AT&T iPhone Pricing: The Good, The Bad And The Complicated
BusinessWeek - on July 01
Posted by: Arik Hesseldahl
AT&T finally got around to disclosing all the pricing details around the iPhone 3G today, and while Apple is widely praised for its “simplicity” in all things about the device, there’s not a lot that’s simple about AT&T’s plans.
First things first: There’s the price of the phone. If you’re new to AT&T, you’ll pay $199 for the 8-gigabyte phone and $299 for the 16-GB phone. You’ll walk out of the store with a two-year AT&T contract. But you knew that.
On top of the phone, there will be a credit check – some may be required to put down a deposit — and an activation fee of $36. No pre-paid service is being offered.
Upgraders with AT&T accounts in good standing will pay the same prices plus an $18 upgrade fee. There are also early upgrade prices of $399 and $499, while a “no commitment” option will be available soon, that will price the phones at $599 and $699.
Voice and data rates will run from $69.99 to $129.99 per month depending on the number of minutes, ranging from 450 minutes to no limit. FamilyTalk plans, which include two lines, will run from $129.99 to $359.99 per month with each additional line costing between $39.99 and $129.99 monthly. And? Data plans on the 3G version cost more than they did on the first iPhone, about $15 more per month.
Then there’s text messaging: $20 a month for unlimited texts, $15 for 1,500 messages, and $5 for 200 message. Unlimited texting costs $30 a month on the FamilyTalk plan. If you don’t get an unlimited plan additional messages will run you 20 cents each. (My advice, if you’re even a marginally heavy text-user, or if you’re heavily into Twitter, get the unlimited plan.)
If you’re going to get the iPhone for your company, the plans get even more expensive and confusing. If you want to connect to a corporate Exchange server, expect to shell out yet another $15 a month. See here. Finally, expect to pay through the nose, as usual, for international roaming.
It all makes my head spin: Why not offer a single, unlimited voice and data plan? And why, oh why aren’t text messages included with data? I had an unusually heavy period of text message usage a few months back with my Blackberry on Verizon a few months back. I figured, “hey, it’s included in my unlimited data plan!” Wrong. I didn’t like my bill that month.
The non-contract pricing has raised some eyebrows, first among investors and Wall Street analysts. Gene Munster of Piper Jaffrary wrote in a research note issued today that he thinks AT&T is marking up the iPhone higher than previously thought. And this changes some assumptions. He’s assuming that Apple will sell the iPhone for an average selling price (ASP) of $425 a unit, including all the AT&T subsidies. Assuming the ASP is actually $500, and assuming Apple hits the 45-million unit mark that he thinks it will by the end of calendar 2009, he says, adds 8% to his Apple revenue estimate for the 2009 calendar year.
This kind of talk did good things for Apple stock today: It picked up $7 or more than 4% as of 3:53 PM. Click here for the latest price.
The news didn’t do so great for AT&T stock however. It traded down 53 cents or about 1.5%.
If you wanted to buy an iPhone off-contract, Erica Sadun over at The Unofficial Apple Weblog notes that it makes more sense to get on with a contract, then cancel the contract. Even after paying the $175 early termination fee, and paying for the first month of service, at about $450, she says, you’re still money ahead versus the $599/$699 off-contract prices. But who’d want to do that? Someone who wants to jailbreak their phone for use on other networks and with unapproved applications, I guess.
source: BusinessWeek
