcing you into the contract. They don’t want to lose any more money than they did with the current situation of convenience [iTunes setup].

  24. doctor_cos wants you to remain calm says:

    Everybody wants an iPhone.
    I don’t (want one or care). I have a camera, and a laptop. I don’t need a freaking PHONE to take pictures or access the internet.

  25. Parting says:

    @calvinneal: Sorry, but mortgage crisis proves the contrary.

    You should see headlines overseas : ”USA caused world’s market crisis”, ”USA caused severe market damage by allowing deregulated mortgage loans”. Etc.

    Fun to read, or not.

  26. mthrndr says:

    @TechnoSmurf: EXACTLY. Jobs’ statements are even more disengenuous because they’ve now made it almost impossible for people to affordably unlock their iphone. If you must activate in-store, then you’re forced into the higher price plan, even if the phone is cheaper. This is what makes me so angry about this. What the fuck, Apple? You make noise about being so independent, but when you release the one product I want to buy from you (iphone) you force me to sign up with AT&T, a crap-ass company that I have a lifetime ban on ever since they out-and-out lied about my wife’s cell phone service. Just release your damn phone and turn on/off features based on carriers that can support them.

  27. goodcow says:

    Not including SMS with the package is pure greed on AT&T’s part.

    Also, for everyone buying a 3G iPhone, but unable to get 3G service in their area, they still have to pay $30 a month vs. $20 for the old 2G/EDGE data plan. Considering AT&T’s 3G coverage is laughable, they’re making out like bandits.

    I really wish Apple would just make a CDMA iPhone for Verizon.

    My current cell phone, four years old, is literally falling apart, and while I love Verizon’s service, their phone selection is garbage. I don’t know what to do… I want an iPhone, but $35 a month just for data (3G and SMS) is insane.

    Maybe with the 20% work discount on every bill it’ll be manageable…

  28. mthrndr says:

    I should mention that I would love to get an iPhone. but this kind of duplicitous marketing is what makes me want to punch Steve Jobs in his smarmy face.

  29. evslin says:

    I was initially going to get an iPhone until the numbers started coming out and it was determined the total cost of owning one over two years is higher than it used to be. I don’t need to check my e-mail on the run so bad that I’d be willing to pay $75-$80 for it.

  30. evslin says:

    @PeteyNice: Yep, I jumped on that SERO plan just this last week after deciding against the iPhone. I’ve found over the last handful of years that I use minimal talk time but use a shitload of SMS on a monthly basis. The $30 plan was exactly what I needed.

  31. LJKelley says:

    Well consider the fact that bought Sprint and T-Mobile are much cheaper (like $20 Unlimited Internet on T-Mobile, or my favourite $5 T-Zones which basically allow you access to any site or internet service as long as its thru port 80) and the fact that most of AT&T coverage is still EDGE, its not only a false statement but a ripoff compared to the competition. People unlocked their iPhones to T-Mobile because it is cheaper. Raising the prices isn’t gonna help AT&T’s image or stop the desire to unlock iPhones.

  32. djanes1 says:

    I also heard that Apple is going to start charging 15 dollars for the first(!) checked bag. Just get a Blackberry.

  33. TechieEddie says:

    What some people pay for JUST internet access on AT&T gets me Unlimited Data Access, Unlimited Text Messaging, N&W starting @ 7pm and 450 mins on SERO.

  34. itsgene says:

    Why did this post delete all references to the other phones included in the little cost study? Perhaps to get the anti-Apple trolls and the pro-Apple fan boys fighting, which we all know makes for good blogging.
    The Gizmodo article and the little spreadsheet in question come to the conclusion that the iPhone — either model — are still cheaper than other alternatives; such as the Tilt and Verizon’s 3G offering. The original iPhone was cheapest of all; the Sprint HTC Mogul comes in second.

    But it’s not nearly as much fun to have flame wars over “ordinary” phones, is it?

  35. crabbyman6 says:

    @johnva: $0.20 is what Verizon charges too, for sending AND receiving. I don’t mind paying for sending because I generally am doing that conscious of the cost I will incur, but receiving just ticks me off. I can’t easily stop people from texting me, people like my sister who texts me just to tick me off because I have to pay for each one.

  36. Mr_Human says:

    @TechieEddie: Ditto. SERO is awesome.

  37. mercnet says:

    I can’t wait to see people’s faces when they buy this iphone and realize they don’t live in a 3G area. I remember reading AT&T wont have decent 3G coverage till 2009.

  38. CaptZ says:

    @johnva:

    Intersting article on True Cost of SMS…..tongue in cheek.

    [gthing.net]

  39. johnva says:

    @crabbyman6: I think it’s just ridiculous that they can get away with charging so much for it. It’s a ridiculously small amount of data compared to say, Internet access. I understand that they charge the prices they do just because they can and people will pay it, but I still think it’s totally ridiculous. It’s almost pure profit for them.

    I do understand that texts are somewhat useful (like when I’m not sure if someone is awake), but mostly their popularity makes no sense to me. Just send an email or make a phone call.

  40. WraithSama says:

    I have a Blackberry Pearl using T-Mobile. That having been said, there’s nothing deceptive about Job’s speech or the iPhone price point. If I’m not mistaken, the high service prices that are causing “the phone” to be more expensive is actually fees and charges levied by AT&T, not Apple.

    It looks to me like Apple did make a better phone and provide it at a lower price. AT&T just decided to jack their rates and make their service more expensive over the long run.

  41. Meathamper says:

    Ouch.

  42. johnva says:

    @CaptZ: That was pretty funny. Thanks.

    Hopefully the widespread availability of the Internet on phones will kill off the SMS “service” for good. You can usually use email, instead, and the cell companies can’t prevent you from accessing encrypted email servers to do so.

  43. Doesn’t 5 x 12 = 60, not 120?

  44. JennQPublic says:

    @Victo: I have never owned an Apple product before, not even an iPod, and when I broke my old cell phone, I had no interest in an iPhone. But when I went into the AT&T store (already have their service, and haven’t had any problems) I looked at the iPhone, just because it was there. And I looked, and I played with it, and slowly that cult-gleam came into my eye, and I had to have it. I don’t regret it at all, I use enough features on it to justify buying it, and it is the singularly most brilliantly designed piece of equipment (of any kind) that I have ever owned. I am not an Apple fan, per se, but I love my iPhone like Tom Cruise loves Scientology.

    I did play with all the other phones with internet capability (from every service, as I’m not under a contract), and I didn’t like any of them. My last phone was an eight-year-old Nokia 3395, which I loved, and if I hadn’t gotten an iPhone I would have gotten another 3395.

  45. 3G phone data plans tend to cost more than other data plans. Such is the way of technology. My FIOS internet cost more the regular DSL but it saves me time downloading to it’s worth more to me. A dude at work wanted to add a data plan to his Blackberry and they wanted $50 for it. $30 is a pretty good deal.

    The new iPhone also has GPS which is probably worth a hundred bucks since that is what it would cost you to get a separate handheld GPS.

    Also, with an AIM app I won’t be needing SMS so that’s a non-issue.

    Losers who think the iPhone is just a phone are kidding themselves and missing out on some great time saving technology. In fact, I hardly ever use the phone part of the iPhone but everything else about it is sublime.

  46. S3CT says:

    I have a motorola q on verizon. I use it to make phone calls and text message once in a while. It has a lot of features that I don’t and will never use. :D

  47. mgy says:

    @alphafemale: It’s calculated over the entirety of the 2 year mandatory contract.

  48. Trai_Dep says:

    Uh oh, an iPhone with a cracked screen!
    Somewhere in Rainbow Land, a unicorn sheds a single tear. ;-(

  49. Scazza says:

    @Paul D: By that logic, when cell phones were first introduced years ago for 1000 of dollars, through the use of “progress” phones and plans today should cost well into the tens of thousands… Progress should not equal higher price…

  50. backbroken says:

    Not everyone has to have everything.

    It’s a non-essential.

  51. Trai_Dep says:

    For those too lazy to click the link, here’s the graphic in the original Gizmodo article.
    Note that of the 3G plans/phones, both the iPhone and the 3G iPhone are cheapest (admittedly, not by much):
    [cache.gizmodo.com]

    So, this means that either people saying Apple is e-v-i-l will admit their error, or that they’ll admit they’re comparing apples (cough) to oranges?!
    …Nah. I didn’t think so either.

  52. rabiddachshund says:

    @Mr_Human: “And for all that, it _still_ doesn’t do copy/paste” -fix’d (you knew it was coming).
    @Mudpuddle: That was horrible. You’re on punishment.

  53. rabiddachshund says:

    PS: 160/12=13.33
    I don’t mind paying an extra $13/month. However, I bought my iphone the weekend before they announced the free upgrades which everyone is claiming to be official. That is, everyone except for ATT and Apple.

  54. induscreed says:

    iphone for 199
    early termination fee for 175
    total 374.

    Get a media unlimited smartphone plan for $19.99, use SIM card from older, regular AT&T phone.

    You are still a sheep or an ibitch but atleast smarter.

  55. Chronotope says:

    I bet Apple will charge you for the software upgrades too, just like they did for the Touch. Then you’ll exceed your data plan downloading them. Apple just tacks on the charges.

  56. taylorb says:

    I’ve heard that in Korea and Japan you can walk into a phone store, purchase a plan with full features, buy a phone (years ahead of our phones here) and walk out without spending more than 100 dollars.

  57. h0mi says:

    “The new iPhone is not more affordable.”

    Over the lifetime of the contract, you pay more for the new iphone but the fact remains, it’s easier to come up with $200 and just pay $10-20 more a month than it is to come up with $400.

  58. drjayphd says:

    @WraithSama, @Trai_Dep: How DARE you bring logic and reason into this Apple-bashing party? :P

  59. legwork says:

    I pay about the same for my big Blackberry plan. Sounds to me like tweaking to make AT&T happier.

    Um, on that note, I’m still waiting for ANYONE besides AT&T…

    Okay, anyone besides AT&T and Verizon.

    Obligatory “People still use SMS?” sig.

  60. dink23 says:

    @ConsumptionJunkie: You have to beat them at their own game. Couldn’t tell you the last time I paid for a razor or a refill. They tend to give them away pretty regular online. I probably have 4 in reserve.

  61. dink23 says:

    @induscreed: It’s not that easy with an iphone. You have to plug the phone into itunes before it will allow for the SIM card to work and the proper data must be added and yes this includes already active SIM cards. Oh and don’t forget no iphone plan, no visual voice mail.

  62. BankOfFees says:

    Disclosure: I own no Apple or ATT products. The economic math by Consumerist in this article is laughable. To correctly calculate the difference in price over the length of the contract, you have to factor in tmany factors: value of the dollar, the amount of money the upfront discount would yield (on average) during the contract, etc.

  63. Ayo says:

    Whoopty do… considering you are getting a better phone with GPS and 3G capabilities and who knows what else (video? better camera?)… and 3G usage will probably increase the amount of bandwith used. So it seams justifiable.

    I must say. I was, and still am a HUGE critic of the original iphone due to its lack of 3G. and numerous other things. But thats how Apple does it. They introduce a device that has POTENTIAL to be better. Let the early adopters buy them. And then a short time later… they release the “new version” that the same early adopters NEED to get. It’s called planned obsolescences. Why do you think they priced it at $199. So no one will go to the old iphone when purchasing.

    I just wish everyone would quit freaking out about the “more expensive” new iphone. Last time i checked you don’t need to get a data plan.. but i know, i know.. it would be pointless not to.

  64. Mudpuddle says:

    Does the new and improved Iphone come with stereo bluetooth (like a large percentage of primitive phones do that dont sport a hard drive)? Well if i cant use my stereo bluetooth head set can I at least use the flash for my iphone pictures. No you say?

  65. y2julio says:

    I can’t help but laugh. I love my Sprint SERO plan.

  66. Mudpuddle says:

    sent and screwed up by my iphone
    This is what my signature was until i sold it and got something with a keyboard.

  67. thaShady says:

    I still don’t understand how “unlimited data” doesn’t include text.

  68. pete says:

    $160? Not exactly…as BankOfFees mentions, you need to consider two factors in particular: inflation and net present value. But more importantly, “more affordable” is all relative to the contract holder. For people struggling with credit card debt, this definition of affordability should sound familiar.

  69. ianmac47 says:

    So is there anyway to get the new iPhone, cancel the service contract and place an iPhone 1 sim card in the iphone 2?

  70. edrebber says:

    Is Apple responsible for AT&T raising their rates? Apple lowered their price significantly.

  71. benjamintm says:

    Apple and AT&T are disclosing this fully to the user. There is no “hidden fee” associated with the plan. Steve Jobs even said the price for the data plan went up $10.

    While I’m not planning on getting a iPhone 3G (just got the extended warranty for my iPhone), the extra ~$7 bucks a month extra for 3G doesn’t seem unreasonable. Factor in that the new iPhone includes a GPS unit and the entire thing seems very reasonable.

    Ben

  72. Bauer22 says:

    Am I the only Apple Fanboy that thinks this is BS? Im never brought an iPhone because I wanted to see how this one would be but I’m just gonna go get a used old one now. According to Engadget you’ll be able to get the cheaper plan even after the new one comes out. I mean 3G is nice but I doubt I’ll even get it where Im at.

  73. Consumer007 says:

    And this is exactly why I plan to buy the I-Phone WITHOUT activating it and keep my current cell phone. I already called Apple twice and verified I could do it. If they lied I’ll return it to the manager who said I could personally and sue. Too bad they are so damn tempting and addictive. On another note, I don’t appreciate them refusing to furnish the I-Phone with the camera to try and force the AT&T contract on you.

  74. Consumer007 says:

    I’m sorry that’s refusing to furnish the I-TOUCH with the camera…

  75. jamar0303 says:

    @taybay: Yep. And you get a 50% discount for signing a 2-year contract (stay past 2 years, and your discount grows, up to 75% or some number). But, the reason their phones are free is because you pay back the price of the phone in installments per month (included in the price of the plan).

  76. RetailGuy83 says:

    The new iPhone is not more affordable.

    ummm… yes, it is. 200 < 400. Making it more affordable. Even if it costs more over time, it is still more affordable.

    Example, a car cost $20,000. You have $3,000. You can not afford to buy that car. However, I sell you that car for $26,000 over the course of 5 years, is is now affordable to you, even though you are paying more for it.

  77. bnpederson says:

    The overall price is higher but from a budgeting standpoint the phone IS more affordable.

  78. macMD says:

    Jobs is the master showman, he should really pick up the tag line “A sucker is born every minute”. Yes I can do the math so can many more but in the end they blindly ignore the true cost of ownership and just like sleazy car dealers wind up with buyers remorse.

    You have a current iPhone you bought last year, no problem come on in and sign up for iPhone 3G and sign up for 2 more years, we just extend your contract 2 more years. Later in 2008 Jobs intro’s the 32GB iPhone for x-mas and you want that one too, no big deal just sign up for 2 more years, or better add a line and give it to your family member etc. You never escape AT&T and Apple on this one.

    If your cool with that sign up and enjoy if not bend over and you might still enjoy :)

  79. danseuse322 says:

    So I pay $30-35 fro DSL or $50 for cable (no home phone or home cable so it costs more) internet. Then 30 for a data plan (but SMS is not data so add 5). WHY would I want to pay $70-85 a month for internet when it’s all over and free in many places. I drive a Corolla and pay half that to fill my gas tank. That’s nuts. If we need to be that wired, we lost our life somewhere.

  80. BankOfFees says:

    Why hasn’t the headline changed? I am an economist and have done many of these types of calculations. Consumerist’s math is simply laughable and not true — see my previous post. (Disclosure: I do not own any Apple device or subscribe to ATT). It’s sad that Consumerist, a site which often calls out untrue advertising, has a headline which simply isn’t true.

  81. @BankOfFees: Consumerist is big on the sensationalism. Sometimes I like it, but this is sorta silly.

  82. gte879p says:

    @BankOfFees: Since you are an economist, please enlighten us with the proper math to correct the math in the article. It would be interesting to see how much of a difference there is when NPV and TVM are taken into account.

  83. BankOfFees says:

    InfiniTrent: with this type of factually false headline, Consumerist is becoming exactly what it purports to expose.

  84. The-Tree says:

    this is YET AGAIN proof posoitive that americans are so freaking dumb they will pay more in the longrun to save money up front.

    you could sell a smartphone for 1 penny, as long as it has a three year contract, and has a decent monthly fee, you cna re-coup the cost long term….but god forbid the american consumer would be a fraction of a cent smart enought o realize they are losing money in the long run

    and people wonder why our economy is in the hole.

  85. jcoltrane says:

    Sprint SERO plan + Touch or Instinct FTW!

  86. mythago says:

    Someday Apple will figure out that they have all these nifty devices, and never bothered to work on batteries to keep up with the thing. I’m not even buying a new iPod after finding out (the hard way) that Steve Jobs thinks “not enough juice to watch a movie all the way through” is A-OK for battery life.

  87. planet2334 says:

    Great information, I’d recently gotten a call from a friend after sending her a birthday card, and she was thinking of getting one of these phones because of the “cheaper” price. She may still choose to, but at least she has all the facts, I sent the link to her for this page. Thanks.

  88. mayes says:

    Thank you ,

    ATT for overcharging for SMS and Dataplans

  89. maestrosteve says:

    It appears that no matter what Apple does, people want to find something to complain about.
    When the original iPhone came out, people complained about the price, but nobody figured the total cost after 2 years would be cheaper than owning a Blackberry. The iPhone plan was $10 a month less than a comparable BB plan, that $240 savings over the 2 year contract, but people concentrated on the upfront price. It was panned as being too expensive.

    Now that Apple has lowered the price of the phone, added 3G and GPS, and AT&T is charging the same as the Blackberry plan, people want to complain about that. Now it’s said that the plan is too much money.

    Is there any way people won’t complain one way or the other?

    It’s kind of dumb to complain about any price break. It’s like if a car manufacturer lowers the price of a car, and people complain because the car costs more after 3 years because of the increasing gasoline price.

  90. opsomath says:

    I assumed it would wind up costing more as soon as I saw the higher monthly rate. Otherwise, why would they bother offering it? TANSTAAFL.

    If people weren’t so addicted to having the Latest Gadget, this wouldn’t even be worth noticing.

  91. Thillbilli says:

    I agree that it’s a bit backended that overall, the price is more to own and operate an iPhone 3G than a 2G.

    But there is another way to look at it. Perhaps the problem in affording an iPhone is not the cost of upkeep overtime but the initial cost at time of purchase.

    So you buy a 2G 8Gb. $399 + 39 + 20 = $448 at time of purchase

    Someone gets the 3G 8Gb $199 + $39 + $5 + $30 = $273 which is a difference of $175 at purchase.

    The remaining differences in cost the (calculated $175 difference at purchase and overall $160 increase = $330) are spread out over the next 24 months (about $13.50 per month) which could make such expenses more managable.

  92. JustThatGuy3 says:

    @Concerned_Citizen:

    Nope. Won’t be able to buy it without a contract. New iPhones need to be activated in-store, at the time of purchase, on a 2-year contract. No online sales, no “activate at home.”

  93. JustThatGuy3 says:

    Did the NPV. Over 24 months, at a 10% annual discount rate, the new plan is $1810 in total, while the old one is $1683. If you don’t care about SMS, the new plan is $1701 and the old one is still $1683.

    So, new plan is still more expensive, but you also get more (i.e. 3G).

  94. mike says:

    This is obvious. I, like many people, plan on buying the phone, having it for one month, then buying out the contract.

  95. sgodun says:

    Um, Consumerist? Exactly when did you lose touch with reality?

    The new iPhone *IS* more affordable, in the same way that a $20,000 car is more affordable when its payments are spread out over several years.

    “Affordable” is not the same thing as “expensive”. I’d think that Consumerist, of ALL sites, would recognize this. Alas.

  96. digitalgimpus says:

    In a sense it is more affordable and attracts new customers.

    Not everyone could afford to put $399 down (note spending $399 is for a glorified iPod touch, since that doesn’t include the plan).

    $199 is a much more reasonable amount to pay for a phone. The service plan is pretty standard now… people are likely paying close to that amount anyway.

    Affordable != Cheaper. I fail to understand why people think they are the same.

  97. Jackasimov says:

    Just get a Jitterbug.

  98. Chune says:

    @mthrndr:
    But isn’t the phone actually cheaper if you do the following?

    - Buy iPhone at 199
    - Cancel contract immediately, pay $175 ETF fee

    - Cost, $374.

  99. mthrndr says:

    @Chune: That’s actually a really good idea. I hadn’t thought of that.

  100. UnicornMaster says:

    I don’t know if it’s $10 more a month to make up the upfront cost or if it’s $10 more a month for the faster data service, 3G. It’s like paying the difference between DSL and DSL Lite maybe. Or at least that’s the way I’ll justify it when I purchase one next month.

  101. kJeff says:

    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.

  102. Wormfather says:

    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.

  103. Wormfather says:

    @mythago: I’ve never had that problem on my video ipod or on my iphone.

  104. Angryrider says:

    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.

  105. Wormfather says:

    @Trai_Dep: Is that on “Planet Unicorn, heeeeeeey”

    YouTube it.

  106. JustThatGuy3 says:

    @Angryrider:

    Out of curiousity, which features in particular?

  107. JustThatGuy3 says:

    @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.

  108. RINO-Marty says:

    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.

  109. capnjack says:

    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.

  110. Jmatthew says:

    @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.

  111. piratealice says:

    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?

  112. Wormfather says:

    @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.

  113. StanislausKabolla says:

    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.

  114. Aisley says:

    Definitely, Steve Job did not lie!!! He said that THE PHONE is more affordable. He was not talking about the plans!

  115. SacraBos says:

    @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.

  116. S-the-K says:

    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!

  117. ExtraCelestial says:

    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…

  118. Trai_Dep says:

    @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…

  119. Ron-Mexico says:

    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.

  120. Thanks, Consumerist, for pointing-out that the new iPhone will cost me more than the old iPhone, despite what Steve Jobs said.

  121. dpnation says:

    @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.

  122. @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.

  123. ArianaMenestheus says:

    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.

  124. maestrosteve says:

    @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?

  125. beetlebug62 says:

    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.

  126. adamcz says:

    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.

  127. clank-o-tron says:

    @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….

  128. Ein2015 says:

    I blame AT&T.

  129. Jakebane says:

    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

  130. wildness says:

    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.

  131. FLConsumer says:

    Blackberry FTW. No AT&T/Steve Jobs douchebaggery here.

  132. BarbraGautam says:

    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

  133. Parting says:

    @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.

  134. metalhaze says:

    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…

  135. Voltron's Underwear says:

    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.

  136. zucchini says:

    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!