Anand Reviews the Apple iPhone 3G
by Anand Lal Shimpi on July 16, 2008 8:00 PM EST- Posted in
- Smartphones
- Mobile
Activation, Price and Costs
I loved activating the old iPhone, you plugged it in, filled out your information and activated using iTunes. Apple, quite effectively, wrestled power away from AT&T. You didn’t have to so much as set foot in an AT&T store to start using your iPhone, it was great.
I was hoping that this was the first step in shifting power away from the service providers. I wanted to see cell phone service providers work much like ISPs, they simply provide you with access to their network and you turn to hardware providers for the hardware. Eventually I’d hoped for silly per-minute charges to go away much like they did in the ISP space and all of it was supposed to start with the symbolic action of Apple wrestling away power from AT&T with the first iPhone.
Then it happened. AT&T subsidized the cost of the new iPhone 3G, allowing Apple to hit its sales numbers and please its investors (as well as increase the install base for the almighty App store) and things went back to normal.
I would rather pay more to be free from AT&T’s grasp and I really hoped that Apple would be the first to change the way cell phones worked after how they handled the original iPhone. But with the iPhone 3G Apple has become no different than any other mobile phone manufacturer. Maybe the long term will still turn out the same or better and this approach will be necessary, I'm by no means a visionary, but what it looks like to me is AT&T wins and Apple and the consumers lose. Its like the struggle between federal government and states rights, and we all just got taxed.
It does look like you’ll be able to buy a no-strings-attached iPhone 3G for $599 or $699 (8GB and 16GB, respectively), but it looks like the days of just buying a phone and activating it on your terms over iTunes are over.
Thanks to AT&T’s subsidies, the 8GB iPhone only costs $199 while the 16GB model will set you back $299. This is significantly lower than the first 4GB iPhone’s $499 launch price. The problem is, as many have already pointed out, that you end up paying more for the new iPhone 3G over the course of your 2-year contract than you did the old iPhone thanks to AT&T’s more expensive data plans:
| Price of Phone | Monthly Cost for 900 Minute Plan | Monthly Cost for Unlimited Data | Monthly Cost for 200 SMSes | Total Cost over 2 Years | |
| iPhone (4GB) | $499 - $100 giftcard | $59.99 | $20 | Included with Dataplan | $2318.76 |
| iPhone 3G (8GB) | $199 | $59.99 | $30 | $5 | $2478.76 |
Let’s take the 900 minute plan that AT&T offers, on the original iPhone and on the iPhone 3G this plan will set you back $59.99 per month (plus all the taxes and added wizard sacrifice fees). Unlimited data used to cost $20 per month, now it costs $30 on the iPhone 3G (that extra G is pricey). You used to get 200 SMSes free with the iPhone data plan, now they cost an additional $5 per month. Even if you bought the first iPhone and didn’t take advantage of the $100 gift card that Apple gave to all early adopters when it dropped the price of the phone, your total cost over two years would be $2418.76 - that’s $60 less than the new iPhone 3G and its subsidized cost.
AT&T subsidizing the cost of the iPhone actually doesn’t do anything to lower your costs over your 2 year contract, it simply means you have to front less money. To make matters worse, you can’t opt for the old iPhone plan with the new iPhone 3G, so even if you wanted to buy a no-contract iPhone 3G you’d end up even worse after 2 years.
The lower up front costs do nothing for you, you’re simply delaying the pain. That being said, these things will sell a lot better than the older ones - while they cost more in the long run, the barrier to entry is a lot lower, and that’s all that matters for most.
Good job Apple, going from the company that had such a hot product that AT&T had to share its monthly revenue, to helping fool consumers into spending more than before. I can’t help but ask what Google would’ve done...
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Sunrise089 - Friday, July 18, 2008 - link
Wow I wish I had first comment here so I could get a response.In Anand's otherwise near-perfect review, he talked about Exchange support but didn't cover my #1 iPhone question: does Exchange support work without the $45 Enterprise Data plan? I can't for the life of my get a conclusive answer if the Enterprise plan is required for exchange, or just required if the iPhone is going to be purchased or paid for through a business.
araczynski - Friday, July 18, 2008 - link
i'm still holding out for the day the iphone comes with some real screen resolution.if the N810 can do much better than this, why can't the almighty apple?
sleepr0 - Friday, July 18, 2008 - link
Lets see:- The 3G doesn't fit the old cradle and the cradle is not included - $15.
- Old cover doesn't fit - $20.
- Unlimited data up $10/month.
- Text up $5/month.
- Cellular triangulation works nearly as well as GPS.
- 3G not significantly faster than Edge and all the new users will take a load off of the Edge network, freeing up bandwidth and making Edge a bit faster.
- Battery life worse.
I'll wait for Version 3, thanks.
wvh - Thursday, July 17, 2008 - link
Why do you buy a new phone when you are happy with your old one – it has pretty much the same functionality anyway? What is wrong with all those people who buy something just because Apple (or whoever) releases it? All these morons queueing up, did they all accidentally happen to break their phone the day before?It's a nice in-depth article, no remarks there, I've just heard enough already about this consumer hype. It's just talking people into fake needs.
Blast me for being negative, but you know I'm right.
michael2k - Friday, July 18, 2008 - link
The problem is that people aren't happy with their old one, and it doesn't have the same functionality, so that is why they queue for the iPhone. So essentially all your base assumptions are wrong.There is nothing wrong with these people; there is something wrong with the RZRS et al they already own, because they were broken the minute they bought them. No accident, they were just made that way.
Giacomo - Friday, July 18, 2008 - link
No, actually you aren't right. You could be, if we were here to make free-philosophy, but that's not the case, we're here to talk about hardware (and related).So then, you are accusing the mass of an excess of "hype" around the iPhone, and well, while it's definitely true that many of those people will buy it for "trendy" purposes, there are surely others (like me) who are about to buy it because they just like it and could benefit from it. In my particular case, I have lost my iPod Mini (...) and my cellphone is at its 4th year of life, with the keyboard almost died (intense 20.000+ sms usage in these years). The iPhone, by simply being, to me, an iPod which calls and writes sms, is great to have both the devices in the "main" pocket.
Full comfort over the whole year (no matter what clothes I'm wearing, the front/right pocket does ALWAYS have my cellphone inside, and thanks to the iPhone, the iPod as well), a brilliant keyboard for my heavy SMS usage, and I could be happy without anything else. Plus, there's something else actually, and I'll surely enjoy.
If we had to think like you in your post, we should all tell you: Why do you read Anandtech? You can live with a 5 years old PC without problems nor upgrades, if you just use some Office, browse the web and check your mail. If you game, well, that's energy consuming, money-wasting, time-wasting, and you should quit. But, of course, none in here would say that to you, neither would I.
Regards
Giacomo
scottwilkins - Thursday, July 17, 2008 - link
First, I've had AT&T for years. Never stepped in a store, and never talked with them about a purchase. They were very helpful and darn quick about replacing my wife's phone when it died. AT&T is the easiest to work with (and I work with most of them because I support a lot of folks on different networks) Plus, the AT&T signal in the places I go beats out all others hands down. So for you to say their signal is bad is very objective and quite stupid, since you did it only probably in one room and not overall.Also, your indications that other phones can't do what the iPhone can do are all false. One thing the iPhone CAN'T do that many many other phones can do is change. It can't change it's interface to suit other purposes, it can't change it's battery, and it can't change carriers. The 3G's only add over the old iPhone is 3G and GPS. All other features are software, and now available on the original iPhone. So an upgrade is useless until you contract is up.
Apple is a closed box. I prefer freedom.
michael2k - Thursday, July 17, 2008 - link
Uh, with a soft interface and touchscreen, the iPhone is just about the only device where it's interface can change as needed; you get two buttons when in Camera mode, 20+ in Calculator mode, 26+ in note-taking mode, etc.Ryl3x - Thursday, July 17, 2008 - link
I will buy at lunch. I read alot of reviews over the web including sites that dedicate themselves to phones. I found this to be one that i could relate to. Thanks.DeesTroy - Thursday, July 17, 2008 - link
My younger brother works for Garmin. You almost certainly won't get voice directions, at least not for free. The licensing agreements with the few companies that make the maps used in mapping software (e.g. Navteq) are very specific about what you can and can't do with the maps they provide. The mapping companies currently charge significantly more if you want to do voice directions. Nokia's purchase of Navteq makes a huge lot of sense given what one can do with maps, a GPS, and Internet all in one package. All of this is probably part of the reason that Garmin is getting into the phone business with the nuvifone.