The Real Price Of The iPhone: $599

from the hey,-that-sounds-familiar dept

Tue, Jul 1st 2008 7:16pm — Mike Masnick

As was widely expected, it turns out that all the hype and fuss about the iPhone costing $199 was really hiding the key facts: it's only that price if you're buying it in the US, along with a long term contract with high service fees. At first it actually appeared as though the only possible way you could buy the phone was with one of those contracts. However, AT&T has now admitted that it will indeed sell the phone without a contract, but the price will be $599. While some unlockers may find that worthwhile, it's probably a bit much for most. Still, this once again highlights how Apple's predictions that it was going to change the economics of the mobile phone industry haven't actually been true. There are plenty of mobile phones out there that you can buy subsidized under a contract, which cost 3x as much without a contract. So, rather than changing the economics of mobile phones, Apple has now completely bought into them. Update: Of course, as some are realizing it's actually cheaper to buy the subsidized version and break the contract. The early termination fee is less than the difference here, so you end up doing better that way.

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Filed Under: iphone, pricing, subsidies, unlocking
Companies: apple, at&t

45 Comments

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Ianne, 1 Jul 2008 @ 7:59pm

not apples fault
that was not a decision made by apple as they signed marketing to at&t.
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ianne, 1 Jul 2008 @ 7:59pm

Re: not apples fault
Ohh, FIRST!
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bobby, 1 Jul 2008 @ 8:13pm

Re: Re: not apples fault
Looks like you fail in more than one way.
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Jay, 1 Jul 2008 @ 8:16pm

This is AT&T
As a devout PC guy, and denouncer of all (well, most) things MAC... I must side with apple on this. The phone doesn't actually cost $599, that is Apple penalizing you about $300 bucks for not signing with them... typical carrier bs.
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Destructo..., 1 Jul 2008 @ 8:19pm

You must mean AT&T. AT&T is penalizing you about $300 bucks for not signing with them.
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Jay, 1 Jul 2008 @ 8:23pm

Re:
Yeah, AT&T, typo.
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Eric, 1 Jul 2008 @ 8:24pm

Stupid AT&T
Wouldn't it be cheaper to sign the contract and then break it and pay the $175 penalty?
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Eric, 1 Jul 2008 @ 8:30pm

No Text Messaging?
And NONE of AT&T's plans for the new iPhone include text messaging, the cheapest service that AT&T offers. AT&T are scum. Bottom feeders of the worst type and I should know. They are my carrier and as soon as my plan expires they are history.

BTW, the iPhone is a piece of crap. Apple seems to think that you have to send in YOUR unit for them to change the GD battery! Jobs is a leech.
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Greg, 1 Jul 2008 @ 8:32pm

Could be worse...
Could be worse, they could be Rogers of Canada.
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Eric, 1 Jul 2008 @ 8:35pm

Re: Could be worse...
True!
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some old guy, 1 Jul 2008 @ 8:50pm

Re: not apples fault
that was not a decision made by apple as they signed marketing to at&t.

When faced with the choice of dancing with the devil or not, remember this: The devil chooses the song.
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AlexC, 1 Jul 2008 @ 9:11pm

You could just buy the touch screen IPOD for $399 and then a regular phone from AT&T with a $39.99/monthly plan with 450 rollover minutes...

I just can't understand why people would want it in the first place. It has GPS? So what, almost every phone carried by Sprint and AT&T can do it for a nominal fee. It can play videos and music? Be still my beating heart, check out the Upstage carried by Sprint and the Ericsson W580i carried by AT&T. It can browse the internet quickly? We already have the HTC Touch, Blackberry, Treo, Centro, and Blackjack. There are also devices you can plug into your laptop and access the internet anywhere the carrier has a network for $60.00/month, with a 5-gig data cap.

As far as I can tell, there isn't anything new the Iphone brings to the table. Oh, and by the way, the battery of the Iphone can only be replaced by Apple. They were nice enough to solder it in so a year from now when that battery can no longer hold a charge, you will need to spend an unspecified wad of cash to get it working again.

I'm sure people will find faults in my statements, but I really don't care. The point is that you don't NEED the Iphone, so if you don't have money growing on trees then DON'T BUY IT >:-P
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Danny, 1 Jul 2008 @ 9:24pm

Well...
Still, this once again highlights how Apple's predictions that it was going to change the economics of the mobile phone industry haven't actually been true.

They might have if they hadn't have setup and exclusive deal with AT&T for its first few years.

I agree with your comment 12 AlexC that the iPhone really isn't bringing anything new to the table but I'll go one step further and ask has the technological needs of the AVERAGE cell phone user been raised so high that all those goodies you mention are necessary or is all this iPhone hype just the newest round of "Keeping up with the Jones"? I totally agree that if you don't need that phone.
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Anonymous Coward, 1 Jul 2008 @ 9:48pm

Good point, Danny. Most of the people that buy a cell phone from my store look at minutes and coverage. Even executives want a good deal. We have had five people come in and ask for a Iphone (which we will not carry).

When informed of the pricing and the lack of benefits, they realized the Palm Centro is a better deal. Our Centro is only $50 for the hardware, assuming a 2-year agreement with AT&T. The price for 450 rollover minutes a month is $39.99 plus $30 for a "personal PDA addon", which is a fee added to all smart phones. This may seem expensive until you realize that TEXT MESSEGES can be sent using Centro, which somebody else pointed out Iphones can't do.

Ooops, off on a tangent. To answer your question Danny, the five people inquiring about the Iphone looked like they were 15-25 years old and already had multiple Apple products. "Sheep" is the primary market for the Iphone. If people wanted to "keep up with Jones", they would purchase the HTC Touch. Play with a working floor model sometime... it is incredibly advanced.
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AlexC, 1 Jul 2008 @ 9:58pm

In other words a majority people want a good deal, not the newest and greatest tech marvel.

However - flashback to people paying $3,000 on Ebay for the PS3 - people are idiots and don't do their research before parting with an entire months worth of take-home pay
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mobiGeek, 1 Jul 2008 @ 10:22pm

Re: Could be worse...
Rogers Wireless actually is/was AT&T.
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mobiGeek, 1 Jul 2008 @ 10:28pm

Re:
I can't speak for other devices, but the BlackBerry (currently) has a terrible browser. One thing the iPhone has done well is develop a very decent mobile browser as well as dedicated YouTube integration.
Your point about not NEEDing an iPhone is valid. But that is true of any mobile device...or just about anything.
Personally, I'm not much for the iPhone. Slick design, some great mobile UI concepts, but it doesn't come anywhere near a secure enterprise-capable device for my "needs".
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mobiGeek, 1 Jul 2008 @ 10:31pm

Re: Well...
My brief overview of the iPhone, and the input from the 10 or so iPhone owners I know, indicates that what the iPhone does it does better than the majority of devices on the market today.
Ultimately, i think the iPhone has the potential to be the best platform on the market from an engineering and design perspective. But it is a "prosumer" device, not a professional/enterprise market device.
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AlexC, 1 Jul 2008 @ 11:14pm

I doubt it has the best potential. My vote goes to anything running a mini-Windows platform. Just look at the Blackjack. Nobody has ever heard of it, but it made AT&T a boatload of money just because Dick and Sally can sync with their WINDOWS computer like the other 99.999% of Americans that have Windows but not a Mac OS.

The Windows mobile platform is geared to documents/business and the Iphone is geared to fast download of a teen-whacking-nuts-with-martial-arts-weapon video.

Besides the Blackberry might be slower, but it has an actual keyboard. I'd bet people can still surf on the Blackberry faster just because of that keyboard.
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Anonymous Coward, 1 Jul 2008 @ 11:32pm

Well shoot. 600 bucks is way better than the unsubsidized price of 900 that Rogers is planning to charge if you want the iPhone in Canada without a plan.
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ade, 2 Jul 2008 @ 12:17am

Re: Stupid AT&T
@Eric

Duh! That's what the article said.
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Anonymous Coward, 2 Jul 2008 @ 12:21am

THEN WHO WAS PHONE?
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iPhone, 2 Jul 2008 @ 2:05am

Re:
I is phone.
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stewart, 2 Jul 2008 @ 3:02am

Re: Re: Could be worse...
Not quite correct. Rogers is and has been a public Canadian company for many years. It once bought control of (and later sold for a healthy profit) a Canadian telecom entity of which AT&T was a minority shareholder and which carried the AT&T moniker.
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Anonymous Coward, 2 Jul 2008 @ 3:22am

Re: Re: Stupid AT&T
@ade

Duh, the article was updated based on the comments made:

"Update: Of course, as some are realizing it's actually cheaper to buy the subsidized version and break the contract."
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Krubuntu, 2 Jul 2008 @ 4:11am

Re: Re:
You are correct, the current BlackBerry Browser is horrid.
If you currently use a BlackBerry, check out Opera's free mobile browser, Opera Mini. I use it on my Curve and it works similar to the Safari one on the iPhone. It will work on some WM devices as well. Wicked cool and WAY better than the BlackBerry Browser.

Back on the article, I think that the Android operating system will have more of an effect on the mobile industry as a whole than the iPhone, especially since it will be available for multiple carriers. Over 250,000 iPhones were sold and NOT activated on AT&T. That's quite a few "Death Star" haters and imagine if Apple had gone with more than one carrier how many iPhones they would have sold....
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inc, 2 Jul 2008 @ 5:18am

Just wait a few months and Apple will slash the prices by half like they always do. Has no one caught on to their pricing model yet?
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Anonymous Coward, 2 Jul 2008 @ 6:08am

Re: Stupid AT&T
These contracts typically stipulate that if you break the contract you have to pay the full price to keep the equipment plus the cancellation fee.
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Etch, 2 Jul 2008 @ 6:24am

Re:
No one NEEDS an iPhone! No one NEEDS an iPod either! But it's the coolest gadget out there today, mostly because of its interface and looks and design. That's what every apple product is: a Slick toy.
Of course you can get all that functionality for cheper somewhere else! DUH, you can say the same thing about every single apple product!
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jonnyq, 2 Jul 2008 @ 6:44am

Re: This is AT&T
I don't see how not subsidizing $300 of the price is a "penalty". You either get a $300 reward/discount for signing with them or you pay full price, just like any other phone at any other carrier. Whatever Apple says to the contrary is handwaving.

Don't get me wrong - I, like most people, signed a 2-year contract to get subsidized phones. But that's what it is - a discount.
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Jake, 2 Jul 2008 @ 7:25am

My thoughts exactly. I can get a frigging laptop for that kind of money -albeit a low-spec one- and still have enough cash left over for a 3G modem and a cheap headset; Skype offer a better call plan than most contract phones anyway, and there are more than enough free wi-fi spots in this country to eke out even the worst 3G dataplan. And what am I sacrificing by this? The need to carry a laptop bag?
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iWanna, 2 Jul 2008 @ 7:58am

Apple's stuff works
I'm a non-typical nerd, I don't like to tinker any more. I don't like to tweak and fiddle to get things to work correctly. I'm a MCSE and an Admin for an entire Microsoft network, but my main computer at home is an iMac. Apple products tend to just work. They do what you want out of the box, they are pretty, and they are very easy to work with.

I think one of the largest advantages of the iPhone will be the App store and the apparent ease of creating Apps for the iPhone. I'm not a person who texts and especially not as I'm driving (a sales lady mentioned that an actual keyboard was wanted by people who like to text while driving). I'm not saying it's not expensive though, because it is. I'm still weighing the fact of whether I even want to spend that kind of money on a toy (because I'm not a cell phone kind of person, I'd rather people not know where I am). But if I do get, I know it will work and I know it will be easy to use.
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John Wilson, 2 Jul 2008 @ 8:03am

Re: Re: Re: Could be worse...
AT&T Canada had a partnership with Rogers which, depending on who you choose to believe, AT&T left over a monetary dispute with Rogers. (Surprised, anyone? :-) )

Eventually AT&T Canada ended up being owned by Manitoba Tel who cooperate with AT&T in everything but wireless. That is, unless MTS gets some spectrum in the current auction. Given one of the terms of the spectrum auction is that it support the wireless protocol that the iPhone uses should MTS get some spectrum you can see some things coming together.

ttfn

John
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Paul, 2 Jul 2008 @ 8:28am

iSuppli calculates that the new iPhone costs $54 less to make than the original (see http://blogs.zdnet.com/hardware/?p=2136). Yet the new one still costs more to purchase w/o contract.

Part of the margin increase is probably driven by a revised estimate of how many new iPhones will be unlocked (thereby robbing Apple and carriers of expected revenues), but the whole thing is enabled by offering it through just one carrier.
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Spike, 2 Jul 2008 @ 9:22am

>> I think that the Android operating system will have more of an effect on the mobile industry as a whole than the iPhone

As someone in the industry, I can tell you that this is highly unlikely. Android is, so far, a mess.
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Anonymous Coward, 2 Jul 2008 @ 9:47am

Re: Re: Stupid AT&T
I'm sure they'll have something in place or change the fee for the iPhone. I've never seen a company that has taken a phone back before, however we are talking about the iPhone. You'll probably need to do something like go beyond the first month to potentially escape the full retail price but I don't see how they can nail you for BOTH the early termination fee and the full retail price.

You'll probably also have to pay activation fees to your current provider.
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Anonymous Coward, 2 Jul 2008 @ 10:07am

Re:
Why do so many think that what their "OPINION" is the only logical choice? I'm certainly no Apple fan but I also have a laptop for specific needs, one of them is NOT to carry with me everywhere, drop it down, take it out of standby to look at appointments, calendars or make a phone call. If that's how you do it, fine by me but that would be a pain in the ass for me. I have a Blackberry that I'm quite happy with albeit the poor browser.

I'm interested in the iPhone and hope that Apple continues to push the market and we see some very nice alternatives coming out very soon that drives down prices across the board.

Back to the original point... Who cares what people are spending on the phone? Is it coming out of your pocket? Making your life worse?
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Anonymous Coward, 2 Jul 2008 @ 10:13am

Re: Apple's stuff works
I'm not up on the Touch so I may be way off but doesn't it have the iPhone features without the phone?
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Anonymous Coward, 2 Jul 2008 @ 10:14am

Re: not apples fault
...they signed marketing to at&t.
That was Apple's decision.
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Anonymous Coward, 2 Jul 2008 @ 10:17am

Re:
How is this any different than most smart phones that are still new? They sell for outrageous prices as well without a contract.

Every provider pulls the same thing, how is this any different? Apple has to have the biggest bunch of babies for consumers that I've seen.
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Anonymous Coward, 2 Jul 2008 @ 10:19am

Re: Re: Re: Stupid AT&T
I've never seen a company that has taken a phone back before, however we are talking about the iPhone.
Then where do they get all those "refurbished" phones they offer?
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Anonymous Coward, 2 Jul 2008 @ 12:55pm

HTC Touch
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Jake, 2 Jul 2008 @ 5:21pm

Re:
It seems like a lot of extra money to pay for not a lot of extra convenience is all I'm saying.
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the non conformer, 14 Jul 2008 @ 3:26am

Contracts
http://thenonconformer.wordpress.com/2008/04/27/basic-contract-law/

http://thenonconformer.wordpr ess.com/2008/07/08/justifiable-uproar/
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peratlu, 11 Nov 2008 @ 8:12am

Re
Couldn't believe it's selling on that price?
___________
Pratul
manitoba drug rehab
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