For techies, particularly those who like Apple products, the new iPhone 3G is starting to look nice. The current iPhone already has a mess of cool features, but Apple’s adding speed, GPS, support for Exchange, and many other features to attract new consumers, particularly business consumers.
Most importantly, the price for the entry level iPhone will be lower than less sophisticated devices, only $199.
This price is highly subsidized by AT&T, the only carrier that will officially support the iPhone. For every customer purchase, AT&T provides $300 to $400 to Apple to receive the device. This subsidy comes at a great cost to AT&T, but they’re confident that it will take only two years to recover these costs. Why? iPhone users spend more.
The average phone bill of an iPhone user is $95, almost twice the average of all other customers. If you’re an average iPhone user, you are spending $540 more per year, or $1,080 over the life of the two-year contract, for the privilege of buying an iPhone for only $199. I think AT&T is recovering quite nicely.
Would you buy the iPhone at $199? It sounds like an attractive price at first glance. But what if you had to pay your total $1,279 up front? You’d get to keep your $50 monthly plan with this option.
The good news is this lower price might mean more competitive phone prices across all cellular carriers. The bad news is the higher subsidies may be covered by higher monthly rates.
Information on iPhone subsidy from AT&T Starts Subsidy War, Scott Moritz, Fortune, June 10, 2008.
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The comparison between ‘average iPhone user bill’ and ‘average user bill’ is pretty meaningless, because anyone who buys an iPhone is likely to be a heavier than average user. To know whether AT&T really are going to rake it in, you want to compare ‘average bill (pre-iPhone)’ and ‘average bill with iPhone’ across the group of users that bought an iPhone.
I will be in line on July 11th!!!! Maybe I’m getting ripped off by At&t currently, but my bill is $85/month for just 900 mins/unlim night & wknd/1000 txts…so the extra $10/month for a full array of services is well worth it!
Not to mention that the sdk and app store is unlike anything else out there. That alone should sell this phone, as well as the fact that Apple sends out os updates frequently, unlike other phones that are a once and done purchase.
I bought the 16G i-phone when it became available (and paid ahem $500 for it), and it was one of the best puchases I’ve ever made. I love the mapping features, the abiltiy to approve blog comments from anywhere (I don’t admin my blog from my office PC), and calendar.
I was already with AT&T (Cingular, actually), when I purchased the phone – I have the most bare-bones plan – and the i-phone caused my wireless bill to go up $4.95 – that’s $30 a year that I feel is totally worth it. I just wish that I’d waited for this new version before jumping on the bandwagon – the extra speed would be nice.
No, I am definitely not an iPhone kind of person. I am very happy with PagePlus cellular, as I’m not one of those people who spends more. Getting value for the money is a bigger thrill to me.
I do love gadgety cell phones, but will never do a contract, and prefer the Verizon network. If the iPhone ever goes a la carte where one can buy one reasonably on eBay and then activate it on PagePlus, I might consider it. Meanwhile, I’m happy with LG phones.
“The average phone bill of an iPhone user is $95” – I have an iphone and am on the $59 a month for 500 minutes day minutes & unlimited night/weekend with unlimited data/email. What are those people doing with their phones that they are spending that kind of cash?
That being said, best purchase I have made in years, no question.
$59 was the minimum plan for the previous version of the iPhone ($39 voice + $20 data). However, AT&T has upped the data cost for the new iPhone to $30.
AT&T requires a 2-year agreement, so that extra $10/month means an extra $240 over the life of the contract. Add that to the $199 price of the phone and the price is more than the $399 of the previous version.
Not a big deal since it’s more feature-rich than previously. But it’s misleading for people to tout the $199 price as some big discount compared to the previous $399 iPhone.
They upped the price of the data? Wow…that’s pretty dumb. Thanks Anne, I didn’t know that!
David, how is upping the price of the data plan a dumb thing? Makes perfect sense that faster data transfer would cost more.
I’ve waited a year for this iPhone, and I’ve saved $500 for it. It’s going to make transportation of all kinds so much easier (I can check if a bus is running late from my iPhone, and with GPS I’ll never get lost again).
They are only upping it because it is the iPhone – every other phone of theirs (ATT) is already running 3G, (and a lot of them have GPS already built in) and they are not going to be charged more. Don’t get me wrong, I have an iPhone from the first time around, but they are only doing it because they know that anything Apple can have a “surcharge” on it, because everyone will still buy it.
I would love to have gotten an iPhone, but it has to work on my Sprint plan which has a great rate. Someday the AT&T monopoly will expire ;-).
I work for ATT. The plans are reasonable. The company makes all their money off features and downloads. If you have impulse control, i.e. not obsessed with the latest game or ring tone, or don’t have any overages, you probably spend very little.
iPhone users can spend more because they have to have a data plan. Of course, why would you have an iPhone for voice only!
I will be on vacation when the new iPhone is released. Yippee!
people are just getting rip off by apple…anything new comes out…people just ussually gets suckered at all times….i love my lg voyager no questions ask…people are just stupid this days..