The iPhone 3G has finally arrived; people are giddy with the vastly reduced price. What a sweet deal. Imagine getting one of the most talked about iPhones starting at the low price of $199 for the iPhone 3G 8 GB, and $299 for the iPhone 3G […]

iPhone-3G.jpgThe iPhone 3G has finally arrived; people are giddy with the vastly reduced price. What a sweet deal. Imagine getting one of the most talked about iPhones starting at the low price of $199 for the iPhone 3G 8 GB, and $299 for the iPhone 3G 16GB, Not bad, not bad at all! The iPhone 3G price is a huge difference from the first generation iPhone. The first iPhone came out the starting price was $499.

We’ve heard the reduced price rumors for the iPhone 3G for a while. It’s a great feeling to know that the price reduction is true. I’m still wishing we had seen more memory, an updated camera, along with wireless synching of music. I guess I’ll have to look forward to those features in the next generation iPhone.

Shortly after the news about iPhone 3G price drop people started hearing unpleasant news about a change coming to AT&T’s new monthly pricing plan. AT&T has struck a new deal with Apple. AT&T will be raising the monthly minimum service plan from $60 to $70 per month. iPhone 3G users will be paying an extra $240 over the lifetime of the two-year contract.

Why will iPhone 3G users be paying a higher monthly fee? According to analyst’s AT&T will actually be paying Apple a few hundred bucks more per phone than they are actually charging for it, in order to make up the loss AT&T will be forced to tack on the additional fees.

“Less than 20 percent of our customers have integrated devices,” Ralph de la Vega, the head of AT&T’s mobile business, said during the conference call. “And, at the $199 price point, we could have mass adoption and put the iPhone in the hands of people who have never surfed the web on a phone.”

With AT&T subsidizing the iPhone 3G it puts it on par with other smartphones, such as RIM’s BlackBerry and Samsung’s BlackJack.

At the WWDC ’08 keynote address, Steve Jobs mentioned that 56% of people didn’t purchase the iPhone because of its price. Apple quickly learned, what many of the mainstream cellular carriers have already known, that many Americans would prefer not to part with their money up front.

Will people be less likely to buy the iPhone 3G even if they will pay more over time? I doubt it. I’m not an iPhone user but that is only because the rural parts of South Carolina I travel to when I’m in South Carolina have very spotty AT&T coverage, since I rely heavily on my cellular phone for my business the iPhone is not an option. However, if it were open to my web carrier, Verizon, I would be happily sipping the Kool-Aid.

Will the increase in AT&T’s monthly fees stop you from purchasing the iPhone?

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  1. TurbineSeaplane Thursday, June 12, 2008

    I have a 1st Gen iPhone and will not be purchasing a new 3G one.

    3G is nice, but for the increased monthly costs, there just aren’t enough new features to justify it for me.

    Personally, I think the new v2 software will be the big splash, and you certainly don’t need the new phone for that.

    Also, I anticipate ANOTHER new iPhone NEXT June, probably with more of the features we all KEEP complaining about and wanting, yet not getting.

    I’ll wait until then.

  2. AT&T’s service is Flintstonian, at best, and a $10.00 increase sounds like they decided on an amount, less by studying the impact would have on their system than by how much they can possibly squeeze out of the consumer. They can make up the difference by garnering a new/larger customer base, but they opted for the jugular instead.

    I’m happy with my 8GB iPhone, but I can’t keep throwing money at AT&T simply because they think that they have me by the short ones. $10 spread out among the hundreds of thousands of consumers is not unlike the windfall that the oil companies are enjoying – not out of this pocket.

  3. The first was 599

  4. Will not be purchasing new 3G phone due to price increase. It actually higher than $240 new plan does not include text messages. $360

  5. i have a gen1 iphone i purchased just after the big initial price drop. at first i sincerely thought about selling my phone and buying the new 3G version- right up until i heard about service plan price hikes. i honestly wish they would have just stuck with the original plan. you paid what the phone was worth (debatable, sure), and the service plan was competitive and not so much more expensive that it was too hard to swallow. $20 extra was one thing, $30 extra is approaching twice what people are used to paying for monthly cell service.

    also what bothers me deeply is that because of this new subsidized scheme, they are getting rid of one of the really impressive parts of buying the phone- home activation through itunes. sure, it’s something you only experience once in the phone’s lifetime but it’s one of those first impressions that lasts.

    no, i will not be purchasing the new 3G phone and yes it is because of the higher monthly service cost. i would rather pay the extra $200 up front than pay ANOTHER $10/mo for the entire lifetime of the product.

    (@ Shawn- where did you read no text messages are included in that price? i find that extremely hard to believe.)

  6. I’m getting one… I can’t take Edge for one more day and I can’t believe I pay 20 p/m for it!

    Based on what I see at the ATT site, it’s a wash for me. They upped the cost for the data plan to 30 (for every phone, not just the iPhone) but, they lowered the talk time costs. It looks like my family plan cost will remain the same for me. One other note… I didn’t see any mention about texting options?

  7. Sachin Patel Friday, June 13, 2008

    It seems that, for one, here in the UK we may be getting a better deal on the iPhone than over in the USA. Not only do O2’s tariffs for the iPhone start at only £30 a month ($60), but it seems that they’re also going to be releasing it on Pay as you Go as well, in order to make it more appealing to a younger market. Finally, on certain tariffs, the iPhone will be free.

  8. I’m a little surprised really, after Apples rhetoric last year about changing the way phones are used, bought, paid for etc. It just shows you can’t believe what anyone says, when huge sums of money are involved.

    Anyway, I’m extremely happy with my unlocked, activated, jailbroken 1.1.4 8gb iphone. The only thing I would consider upgrading for is the GPS, but if Apple actually enabled the proper bluetooth profiles that the phone already has in it’s software, then a $30 bluetooth keyfob GPS would be useful. I gotta keep my 5 year old PDA around just because of this.

  9. Peter cultard Friday, June 13, 2008

    Thats right. . . but will it unlock have a look at this article on what there planning to protect the unlocking of new iphones. however in some countries its illegal to do.. read the comments


  10. Such practice is not uncommon here in Singapore. Most of the phones sold in the market from telcos are heavily subsidized, and in return, you enter into a 2 year contract. On one hand, they reduce the churn from their subscribers, and they get to recoup the subsidy in the first place. Some phones are so heavily subsidized, you pay $0 for the phone.

    As for the iPhone, I’ve already pre-ordered it. Guess that’s the effect of taking so long to get here.

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