Thursday, July 10, 2008

How Much Is That iPhone In The Window?

Journalists able to see through the new low price of iPhone v2.0 notice that it costs $1975 over the course of your two year ATT-Wireless contract.

And yes, that's something to consider. But how much MORE does that cost me than my antique (2.5 year old) piece of junk phone, also on ATT?

After rebate, I think my piece of junk cost me twenty bucks. Your basic "places phone calls" phone. My plan is $39.99 a month (plus fees and taxes that put on almost ten bucks of course, but we'll ignore that).

Farnoosh Torabi at thestreet.com cites the following figures for the 3-G iPhone...
$199 for the actual phone
$30 / mo data service
$39 / mo voice
$5 / mo SMS
----
$74 / mo total service charges

(I'm pretty sure the voice service would be like mine, $39.99, but what's a buck among friends?)

Over the life of the contract that comes to...
$199 phone
$1776 service
-----
$1975.00

Yeah, that's a decent amount of cash. But what does my plain vanilla phone cost me?

$39.99 / mo = $959.76 / 2 year contract
+$20.00 phone
------
979.76

So the marginal cost of getting an iPhone versus a hunk-o-junk is about $995.24 spread over two years, give or take a few bucks for rounding errors, or an extra $41.47 / month over those two years. And for that upgrade I get an iPod/phone/camera/mobile internet device thingie, not just a talking brick.

Given that having a cell phone is a greater necessity than having a landline for the iPhone target demographic, this isn't that extravagant. People easily spend that much money on their bar tabs over a month.

Apple is going to sell a heckava lot of iPhones.

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