Doin' the wacky AT&T math
As everyone has told us this morning (Thank you guys, we love you!), AT&T has announced their price plans. Christina got a post up about this earlier today. As I dragged my weary Mountain-Time-based self out of bed (after a night of random fire alarms due to a wonky 9-volt battery), I decided to see what all the fuss was about. You can imagine my surprise when I saw that AT&T was slapping a $400 premium onto non-contract phones. In case you were up most of last night (like I was) and weren't reading that last line correctly, let me say that again: there is a four hundred freaking dollar premium for non-contract phones.
Follow the jump for more thoughts about this development.
In a world of $200 subsidies, this $400 premium made me sit up from my bleary stupor. Normally AT&T charges $200 more for the 'retail' price sans contract for hot desirable phones, not $400. Far be it from me to suggest that people enter contracts that they intend to break, but new and current iPhone users will be better served mathematically by signing up for the upgrade ($199 to transfer service to a new iPhone, phone included), pay for a month of service and then cancel the contract after 30 days, keeping the phone and paying the $175 early termination fee plus that one month of service, which will run about $70 plus $36 for activation.
This comes to about $450 plus tax versus what AT&T is asking: $600 plus tax. For the 16 6B model, this works out to $550 (or so) compared to the $700 sticker price. According to Apple Insider, AT&T is likely paying about $325 per 8GB iPhone direct to Apple. A $450 price tag still offers them a comfortable profit margin should the guilt start kicking in.
Given this hefty price tag, consider what the point of buying an iPhone outright gets you: basically a contract-free unit that you can hack, unlock and activate at will. Once you've paid the price, and the unit is yours, you can use it with insanely cheap pay-as-you-go plans, including inexpensive "unlimited" 3G data plans that may or may not work with the iPhone 3G. You get the new cool form factor and onboard GPS positioning, great for runners and bikers and such.
That being said, unlocking or hacktivating your iPhone comes with a bunch of drawbacks. Be aware that you're basically invalidating your warranty and customer support, and that your plan might not work correctly on the phone. You might, in fact, not have access to those 3G features you were looking forward to, mostly because no one has had a chance to test the $20 for 30-day-unlimited data plan with the iPhone 3G. Plus $450 is kinda pricey for just buying GPS features if you discount the 3G data bit.
If you can bear the emotional wait, you'll likely do far better to wait for the price to drop -- you know it will -- and look out for the first wave of refurbished units that should hopefully appear within six months. If you're really set on upgrading, here are some reasons to "go legit" with AT&T:
- You pay "only" $199 or $299 for the new unit and you can eBay the old unit for a good profit. You can even wipe the old phone as needed to protect your privacy. That $500 or so extra can offset the contract price difference between your current iPhone plan and the new more expensive 3G plan.
- Likely as not, you can roll over your balance from your current iPhone or other AT&T plan, giving you a nice minutes nestegg.
- Sure, the new phone plans are more expensive than what current customers are paying but you do get that 3G connectivity. That difference in unbearable EDGE slowness to actual 3G usability may make the difference in getting your work done or not, especially when you want to untether yourself from the office, stick the Internet into your pockets and go away with just the bare minimum of computing to connect you to the real world.
- You get all the AT&T and Apple warranty plan goodness for that money. Sure, it's going to cost about $2000 for the two years, but you get a lot of value for that money for a price that's not that much different from buying a computer -- plus you get phone calls and internet thrown in.
I was really hoping that AT&T/Apple would sell the iPhone 3G contract-free for about $400. That they're coming in instead at $600, or about 50% more than my original guess, is disappointing. Were you planning to buy a contract-free unit on the 11th? How has the pricing affected your decision? Let us know in the comments.
Share
Categories
As everyone has told us this morning (Thank you guys, we love you!), AT&T has announced their price plans. Christina got a post up...
Add a Comment
ddAnyone know if the no contract 3G phones that they intend to sell can be activated by Verizon Wireless? I am nonot an AT & T fan. Does Verizon have a plan to accomodate Apple's 3G phone?
July 07 2008 at 9:25 AM Report abuse Permalink rate up rate down ReplyA.) Most of the revenue this phone is to make is not thrugh the initial sale of the handset, but by the contract.
b.) If you make it too easy to get around a.), then you outsell yourself and cut your potentioal profit margin, 600 dollars is actually cheaper than i expected them to bump the price to.
Is there a way to turn off one of the commenters from this TUAW feed, im so sick and tired about Erica Saduns moaning and grianing about a product she tries to make into something it is not.
I don't understand the no-plan premium. AT&T charges $175 to break a contract (according to David Pogue's interview with an AT&T spokesmonster), which puts a contract-free iPhone at only $375. (Plus they pro-rate your months-to-date on your phone, so if you stick around for a while, that fee decreases)
July 02 2008 at 12:54 PM Report abuse Permalink rate up rate down ReplyHere's the math that *I* don't like:
We are currently a one iPhone family and would like to become a two phone family. (We had to wait until this June until my contract with another carrier ran out, and of course by then all the Gen 1 iPhones were sold out and we had no choice but to wait for for Gen 2 no matter what the stupid AT&T math was.)
My husband's iPhone contract costs $59.99/mo currently because he has the old plan. If we do go ahead and buy the second phone now, it will cost us $69.99/mo. What will I be getting for my additional $10/mo that my husband isn't? NOTHING! Because there is no 3G service in the town where we live! In fact, I will be getting LESS than he is because my plan won't include the 200 text messages/mo that he gets!
Oh, I almost forgot, my extra $240 dollars over the life of the contract is buying me a gps function that he doesn't have. BIG FREAKIN' WHOOP.
And still the iphone 3g feature a crappy 2px camera.
I think that it is not a bad idea to buy a ipod touch and to stick with your regular cellphone
I have to say that this doesn't surprise one bit. I lived in SA, TX for more than ten years and SBC (now ATT&T) ruled the landscape the entire time.
It didn't matter wether you chose someone else for your services -- ATT$T got your money, by taxation or undue fees or otherwise. That'd be fine if they paid their workes fair wages, but when the workers were on strike to ask for living wages, the city council and mayor "volunteered" their time to handle the jobs.
And perhaps less surprisingly on a national scale, a good portion of that outrageous fee you might pay turns into a donation to the Bush/Cheney (and Vitter/Craig) GOP.
Why Apple, with Al Gore on the board, signed an exclusive with ATT&T makes no ethical sense. Im stuck with T-Mobile right now myself after freeing my phone from Cingular (ATT&T), otherwise I'd go for the ad i got int he mail:
credomobile.com/painfree - they'll pay your contract termination fee up to $200, but they work on the Sprint network (CDMA), so no iPhone porting to there yet. Oh, and you decide where their money goes -- and calls to congress to speak your mind are free.
When Apple has the mind to be as open with their platforms as the UNIX core that runs OS X, I'll be on board. Till then? There's a boing boing joke about why it's best to avoid ATT&T:
AT&T billing site makes jokes about company's participation in warrantless wiretapping?
Plenty of other reasons to dislike this admin, but that one works now, right?
i'm getting a contract free iPhone 3G only when the now 15$ payg mediaNet unlimited plan works well with it. i already asked att reps if medianet makes use of 3G speeds when i have a 3G phone and they were positive about it.
but i'm only getting the 3G when this works out!
(Erica, test it for me pls? *puppy eyes*)
One last thing on the Contract vs. No-Contract route. Recall that AT&T is now pro-rating thier ETFs on new contracts -$5/month (no love for contract signed before May).
http://www.engadget.com/2008/05/27/atandts-prorated-etf-is-live-for-new-renewing-customers/
I just spent an hour on the phone with ATT to get an uncertain answer to my question: "What are the qualifications for an upgrade pricing?"
So far, I've heard only that you must have been an ATT customer for two years using other equipment. If you've been a non-iPhone ATT customer for less than two years, you pay more than $199/$299.
Unfortunately, while I signed my contract in March of 2006, ATT's system shows a new account number created this March, when I moved back to California after six months in Louisiana. Those two area code changes show up as activations - even though I've had the same equipment since 2006 - muddying the sales history with ATT and casting doubt on whether I am officially eligible for "upgrade pricing".
I am surprised that you are surprised by the no contract pricing. Did you really expect a 3G with GPS version of the original iPhone to be cheaper then the first version?
July 01 2008 at 4:28 PM Report abuse Permalink rate up rate down ReplyHot Apps on TUAW
Deals of the Day
more deals- iFrogz Luxe Lean Hard Case for iPod touch for $10 + free shipping
- Refurbished MacBook Air Laptops: Deals from $849 + free shipping
- iFrogz Breeze Hard Case for iPhone 4 / 4S for $16 + free shipping
- Ventev UltraTHIN Hard Shell Case for iPhone 4 for $2 + $2 s&h, more
- Body Glove Matrix Case for iPhone 4 / 4S for $3 + $2 s&h
- Pogoplug Premium Personal Cloud for PC and Mac for $10 + free shipping
Software Updates
more updates- EFI Firmware Update brings Lion Internet Recovery to 2010-model Macs
- OS X Lion 10.7.3 released with Safari 5.1.3, Wi-Fi bug fix
- Aperture updated to 3.2.2, addresses Photo Stream issue
- Apple updates Keynote to address Lion issues
- Google Search app gets new look on iPad
- Apple releases Apple TV Software Update 4.4.3



78 Comments