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iPhone: it isn't the price I'm worried about

John Gruber has penned a rebuttal to Steve Ballmer's recent statement that the iPhone, an product that isn't even shipping yet, is priced too high to gain significant market share. I find myself agreeing with John's argument that the iPhone isn't priced too high. I'd plunk down $500 tomorrow for a device like the iPhone (and recall I haven't, much like most people, even touched one of these beasties yet), however, I'm not as convinced by the argument that Apple will sell boatloads of these things because they are priced like early iPods.

The rub with the iPhone isn't the price of the device itself, but rather the unknown price of the phone plan you'll be required to buy along with it. When I buy an iPod, it is mine free and clear. I don't need to pay a monthly service charge (which is signed in blood) to ensure that the darned thing will continue to function. That won't be the case with the iPhone. I'm almost certain that you will not be able to buy an 'unlocked' iPhone (that is an iPhone that you can use on any network, without having to buy a plan) for at least a year after its introduction.

'But how much could a phone plan cost, Scott?'

The truth is, we don't know yet. AT&T and Apple could be cooking up some special deal for iPhone buyers, but for the sake of argument let's just look at AT&T's current rates (as listed on Cingular.com) for the type of services that you would want on your iPhone to take advantage of all those super cool features. Here's the breakdown:
  • 450 minutes talktime per month (includes 5000 nights and weekend minutes): $39.99
  • Smartphone Connect Unlimited (this is unlimited data transfer, since an internet communicator is sort of pointless with a data transfer cap): $19.99
  • Messenger Starter (200 text messages per month, unlimited texts to other AT&T customers): $9.99

That's a grand total of $69.97 in services for your iPhone before taxes (and that's kind of on the low end of the available services. I'm sure lots of people will want more talk time, or more text messages.). Now, let's assume that Apple and AT&T will only require that you sign up for a year (I'm betting the iPhone will require a 2 year contract), that translates to about $839.64 for the first year of services (before taxes once again). Tack on $500 for the iPhone itself and you find that Apple's cool new phone is going to cost you $1339.64 (roughly).

Now, I know lots of people are going to point out that there are a number of unknowns about the iPhone, including what the service plans are going to look like. This is very true, however, Apple isn't the first company to come out with a super cool smartphone so we have some history with which to draw on. My current phone of choice is the Motorola Q, which is a Windows Mobile smartphone. I pre-ordered it for about $200 and signed up for a 2 year contract with Verizon. The Q sports EVDO, which is faster than the Edge network that the iPhone will be using, it can send text messages, browses the web, and does voicemail. It doesn't have WiFi, nor is the software that it runs as cool looking as the iPhone's. My phone plan/unlimited data/unlimited text messaging costs me about $85 a month which, in the realm of smartphone pricing plans, is a steal.

The iPhone is priced right, but the devil will be in the details of the service contract that comes along for the ride on one of those little marvels. Let's hope my worrying is unfounded, but something tells me the numbers listed in this post aren't going to be too far off the mark.



John Gruber has penned a rebuttal to Steve Ballmer's recent statement that the iPhone, an product that isn't even shipping yet, is priced...
 

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Jose M. Garcia

so? since its manufactured by apple, would it be charged through a pc????? hopefully not, and att should find a separately and less expensive plan for this phone, I say it'll be best atleast 50 dollars, I mean the phone itself its expensive, and then keep paying a little more than half a hundred dollars????

June 22 2007 at 1:25 PM Report abuse rate up rate down Reply
diane

i feel sorry for all the parents. this is going to be a huge expense. anyway- i was wishing for a great deal on the phone with two year contract. keep my cheepo phone and sell the iphone on ebay and make some dough. to bad for me- 500 bucks for that phone with no incentive? come on.

June 10 2007 at 7:37 AM Report abuse rate up rate down Reply
xGenius

i used to work for apple... as of last month. last i heard, there was an "iPhone specific" plan coming out that isn't comparable to any of the existing monthly plans out now.

June 06 2007 at 4:25 PM Report abuse rate up rate down Reply
Mitch Cerroni

Look at Helio, which has the upcoming Ocean thats similar if not more features than the iPhone, they offer 500 minutes with unlimited text and data along with other stuff like google maps WITH GPS all for $65 a month. I really only would use the text and IM and maybe google maps and talk less than 500 minutes so its fine. But none of it really compares to MetroPCS with unlimited everything and I pay $50 a month but no hope for a smartphone. I will still switch to cingular just for the iPhone and hopefully just pay the $39 for 500minutes and try to find wifi spots for everything else. The big thing is Apple opening development for the iPhone (skype via wifi for free)!

May 09 2007 at 1:09 AM Report abuse rate up rate down Reply
jh

Yeah. RIGHT.

Because Steve Jobs of Apple (Revenue, 2006, $19.6 billion) can FORCE AT&T (Revenue, 2006, $63.5 billion) to do something.

Mark my words. The Iphone is going to run around $75 to $120 a month, depending on your minutes. There might be some higher end bundling, but they're getting you to pay $600 for a phone.. you've got the money to pay $80 for the service.

May 02 2007 at 10:23 PM Report abuse rate up rate down Reply
Robert

My guess is that Steve will work with (force) Cingular/ATT to offer some decent plans (data, SMS, minutes) that are probably better priced than what is now offered.

May 02 2007 at 9:42 PM Report abuse rate up rate down Reply
WPCoder

What I've been told by many different Cingular reps -- the data plans are priced based on expected use for each device (in reality -- how much data really is expected for the "unlimited" plans). So, on devices that have small screens and no QWERTY keyboards, the data plans are cheaper as they don't expect you'll practically be able to use much of your data plan. But, when a QWERTY style keyboard or larger screen is in play, the data plans are far more expensive. Usually double. I had an Audiovox 5600 smartphone from Cingular with the MediaNET plan @ $20. However, if I were to step to the Treo 750, which is still Windows mobile, it's $39.99 a month for unlimited data.

May 02 2007 at 8:47 PM Report abuse rate up rate down Reply
paul

If you'd plunk down $500 for an iPhone, then you're either rich and stupid or just stupid.

May 02 2007 at 4:05 PM Report abuse rate up rate down Reply
Guy

The smartphone plan you talked about, in only for phones like the Blackjack or the 3125, not, I am guessing the iPhone. The 8525 is the closest thing Cingular has to the iPhone and that requires a PDA plan, you can't activate it with a smartphone plan. That is atleast $80, and 450 minutes is only 20 minutes a day (22 non weekend days a month), that isn't alot.

You can get any phone unlocked, it is illegal for them to grant that request, but you do need to jump through hoops. You need to prove you own the phone, then they have a form to fill out, and wait about 2 weeks for them to get the subisidy code. Also that won't do people too much good since you will still need to pay the early termination fee of $200. Also the only major company you could take it to in the US is t-Mobile although in Europe it would work.

May 02 2007 at 2:08 PM Report abuse rate up rate down Reply
jh

My suspicion , having been a Cingular customer, is that you will be paying between $75 and $120 a month for their service.

I bet they would require an unlimited High Tier Data Plan, which is around $60, plus your minutes. I would also imagine that your rollover would use data minutes.

May 02 2007 at 2:05 PM Report abuse rate up rate down Reply
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