iPhone 3G S: Hidden Costs Revealed

I think we can all agree the new iPhone 3G S announced yesterday is an incredible device. (For example, check out MainStreet's iPhone photo gallery.) What’s not to love about faster speeds, new features and the ability to shoot video, all for the same price as the last model?

But you may have to back up the truck a bit there.

The “same price” $199 price tag for the 16GB version isn’t all it appears to be (Stock Quote: AAPL).

If you're a loyal iPhone user, that phone might cost you $399 or more.

Here are some ways Apple is pressing iPhone fans, according to AT&T’s new pricing model (via Gizmodo):

The new iPhone:

  • Will cost $199 (16GB) and $299 (32GB) for new and qualifying customers.
  • If you have an iPhone now but are not currently eligible for an upgrade, early upgrade prices are $399 (16GB) and $499 (32GB).
  • If you want it without the At&T contract, prices are $599 (16GB) and $699 (32GB.

 

The old iPhone:

  • Will now cost $99 (8GB) and, while supplies last, $149 (16GB) for new and qualifying customers.
  • If you have an older iPhone but aren't yet eligible for an upgrade, early upgrade prices are $299 (8GB) and $349 (16GB) while supplies last.
  • If you want it without the At&T contract, prices are $499 (8GB) and $549 (16GB).

 

What this all boils down to is that current iPhone users—that is, loyal customers—will be required to pay at least $399 to move their existing AT&T contract (Stock Quote: T) to the newer 16GB version.

Only those new to the iPhone game or who have qualified for an upgrade on their contract already (usually after holding one for two years) will be able to purchase the new iPhone for the advertised $199.

Kind of a punch in the gut, isn’t it? One of the major complaints arising from current iPhone users upset about the increased upgrades costs is the fact that it was much cheaper to switch from the original iPhone to the iPhone 3G last year. Apparently Apple and AT&T aren't feeling as generous now.


And although it may seem unfair for loyal users to pay this exorbitant price for the latest version, it’s the industry standard for most electronic devices. This is the full non-“phone company subsidized” manufacturer cost for the new device.

Think about your laptop or other electronic purchases. You don’t get a discount when you a buy a new laptop a year after buying the previous one. The game-changing discounted entry level prices are to entice users into signing a binding two year contract with AT&T. Once they’ve got you in, they can count on your monthly usage and data plans like a steady paycheck.  

Check out Apple's full comparison of the iPhone 3G and the new iPhone 3G S and let us know if you’ll be on board for the new (potentially costly) upgrade.


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