How Humiliating
I suppose I won’t be taking any monetary advice from Brett Arends. In his piece for the Wall Street Journal titled “When It Comes to the iPhone, Waiting Was Golden” he makes the case that only fools went out and bought the first generation iPhone. From the article:
So much for all those who stood in line a year ago. They paid $599 (again, plus cellular contract) for a model with eight gigabytes of memory, and those models only ran on slower EDGE networks.
How humiliating is that? Owning one of these is like being the PC guy in a Mac commercial.
Clearly, Mr. Arends hasn’t done any actual math on this subject. He simply says that an early adopter paid $599 for an 8GB model and someone who waited will pay $199 for an 8GB model with 3G and GPS. That certainly seems cut and dry. But we’re talking R.O.I. here, right? That’s the lead on this story, in fact it’s part of the page title. And if we’re talking R.O.I. then we must talk about total cost of ownership. And in the end, you will pay more for an iPhone 3G than I did for my iPhone 2G. Here’s how it breaks down:
I stood in line on June 27, 2007 for the first generation iPhone.
- $599 for 8GB iPhone
- $480 for 24 months @ $20/month Unlimited Data Plan (including 200 SMS)
- $1200 for 24 months @ $50/month voice plan
- -$100 credit when Apple dropped the price to $399
- TOTAL $2179 for 24 months of ownership
The new iPhone 3G will be released on July 11, 2008 with new data plans
- $199 for 8GB iPhone (with 3G and GPS, $299 for 16GB)
- $720 for 24 months @ $30/month Unlimited Data Plan
- $119.76 for 24 months @ $4.99/month 200 SMS Plan
- $1200 for 24 months @ $50/month voice plan
- TOTAL $2238.76 for 24 months of ownership
Note: I include the $4.99 for SMS because that’s what iPhone 2G users get included with their data plan at $20 a month. You could choose to pay 10 cents per message sent or received for SMS but that would not be a true comparison of features. Also, this does not take into account taxes and regulatory fees which increase with your total bill.
Humiliating indeed. The way I see this is that I enjoyed a superior product for a year before the “waiters” are going to get a chance to experience the same product. They’ll pay $60 more than me to experience the product but they’ll get 3G and GPS. Every other new feature is in the software and I get that as a free upgrade. I don’t think there’s anything humiliating about enjoying the world’s best phone for a year and paying less than other people are about to.
The true winners here are people who just bought an iPhone in the last month or two. They only paid $399 for their iPhone and they enjoy the same contract as the day-one iPhone buyers. But their contract gets to stretch into 2010. They’ll enjoy a much better R.O.I.
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