This Friday marks the introduction of Apple’s new iPhone with their exclusive provider, the new, new AT&T. As much as we might love the new phone, the AT&T Wireless telephony package coupled with an iPhone makes this one of the most expensive cellphone bundles ever to hit Mother Earth. In fact, payments on a midsize automobile might just turn out to be cheaper than an ongoing iPhone contract with AT&T. AT&T may fool everyone and come to their senses on pricing before Friday, but we aren’t betting on it. Our guess is that AT&T is delaying a pricing announcement until the day before the phone’s introduction so that all the dumbest people on the planet won’t have time to do the math. It just goes to show that pairing the marketing genius of Apple with the greedy beancounters at AT&T still spells T-R-A-I-N-W-R-E-C-K. Not that any self-respecting college stud would be caught dead in a Ford Focus, but just for grins, let’s do the math so that everyone has a few days to bask in the real cost of an iPhone.
First, the iPhone hardly qualifies as a bargain. At $499 for the 4GB model and $599 for the 8GB, there’s no pricier phone in the cellphone marketplace. To add insult to injury, AT&T has taken things one step further: NO REBATE WITH AN iPHONE even with a two-year cellphone contract. Suggesting they’re MIGHTY PROUD OF IT is just the beginning of our little tale of woe! So, assuming the iPhone is actually worth its retail price, you begin this exercise paying roughly a $250 to $300 sign-up premium compared to purchasing a new RAZR phone or high end PDA with a two-year AT&T cellphone plan.
And then there’s the matter of picking a cellphone plan. Even Verizon can’t hold a candle to the new AT&T. If you plan to use the iPhone in the manner in which it is being advertised, i.e. to surf the web, to watch YouTube videos, and to send all kinds of messages to everyone on the planet, then hold on to your
hat wallet for the ultimate sticker shock. The cheapest individual cellphone plan starts at $40+ a month for 450 daytime minutes plus nights and weekends starting at 9 p.m. To take advantage of free calls to other AT&T phones (100 million wireless and wired phones), add another $20 a month. For earlier nights and weekend calling (7 p.m. instead of 9 p.m.), add another $10 a month. For unlimited data usage, add $40. For unlimited messaging, add another $20 a month. For phone insurance, add another $5 a month. Now add AT&T surcharges and taxes for another $20 a month. That gets us to roughly $155 a month plus the $10-$15 a month no-rebate penalty amortized over the life of the two-year contract because you chose an iPhone. So, the grand total for an iPhone works out to $600 plus tax for the only decent model plus roughly $170 a month for the required two-year service contract. Amortizing the hardware cost of the iPhone over 24 months brings our monthly cost to approximately $195 a month. The early termination penalty actually looks like a bargain with a plan like this one! Now the shocker. To lease a 2007 Ford Focus with air conditioning, you’re looking at less money per month although you’d make payments for additional years. But then, you may want to use your iPhone for more than two years as well… assuming you either win the lottery or have a healthy trust fund. Just don’t plan on more than three years, or it’s another pricey adventure paying Apple to replace the iPhone battery.
To give you a point of reference, our current Sprint family plan with FOUR PHONES and no discounts costs roughly $200 a month. It includes 2500 shared minutes, free calls between home and the four phones, free nights and weekends starting at 7 p.m., free tethering to four PCs (another $20 option per phone with AT&T), free roaming and long distance, free calls to other Sprint phones, and unlimited Internet service and messaging on all four phones. And the total hardware cost for the four phones including two Treos and two Katanas (the better RAZR) is roughly the same as purchasing one iPhone. Call us crazy, but we’ll stick with Sprint a bit longer. If you really want some fun, price out the cost of switching a family of four to iPhones. Then you can kiss that new BMW goodbye forever.
Pricing Update. We’re thrilled that our original article (above) produced dramatic price reductions within hours this morning. The new price is about one-third of the old one. You do think it was our article, don’t you? Steve Jobs has apparently worked his magic with AT&T just as he did with the music moguls. New pricing for the iPhone was just announced with unlimited data, visual voicemail, 200 SMS text messages, 5000 to unlimited night-and-weekend minutes, rollover minutes, and unlimited mobile-to-mobile calling each month. 450 daytime minutes will cost $60 a month while 1350 minutes will run $100 a month. Shared use family plans (700-2100 minutes) are $50 more with two lines activated. Great news for the iPhone and consumers. And there’s more good news. The entire activation and synching process for the iPhone will be handled using good ol’ iTunes in the privacy of your own home.
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