Tuesday, June 26, 2007


Apple and AT&T just announced the rate plans for the iPhone contract. I've been watching the market with a wary eye. I'm not usually an early adopter, but there have been exceptions. I need a new phone. My current phone, a Motorola V551, has become practically unusable because the speaker volume has faded to almost nothing. I basically have to use my hands-free kit in order to place a call, or I won't be able to hear anything on the other end. That said, there are two reasons why I am watching the iPhone:
  1. To see what other options become available as a result of the splash it makes on the market. Capitalism is a wonderful thing. If the iPhone sells like hotcakes, chances are, other high-end phones will drop in price due to decreased demand, and will be ripe for the picking.
  2. To see if it would be worth it to buy.
The main problem with number 2 is that I currently don't use anything analogous to the fancy-schmancy features offered by the iPhone, so it's not like the cost iPhone would replace any expense that I currently have. The only iPhone feature that I currently use is "making calls."
  • I don't own an iPod. I never have. I don't even have iTunes installed on any computer that I own, nor have I ever purchased downloaded music (although with DRM-free music from the EMI label available, I am willing to enter that market).
Part of what I have been waiting for happened today: they announced their rate plans, including the family plans, which is relevant to me because I am currently on a Cingular family plan with my mother and brother. One thing I do like about Apple is that they make things simple: It would cost me $20 more than I am currently paying to add the iPhone features to my plan. This is true (within one cent) whether I create a different plan, or whether I tack-on the iPhone features to my current plan. (Although the way my plan works there is a percentage discount on the main line, and so it might be cheaper if I were able to transition the plan to an iPhone-base plan rather than adding it on, because then the discount would also apply to the additional $20.) iPhone plans add three things over other plans. For $20, you get:
  • Unlimited data: for e-mail and Internet access
  • 200 text messages (sent or received)
  • Visual voicemail
Currently, I use text messaging as little as possible. Text messaging is pure price-gouging profit for the wireless phone providers: it costs them nothing extra, and it never has cost them any extra. They charge extra simply because there are people willing to pay. It's a teeny-tiny packet of data! What's even more ridiculous is when they separate text messaging from data service. I consider it a nice (though insufficient) gesture that the iPhone plan includes 200 text messages. This is enough for casual use, and I won't have to be as annoyed at the 15 cents they currently charge me if I want to read message that someone sends me. Did you know that you can send someone a text message over e-mail? If I have a phone with a web browser and/or an e-mail client, why would I ever use the built-in text messaging feature? That might just be my very first iPhone Safari widget: a free (over the Internet) text messaging application. The main flaw in all of this is that when I commit to a contract with a wireless carrier, I usually receive a discount on my phone in exchange: basically, the wireless carrier is paying for my phone up front, and part of my monthly service charge is paying them back for the phone in monthly installments. That is the way it has worked since the dawn of time. Not so with the iPhone, at least not at launch. $500 or $600 will buy you an iPhone. You can use it as a WiFi-enabled PDA/iPod if you like. You will get no discount for buying the phone from AT&T, nor for activating it with them, but they will still require you to enter a 2-year contract (with a $175 early termination fee) simply for tacking what amounts to a $20 data package onto your plan. Now, it could be argued that the phone is actually "worth" $675 or $775 (and I'm sure that it is to a few schmucks on eBay). It could also be argued that $20 is less than the traditional rate charged for unlimited mobile Internet access. For now I am in wait-and-see mode.

1 comment:

  1. I just thought of an incredibly devious and lucrative (well, make that 'less expensive') idea:

    What if I were to renew my contract with a competing phone, buy and activate an iPhone and sell the other one on eBay? It doesn't seem like there is anything stopping me from doing that, unless the 2-year contract is actually a contract extension on the end of your current contract.