Apple iPhone Economics

imageSo the waiting is finally over the new iPhone has been announced and in a weeks time you could have one in your hands. Come the day of the announcement pretty much everything new about the device had leaked out and so there were little surprises: compass, tethering, video and MMS to name but a few. There were also price cuts for the existing 3 model which is to be an entry level device.

All good news. Well, no, not quite. For a start if you live in the UK then there is no discount on the entry level model. What about the top end 32gb model? Well here you have a number of options to choose from based on contract length and monthly cost.

Lets do the math(s). I am currently on an O2 Simplicity contract which costs me £20 a month for 600 minutes with unlimited web included. A monthly contract with iPhone with a similar number of minutes costs £35 and has LESS messages. So the only assumption I can make is that the additional £15 is to pay for the phone. There is also the upfront cost to consider which is either £275 or £175 depending on whether you opt for a 24 or 18 months contract. This means that the “value” of an iPhone is £535 (£545 if you opt for 18 months).

Oh and if you thought that you were going to get tethering thrown in you can think again. You might be mistaken for thinking that “Unlimited UK Data and Wi-Fi” means simply that and you have already paid for your data usage. Oh no! That will be an additional £15 per month for 3gb or a whopping £30 per month for 10gb. So I have paid for “Unlimited UK Data and Wi-Fi” and then have to pay for an additional 3gb of data. So how does that work then?

The first thing to take away from all of this is that the iPhone clearly is a premium device. £535 can buy you a lot of kit these days, a fully fledged laptop, for example, with a big screen. Ok so it’s not so portable and doesn’t have the cachet of the latest iPhone but it is pretty functional.

The next thing is that this is that if you can afford it and think that you are likely to want to change your iPhone for the inevitable upgrade in a years time go for the 18 months contract. It is only going to cost you £10 more than had you plumped for the 24 month equivalent.  If Apple launch the iPhone 4 next summer you will still have to wait six months before you can upgrade or it will cost you less to buy your way out of the contract if you choose to do so.

The tethering option is a complete rip-off. If you want to spend £15 a month on mobile broadband sign a separate contract and get a free lap top thrown in for the privilege. Even better if you know someone that has a 3 contract get mobile broadband via them. 3 customers get it half price so a 1gb a month data usage costs only £5 – now that is a real bargain. Ok so you have to carry around a data stick too but given you are going to be carrying the laptop is that really any problem?

The last point is that two years is a very long time in the very fast moving mobile market place. Over that period I have had a BlackBerry Curve, a Nokia N73, iPhone 3G and a Nokia E61. Do I think that I can go two years with the same device while lots of new shiny things are release?

So in summary the Apple iPhone is an expensive, over hyped phone. Will I be getting one? Hell, yes!

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