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True Cost of an iPhone 4 is Thousands, Not $199 or $299

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Steve Jobs announced the long-awaited iPhone 4 today, but what does it actually cost to buy and maintain Apple’s latest gadget?  The answer depends on which model you buy, if you’re eligible for a discounted iPhone from AT&T and which AT&T plans you select.

Those who are happy with their current iPhones will definitely appreciate many of the improvements found on the iPhone 4, but there are viable alternatives for those who are displeased with their current devices or AT&T’s network. The total cost of the iPhone 4 is much, much higher than the $199 price tag you’ll see in Apple’s marketing materials over the coming months. This isn’t a surprise for current smartphone owners, but it may come as a surprise for those upgrading from standard ‘dumbphones.’

Forget $199, An iPhone 4 Costs Thousands of Dollars

The absolute minimum total cost of an iPhone 4 over the two-year AT&T contract is $1,674.52 before taxes, regulatory and miscellaneous fees. That’s with the bare-bones 250MB per month data plan, 450 peak minutes per month, 200 text messages and zero paid applications or downloads. If you never use more data, messages or minutes than your allocated, you can squeak under $2,000 over the contract after taxes and fees.

Those who opt for premium AT&T data plans and advanced options such as tethering will feel it in the pocketbook. The most logical data plan for new subscribers costs $25 per month on its own.  Single subscribers who sign up for the DataPro plan, regularly buy apps and accessorize their iPhones can easily spend $2,500 to $3,000 over the next two years.

If your family will have more than one iPhone, be prepared to pay somewhere in the $5,000 for the pair of phones once your two-year contract is complete.

Those numbers might sound outlandish, but if you closely examine any iPhone owners’ wireless bill you’ll see what I mean. A few iPhone users go all out and spend literally hundreds of dollars worth of apps per month, while others never pay for a single app. You’re likely to fall somewhere in between. It’s common for iPhone owners to spend $20 or so per month on apps and games. Buying digital content like albums and movies can really add up.

It can be argued that you can incur many of the below costs on any smartphone, but Apple’s designed the iPhone 4 to make it incredibly easy to spend money. In fact, Steve Job announced earlier today that iPhone app developers have earned over $1 billion selling apps so far. Guess who paid that, plus the more than half billion dollar share that Apple kept to itself? iPhone users like me who don’t think twice about a $.99 app here or there.

Breakdown of iPhone 4 Costs

There are a lot of costs involved in picking up the new iPhone 4. New AT&T subscribers and qualifying AT&T customers will be able to buy the iPhone 4  fort $199 (16GB) or $299 (32GB), which is in line with the original pricing of the iPhone 3GS. The iPhone 3GS will still be sold, but at a reduced price of $99.

Fortunately, AT&T is allowing anyone with a contract that expires in 2010 to purchase the iPhone at the advertised $199 and $299 price points. This means AT&T customers are eligible to upgrade up to six months early.

The $199 base cost of the iPhone 4 might sound affordable, but you also need to consider AT&T’s and Apple’s various fees offering. The upfront cost of an iPhone 4 is a relatively small percentage of the total cost of ownership of the device once you consider the monthly subscription over 24 months, accessories, services, downloads and applications.

Besides the upfornt cost of the iPhone 4, you’ll need to sign a two-year agreement with AT&T and consider the following:

  • AT&T Voice Plan: AT&T’s voice plans start at $39.99 for 450 anytime minutes and range up to $119.99 per month for unlimited family plans with two lines of service. Additional family plan users can be added for $49.99 per month.
  • AT&T Data Plan: Existing AT&T subscribers who already own iPhones can continue to get to unlimited data for $30 per month. However, new subscribers will have to choose between 250MB per month for $15 or 2GB per month for $25. Additional MB/GB are available if you run over this limit and your bill can go well north of $30 if you stream a lot of music or video. Those planning to take advantage of the iPhone 4′s many HD video features should budget some extra money each month for overage fees. AT&T is offering some flexibility however and those who are usually connected to WiFi networks at home and work shouldn’t have too much trouble. You can see more details about AT&T’s new iPhone data plans here.
  • AT&T Tethering Fee: iPhone 4 owners (as well as those who upgrade their iPhone 3G and iPhone 3GS units to iOS 4) will be able to use their devices as mobile modems for their laptops. AT&T will charge $20 per month for ‘tethering’ your iPhone to your laptop. Once connected to your laptop, it’ll be much easier to blow through your 2GB cap if you’re a new subscriber. This service is optional and only a minority of iPhone 4 users are expected o sign up for it.
  • AT&T MMS: Text messages or and Multimedia Messages (SMS and MMS) are not included with AT&T’s data plan. You’ll have to add on at least $5 per month so you can send/receive up to 200 messages. Of course, AT&T offers more expensive plans for heavier users.
  • AT&T Activation Fee: Activating an iPhone on AT&T incurs a $36 activation fee.
  • Extra Tax: If you pay state on local tax on retail purchases, be prepared to pay tax on the total unsubsidized cost of your iPhone. AT&T is technically discounting the iPhone 4.0 by $200 to get to the advertised price points of $199 and $200. Many states, including California, require consumers to pay tax on the unsubsidized price, which means you could spend an extra $20 if you live in a tax-heavy state like California or New York.
  • AT&T Upgrade Fee: AT&T is offering many existing subscribers an early upgrade option that is accompanied by an $18 upgrade fee. This sounds small in the face of a $299 purchase, but these fees  add up.
  • Insurance: Thought it’s not official, AT&T is rumored to start offering iPhone insurance for $13.99 per month. Third party insurance is available at various rates. Many iPhone owners find themselves having to spend money on repairing or replacing broken iPhones.

The iPhone 3GS is simply a poor choice considering the 16GB iPhone 4 is only $100 more. While it might be tempting to snag an iPhone 3GS for just $99, keep in mind that it’s already obsolete and you’ll be stuck with it for at least two years. Features like FaceTime and apps that rely on the iPhone 4′s Gyroscope will be crippled in the iPhone 3GS.

Once you’ve purchased your iPhone 4 you’ll need to outfit it properly. The iPhone 4 is significantly thinner than the iPhone 3GS and previous models, which means many old accessories won’t work with it.

  • iPhone Cases: You shouldn’t walk out of your local AT&T or Apple store with your iPhone 4 without a protective case. Both the front and back panels of the iPhone 4 are made of glass, which is prone to damage. Apple is offering the Bumper iPhone case at launch and we expect to see many other cases in the coming weeks. You should budget at least $30 for a protective case.
  • Extended Battery: The popular Mophie Juice Pack and other external batteries of yesterday won’t fit on the new iPhone 4. Be prepared to plunk down an additional $70 to $100 for a new extended battery if you’re a heavy user. The new iPhone will have better battery life than previous models, but this likely won’t be enough for heavy iPhone users.
  • iPhone Headphones: The headphones that come with the iPhone are mediocre. Many iPhone users are enticed to buy premium headphones with features like noise cancellation. Apple and others are happy to offer iPhone-compatible headphones for $49 to $500.

Apple sells hundreds of thousands applications through the App store, music through its iTunes music store, movies for rent, iBooks to read and TV shows for purchase. If your kids get their hands on your iPhone, be prepared to spend a small fortune on iPhone games, which now have the added bonus of in-app purchases. Don’t underestimate how quickly these costs can add up.

In addition to the above items, you’ll need to subscribe to Apple’s MobileMe to take advantage of all of the iPhone 4′s features. MobileMe costs $99 per year for individuals or $149 for families of up to five. The service allows for wireless Contact and Calendar synchronization, GPS tracking of your iPhone and remote wiping of your iPhone should you ever lose it, easy media sharing and more. It’s not a necessity, but it is something you’ll need to pay for if you want to be able to do everything that Steve Jobs does during his demos.

Conclusion

If your already an iPhone owner and decide to upgrade you won’t be laying out much additional cash than you’re used to other than the initial purchase price. The only ‘risk’ you’re taking is that you’re locked into paying a pretty penny for your phone service for two more years. If you want out, you’ll have to pay a hefty early termination fee.

If you’re upgrading from a standard mobile phone without a data plan you’re budget is going to take a hit. Before splurging on a new iPhone, you should consider all of the costs involved, not just the $199 and $299 price tags you’ll see advertised everywhere.

50 Comments

  1. ECM

    June 8, 2010 at 2:51 am

    nobody care … :(

  2. zholy

    June 8, 2010 at 3:08 am

    May you are right.
    Wait for June 24.I like screen of Apple iPhone 4,essentially quadrupling the number of pixels to 960-by-640.New features include the following:few features of iPhone 4

  3. Mark Jones

    June 8, 2010 at 3:19 am

    Why are you just now saying all of this? the iPhone has always cost this much. I will actually be SAVING $20 a month on my plan of 4 phones because I opted for the 2GB plans instead of the unlimited. Since the iPhone has come out it has cost us extra each month and we all know it, but it is apparently worth it. The author must be one of the many AT&T haters.

  4. Xavier Lanier

    June 8, 2010 at 5:01 am

    Not a hater at all. A lot of foks are going to get an iPhone /smartphone for the first time because of all the excitement. A lot of people simply don't understand the financial impact of signing up for $199 phone

  5. Zach

    June 8, 2010 at 5:55 am

    Good points, but many of the things you called necessities simply are not. Yes, an iPhone can get expensive, but it doesn't HAVE to be as bad as you make it sound.

  6. Kf72985

    June 8, 2010 at 6:00 am

    Why does the author make it out like the iPhone is the only smartphone with a monthly bill and contract? As far as I know, every other comparable device from any provider will be in the same ballpark for pricing, assuming all is done by-the-books. Why so bitter and slighted against the iPhone?

  7. vproman

    June 8, 2010 at 6:19 am

    Hey Xavier,

    From a 2 year iPhone 3G user, here are a few tips to save money:
    1) Ditch the text messaging plan and DISABLE text messaging. I believe you have to call to disable text messaging. If you just cancel your text messaging plan, you'll still receive text messages at 25 cents per message!
    If you want to text message, get a Google Voice account and give that number to all your friends you text message with; it'll use your data plan instead of a text messaging plan to send text messages. Unfortunately there are no GV apps with push notification currently, so you will have to leave the app open to be notified of a text message.
    2) Consolidate voice minutes with a Family Talk plan. This is especially helpful for users who user few voice minutes. My partner and I had 2000 rollover minutes because we never used the full 550 minutes from our plan. We added my parents, bumped up the minutes a bit and we saved $5 – $10 each.

    The costly data plans have always been a pain in the rear, especially with the iPhone since you must get a data plan with it, even if you pay full price for the phone and do not sign a contract. With other phones, you can pay full price and not be forced to add the data plan, but with the iPhone you MUST get a data plan even if you pay the full ~$600 for the phone. That's too bad, because there are probably a lot of people out there who would be happy using the iPhone for voice but not cellular data, and instead stick with wifi to save $15.

  8. ^^^^ FAILURE

    June 8, 2010 at 6:51 am

    this dude is freakin retard…. sixteen hundered dollars per month, what a freakin dumby

  9. Xavier Lanier

    June 8, 2010 at 7:15 am

    It's not the only smartphone to have a monthly bill and contract, but there are some added expenses reserved for iPhone users. Not bitter at all here- I just think it's important that people fully understand all of the expenses involved in buying an iPhone. For example, the 250MB/2GB per month data plans are something that those using smartphones on other networks won't have to worry about.

    You can buy insurance on just about any other phone/mobile device via carriers (including AT&T), but they treat the iPhone like a special case and simply don't offer damage/theft/loss insurance. It typically costs a few bucks a month with a $50 deductible.

    The iPhone is also unique in how it can slowly siphon a dollar here and there for app purchases and other digital downloads.We simply don't see Android or Blackberry users buying as many apps and services.

    The iPhone sales channel is tightly controlled so you're unlikely to score a deal like you can with Blackberry smartphones and other devices.

    Don't get me wrong here- It looks like a great device and I'll be placing my order for a pair 32GB of iPhone 4G's, but there's no denying it's easier to spend more money as an iPhone owner than an Android/Blackberry/WinMo customer.

  10. Xavier Lanier

    June 8, 2010 at 7:19 am

    Thanks for the tips vproman. Looks like you definitely have your AT&T on a tight leash! Do you worry about going over 250MB/month with the new plans? A MB over and you'll be bulled an extra $10 for more data.

    One thing to consider os that that those that use a ton of minutes will benefit greatly by consolidating under a Family Talk Unlimited plan. Each additional family member is only $49 per month for unlimited minutes. Most people won't need unlimited minutes, but the biggest price delta between individual/family plans is on the high-end of the AT&T pricing schedule.

  11. Dawn

    June 8, 2010 at 12:51 pm

    I just bought an ipod Touch and it does almost everything the iphone does minus the camera/video options and calling. Since I have a Samsung texting phone, I can call, take pictures and video with that and use my touch for everything else. My car has ipod docking and I wouldn't want my iphone pulgged into that all the time and have to worry about unplugging it from the dashboard every time I get a call. I might get a used iphone next month when everyone upgrades their phones and not get the smartphone plan, but right now the phones don't do a whole lot more than the mp3 player to make it worth all the extra expense.

  12. Xavier Lanier

    June 8, 2010 at 3:26 pm

    The iPod Touch is a good alternative, especially if you're usually around a good WiFi network.
    One thing that is missing from the iPod Touch is a camera, which means you can't take advantage of a lot of apps. It's fine for gaming and such.
    With the launch of the new iPhone 4, I expect Apple to launch a new iPod Touch. We should see an update this fall, right after the back to school rush.

  13. Arekahtek2b

    June 9, 2010 at 10:18 pm

    Saying it costs thousands of dollars to own an iPhone is unfair. You need to look at the incremental cost of owning an iPhone over a standard phone. Best case scenario is you'll spend an extra $15/mo. for the data package, which over two years will cost $360 – that would be a more accurate way of looking at it. As far as app downloads – sure you are more likely to download apps, but that isn't the true cost of owning an iPhone and in my opinion app downloads can actually save you money. For example, I just purchased the Navigon (US East Region) GPS app for $15. Thus far the app has exceeded the performance of my Garmin GPS that cost me $350. The savings there alone will nearly pay for the 200 Mb data plan for the 2-year contract life of the iPhone. Another example is savings on games – if you download the $2.99 Guitar Hero app instead of buying the $60 Xbox 360 version you'd save $57! Finally, you can download several different texting apps with push notification that will also save you $5/mo. on the texting plan. I believe the new data plans make it more affordable than ever to own an iPhone and now is the time to get one if you haven't already.

  14. Xavier

    June 9, 2010 at 10:50 pm

    It's not unfair at all. The reality is that if you go from a standard phone to the 2GB/$25 plan that's $600 alone. The cost of the phone ($199 to $299), plus activation ($36), plus tax($47 or $57 here in CA since you pay tax on total unsubsidized price) add the above up and you're at about a grand before getting into anything else.

    I do know a couple of people that almost never buy apps, but I (and many others) spend $100's per year on downloads, movies, rentals etc. that we wouldn't if it weren't so easy.

    We can split hairs about the a few bucks here or there, but the fact remains that buying an iPhone is a significantly larger investment than many people expect. Especially when things go wrong- i.e. they lose their iPhones and are treated to buying an unsubsidized one.

    Consider all of the expenses compared to say buying a pre-paid phone with voice/text only. Or riding the coat tails of a family member's wireless contract. People who buy the iPhone and put in the bare minimum $ possible will find themselves missing out on a big part of the iPhone 4 feature set/ experience.

  15. Sdyoun

    June 10, 2010 at 4:58 pm

    Vproman. Do att allow you to disable text-messaging plan? If you use data to text, how much data does it consume? Thanks!!!

  16. vproman

    June 10, 2010 at 5:40 pm

    I use between 2 – 3 GB per month, so under the new data plans I would pay $35 a month for data. Thankfully, I will be able to keep my $30 “Unlimited” plan, for now.

    Combining two individual unlimited voice plans into one familytalk plan saves you $10 each ($20 combined) right off the bat. If you can somehow wrangle up 3 more unlimited voice users to ditch their individual plans and join yours, you'd be saving $16 each ($80 combined). But savings like that aren't just for unlimited voice users. If 3 users on 450 minute voice plans merge into a 550 minute familytalk plan, they can save $16 each as well ($50 total), but they would have to be really low voice minute users, ~150 each, or potentially face expensive overage charges. If 5 users on 450 minute voice plans merge into a 1400 minute familytalk plan, then they also are saving $16 each ($80 combined), and they could use up to 280 minutes each before they'd get overages. AT&T's rollover makes these options even more appealing, as even an extra 100 or 200 minutes unused each month adds up and can leave a familytalk plan with an extra 200 – 400 months to spend after only a couple months. With unlimited voice plans, you're really not taking advantage of rollover.

    Of course, only one person can be responsible for a familytalk plan, so you have to really trust those people, because even with unlimited voice they can charge things to your phone bill or put you into debt if they use their voice service internationally.

    If you are a heavy voice user, you may be able to save money by shifting some of your calls to third-party VoIP services (ex. Skype). As I said, I'm assuming that the 3G data connection is not reliable enough for uninterrupted VoIP calls, but if you make most of your voice calls near a reliable wifi connection (ex. at home) then try using that more and see if you can ditch the unlimited plan and go with a lower priced plan. Individual users could save around $10 each and familytalk users could save around $26 each ($130 combined), wow! Plus, every extra minute you don't use gets put into your rollover.

    Alternatively, if you make most of you voice calls from home, you could buy a 3G Microcell, so that you can use your home internet connection to make calls instead of using AT&T's towers, and pay $20 a month for unlimited calling (for ALL the users on your familytalk plan) through your microcell with the added bonus that you will have improved coverage in your house. Unfortunately, the microcell one-time purchase is expensive ($150 – $200) and $20 month is quite a hit. Thankfully, there are rebates just for signing up for the unlimited microcell calling for X number of months and for signing up for an AT&T internet connection, taking the microcell price down to $50 or $0. The most an individual can save on their plan is $10 by dropping from the unlimited plan to the 450 minute plan and adding the “unlimited” microcell feature, so you better be making a LOT of your calls from home. Familytalk plans though can save $130 just by dropping one rung from unlimited, so even with the $20 unlimited microcell calls feature you're saving $22 each ($110 combined). Every additional “rung” you drop saves you another $4 each ($20 combined), but as you'll have fewer minutes to share you better make sure that you're all making a majority of your calls from home. You can also ditch your landline (if you only use it for voice), if you have one (I don't), because you'll have unlimited local and long distance calling from home for just $20.

    Figuring out how to save money can be exhausting, and shifting through the options can be confusing, but when you consider that savings of even just $20 a month can translate to $240 a year or $480 over two years (that's a couple months of gas right there), you'll probably think it's worth it. As for me, I'm going to save as much money as I can and enjoy my “unlimited” data for as long as possible, because when AT&T comes along and kicks all of us off of our “unlimited” data plans, and they definitely will, we're all going to be paying a lot more for the same level of service. Considering the fact that wireless users have unlimited wants but the wireless spectrum we use for those wants is a limited resource, such an outcome is inevitable. Let's just hope that advances in technology can come along and relieve some of that pressure, so that we don't continue to get gouged by wireless carriers.

  17. vproman

    June 11, 2010 at 8:51 am

    Yes, AT&T allows you to disable text messaging. You will need to call AT&T customer service to completely disable text messaging. When text messaging is disabled, you will not be able to receive any text, picture or video messages. I believe you can still receive AT&T system messages though.

    I couldn't say exactly how much data is used if you use data to text, because it depends on the application that is sending the text message. Apps that use data to send text messages send the message to a third party server (ex. google voice) and that third party server converts it into a text message and forwards it to the appropriate phone. When the app connects to the third party server it may need to send and receive data in addition to your message, such as sending/receiving data to log into the server before sending the message, you're going to use a little more data than the 160 bytes that makes up a text message.

    Let's guess that the size of the data that an app consumes to send a text message is 100x the size of the text message itself (I highly doubt this). That means an app sending a 160 byte text message would consume 16,000 bytes (0.016 megabytes or MB) to send that one message via your data plan. If you have a 200MB data plan, which is the equivalent of 200,000,000 bytes, you would have to send 200,000,000 / 16,000 = 12,500 text messages to eat up your entire data plan. That is a lot of messages and, as I said, I was using a very large estimate of the amount of data used to send each message.

    Of course, you'll probably be doing a lot more than just text messaging, and if you send picture or video messages (if the app supports it) then you'll be using a lot more data for those messages.

    An interesting fact: when you send a picture message or video message as a “text message”, you actually use some data to send that message. The text portion of the message uses no data, it just counts against your text message credits, but the picture or video you send is not covered by your text message credits and actually uses data. I know this because my partner's phone has a text messaging plan but not a data plan, and when he sends me a picture message or two we end up seeing data usage on his phone in the next bill, which ends up costing us a few cents.

    Anyways, check out “textfree unlimited” in the app store. Normally this app is $5.99, but as of 6/11/2010 it is free. It allows you to send and receive text messages using your data plan. When you create a textfree account, you get a unique phone number that is associated with textfree. When you send a text, the person receiving the text will see your textfree phone number, not your AT&T phone number. If they reply to your text using your textfree number, you will receive a push notification on your iPhone that you have received a new message. Since this app supports push notifications, you do not need to keep the app open to be notified when you receive a new text message. You will have to train all your friends to send text messages to your textfree number while still calling you on your AT&T number though.

  18. Stefcal101

    June 12, 2010 at 6:45 am

    please, the bias of this article is so clear.

    where are the articles talking about the costs of ANY smartphone with a data plan on ANY CARRIER?

    guess what? they are ALL expensive and will ALL cost “thousands” Smartphones is the way carriers are making money thanks to the data plans.

  19. Jason

    June 23, 2010 at 5:35 pm

    This article is ridiculous for many reasons. The most important being: (1) You include app purchases in the TCO (total cost of ownership). You can't include those costs because not all owners download apps, and even those that do – do not always download apps that cost money. For example, my boss has an iphone 3GS and only downloads free apps. So his TCO is lower than my TCO. In order to do an accurate comparison of TCO you must first start with apples to apples comparisons and since app downloads differ from owner to owner you cannot include that in a TCO. Of course you can mention it as being something that could add to the cost, but you can't make that something you base part of your article on. (2) You never compare a TCO for an iPhone to the TCO of a Blackberry or a PocketPC or some of the other smartphones. Your article states that owning an iphone costs thousands of dollars, well guess what – so do the other phones. I had a blackberry on sprint before I moved to the iPhone – my total monthly cost for the blackberry + it's data plan was about $80/mo. My iPhone costs – $83/mo (that price includes data, 200 texts). And finally, owning an iPhone and making the decision to ditch a “dumbphone” as you call it is not unlike driving a pinto one day and then deciding you'd like to drive a mercedes. If you have the money (and even if you don't) – it's a personal decision that millions of people make everyday. I don't see any articles saying “Owning a Mercedes Costs Millions of Dollars”. The reason you don't is because most people know exactly what they are doing, what they want and understand that going from a boost mobile throwaway pre-paid POS phone to a new iPhone 4 will be a considerable upswing in cost. They either don't care, or they have the cash to handle it, OR they'll find out the hard way what happens to your credit and reputation when they can't or don't pay for the stuff they buy. Singling out the iPhone for having a high TCO is pointless and truly only serves to show your bias. You are NOT helping anyone and nothing you've said in the article or your comments is news to anyone who has decided to buy an iPhone. While not scientific, I would argue that well over 95% of potential buyers and current 3GS customers are definitely already aware that the $199/$299 price is just for the phone. Cellphones and smartphones didn't just get invented in 2010. They've been around for a LOOOONNG time and I think everyone who owns one or wants to own one understands at this point you buy the phone for a “rope you in” price, and then you buy the minutes, the data, the apps, the texts, and the long-term contracts in most cases. None of which are ever in the marketing literature. So don't think your overaly dramatic headline is helping anyone. You're really just trying to get more people to read your obviously biased article. Also the last half of the article if full of hype. You don't need a case, you don't need headphones, you don't need extended batteries to be an iphone owner and since you don't NEED these items it's not valid to make these claims part of the support for your article's subject. So let me rewrite your conclusion for you.

    Conclusion

    If your already an iPhone owner and decide to upgrade you won’t be laying out much additional cash than you’re used to other than the initial purchase price. The only ‘risk’ you’re taking is that you’re locked into paying for your phone service for two more years with the same carrier that you may not like. If you want out, you’ll have to pay a hefty early termination fee, just like you do with ANY other cell phone carrier.

    If you’re upgrading from a standard mobile phone without a data plan you are probably already well aware that smartphones carry additional costs for the additional service and before splurging on a new iPhone, you should carefully shop the competition and make sure that you want an iPhone vs an Android phone or a Blackberry or a Palm etc.. They all do the same thing and roughly cost the same amount of money with many of the same costs of usage (i.e. app stores, texting, insurance etc…) so base your decision on feature sets and use your good common sense about what you want, what you need and what you can afford.

  20. Xavier Lanier

    June 23, 2010 at 7:20 pm

    Thanks for your comment Jason. You're absolutely right that some people don't opt for extras like apps, movies, headphones, etc. But there's a reason why there are hundreds of companies selling iPhone accessories, apps and other content: people are buying them.

    The TCO comparison between Droid/iPhone/BlackBerry will have to be done another day. I know a ton of people that never buy add-ons for Blackberry smartphones- I personally don't know a single iPhone owner that hasn't bought at least one of the items mentioned in the article.

    I've owned iPhones since day one and have owned/used several other smartphones. A lot of friends/family members have been very surprised at how much it actually costs to own/use an iPhone. Is it a good value? You're right, it's up to each individual.The reason I chose to focus on the iPhone 4 is because of its immense popularity and some of the recent changes in AT&T's plans.

    As to your Mercedes analogy- as a longtime Mercedes owner, I can tell you that there are a few surprises along the way. For example, once a year Mercedes offers me a GPS navigation upgrade for a few hundred bucks. An oil/fluid change, inspection (scheduled factory service) costs about $400 a year into driving one. When I drove a Pontiac I'd spend $25 on an oil change, but stuff just costs more with certain brands. Apple is one of them. Do I NEED to service my car at a Mercedes dealer? Probably not, but it's part of the normal course of driving one, just like buying apps is a normal course of owning an iPhone.
    There are benefits to owning a Mercedes- for example, when I bring it in for repair or service the dealer provides me with a choice of a Mercedes SUV or sedan for the however long I need it. Not the case w/ Pontiac.

    Like Apple/Android/BlackBerry, costs are in the same ballpark for Mercedes/BMW, but there are huge differences as well. For example, when I had a BMW's literally all service was complimentary- new brake rotors, fluid changes, inspections, they even threw in 4 tires once when they showed wear without even asking me.

  21. Jason

    June 25, 2010 at 8:18 pm

    “The TCO comparison….will have to be another day”???? What? Your article is basically screaming at the top of hill that iPhone 4 is this super costly investment and yet you offer nothing in the way of comparison with other products. The people buying iPhones are well aware of the costs and for those that aren't – here is the way your article should have been presented:

    http://gizmodo.com/5571614/iphone-4s-real-cost-

  22. Fvb

    June 28, 2010 at 8:23 am

    Okay first off, signing a contract is what's getting you the phone so cheap. If you wanted the phone you OBVIOUSLY need it so in the long run it's not a bad investment. Sure it's overkill but some people like having more options available to them like surfing the web on their phones as opposed to just texting and calling.

    You seem to be implying that the cost is ridiculous, well guess what nobody gives a fuck. You don't HAVE to get the phone you're not obligated to do anything. If they want the damn phone they're aware of the cost.

  23. Michael

    July 6, 2010 at 8:30 am

    If you want to attack the cell phone industry as a whole then just do that….but don't single out the iPhone and act like the cost of it is ridiculous. There are plenty of other smart phones out there that cost just as much per month if not more. Additionally, if you are going to make comparisons, then compare apples to apples not apples to oranges. Just like you can't compare Ferrari maintenance costs to that of a Honda because their purpose/uses to consumers are quite different.

    Your story does get the “shock factor” that I'm sure you wanted…but in the same way that the folks over at the National Enquirer like to do it.

  24. Xavier Lanier

    July 6, 2010 at 5:07 pm

    The cost isn't ridiculous- I'm a longtime AT&T customer, but a lot of people aren't aware of all of the costs involved in purchasing an iPhone. There are a lot of added costs not found w/ other carriers and smartphones.
    Not going after any shock factor at all, just a clear assessment for those who are saving up $200 to buy an iPhone.

  25. Wonderif

    July 10, 2010 at 5:11 pm

    Unless you've been living in a cave and didn't own any cell phone in the past but then all of a sudden you become an iPhone 4 user, this analysis is a nonsense. We all spend $50/month on average for cell phone bills anyway. If the author works for my company, he's fired.

  26. Iezza

    July 13, 2010 at 10:25 pm

    agreed. if you want a touchscreen get a ipod touch, if you want to phone someone get a “Dumbphone” . i wouldnt pay 2000 pounds(or more) just to combine those two in one

  27. Michael Sartin-Tarm

    July 14, 2010 at 4:14 pm

    Just an FYI that that chart you linked to has been deconstructed as completely inaccurate. And neither of these 2 articles mention anything about the biggest (implicit) cost of owning an iPhone – having to rely on AT&T. Just because you want a comparison chart doesn't mean this article should have focused on that.

    This article seems geared towards people who don't have a smartphone yet. My entire family switched from an extremely cheap family plan (US Cellular) to AT&T and Verizon for smartphones, and it's obvious that this article is a completely reasonable discussion from that viewpoint. Additionally, it would be completely dishonest to claim that an iPhone only costs as much as the difference between what you would have been paying otherwise.

    This article also provides excellent analysis to see why the iPhone 4 has so many features left out of the iTouch: It. Does. Not. Cost. $200. I used this as a resource to explain to my friend why the iTouch is unlikely to ever receive a retina display, for example.

  28. Jones

    July 31, 2010 at 12:13 am

    Thank you Xavier, good information. I think it's the 'tone' or 'spirit' of your article that is throwing so many people from the reaction of their posts.
    People have forgotten to 'listen' and instead only react.
    I definitely understand their points – the iPhone is a powerful tool ( even any standard cell phone ) and it's ultimately how you utilize it that determines if you have made a wise investment. Everything from benefiting from one app only once that 'saved the day' … to… power users becoming more efficient thus saving time & money are valid.
    Your point seems to be 'these cost are unavoidable and do add up'. For a reluctant tech updater like myself looking for newbie info the article was informative. For the rest I would wonder … If you had distributed a test the all these responders about the posted info & they had not previously read your article, how many would have scored that high? Information is always welcome no one needs to feel threatened by it. If they are upset they should first ask themselves why.
    I would have added only one thing to your article … ” Your possessions possess you “.

  29. Jones

    July 31, 2010 at 12:23 am

    Thank you Xavier, good information. I think it's the 'tone' or 'spirit' of your article that is throwing so many people from the reaction of their posts.
    People have forgotten to 'listen' and instead only react.
    I definitely understand their points – the iPhone is a powerful tool ( even any standard cell phone ) and it's ultimately how you utilize it that determines if you have made a wise investment. Everything from benefiting from one app only once that 'saved the day' … to… power users becoming more efficient thus saving time & money are valid.
    Your point seems to be 'these cost are unavoidable and do add up'. For a reluctant tech updater like myself looking for newbie info the article was informative. For the rest I would wonder … If you had distributed a test the all these responders about the posted info & they had not previously read your article, how many would have scored that high? Information is always welcome no one needs to feel threatened by it. If they are upset they should first ask themselves why.
    I would have added only one thing to your article … ” Your possessions possess you “.

  30. Jones

    July 31, 2010 at 12:26 am

    Thank you Xavier, good information. I think it's the 'tone' or 'spirit' of your article that is throwing so many people from the reaction of their posts.
    People have forgotten to 'listen' and instead only react.
    I definitely understand their points – the iPhone is a powerful tool ( even any standard cell phone ) and it's ultimately how you utilize it that determines if you have made a wise investment. Everything from benefiting from one app only once that 'saved the day' … to… power users becoming more efficient thus saving time & money are valid.
    Your point seems to be 'these cost are unavoidable and do add up'. For a reluctant tech updater like myself looking for newbie info the article was informative. For the rest I would wonder … If you had distributed a test the all these responders about the posted info & they had not previously read your article, how many would have scored that high? Information is always welcome no one needs to feel threatened by it. If they are upset they should first ask themselves why.
    I would have added only one thing to your article … ” Your possessions possess you “.

  31. dvd car gps nissan

    October 21, 2010 at 3:53 pm

    Thank you Xavier, good information. I think it’s the ‘tone’ or ‘spirit’ of your article that is throwing so many people from the reaction of their posts.

  32. a.e.

    December 3, 2010 at 11:04 pm

    I found this article extremely helpful but there’s more to it when you talk about the TOTAL cost of ownership.

    Isn’t it required to sync with itunes on a separate computer? Right now, you have to run itunes 10 or more that means you might even have to upgrade or replace your existing computer. What about these kinds of indirect present and future costs that are REQUIRED.

    Please write more!!!!

  33. MP

    December 6, 2010 at 12:16 am

    I would love an iPhone, but my blackberry costs so much less. I couldn’t justify it. I have a sprint family plan, and even with unlimited data and text and more minutes than we ever use, my wife and I pay significantly less. I have a pretty slow job, work long shifts and don’t have wifi at work => I use more than 2gb/month. Maybe someday, but not until the extra costs come down. I agree with the author. All smartphones are expensive, but the iPhone is even more so.

  34. John C

    December 27, 2010 at 8:35 pm

    Thanks for doing the research. This is a very informative article. I have one question though: If I have an upgrade eligible 3g iPhone will my payment come out to 300$ without the case, battery etc..? Since I have a preexisting data plan/ voice plan and I’m not accountable for the extra fees.

  35. Marvin

    January 5, 2011 at 11:38 pm

    The iPhone is not expensive if you have money LOL. I have htc hd2 android running htc evo 4G

    i pay like all unlimitade call, data, roaming but text no. i pay $70.00 total on tmobile but belive me is a good carrier and good signal i live in Puerto Rico. Who whants to pay for fucking text? you can use email or im. Sprint say for htc evo all unlimitade cost $70.00 plus $10.00 for 4G connection, plus $20.00 for wifi router & taxes like $5.00 is like $105.00 month. People dosen’t care if you have the best carrier they only want the iphone & people dosen’t care if the iphone came to boost mobile. But seriously the iphone is the best phone is easy to use, alot of apps, best touchscreen, best video & camera quality, best design, best waranty they give & dosen’t affect viruse or system problem. i have ipod touch 3G & its broke and apple give me a new one with camera.

  36. Tommy

    March 31, 2011 at 8:22 pm

    The author is bashing the iphone, but look at what you get with it. UNLIMITED text messaging, UNLIMITED data plan, UNLIMITED web surfing, ANYTIME minutes, UNLIMITED night and weekend minutes. It’s a computer, ipod, and phone all in one. It doesn’t take a genius to figure out that it won’t be a cheap piece of equipment to own. Whoever thinks they deserve everything the iphone can do for free is definitely a moron.

  37. KJ

    April 2, 2011 at 3:03 pm

    just jailbreak it get the minimum everything and stick it to the man fuck apple and at&t get free apps for texting and calls like google voice

  38. BN

    May 22, 2011 at 2:24 pm

    I actually design apps for both phones. I am a mobile app developer. I am kind of ticked with the high cost not only to develop for Apple products but also that they will not discount their products, ever. I am sorry but I would rather pay $100 a month with Sprint than $180 a month with ATT or Verizon. I do realize that most of the people with iPhones don’t have kids and more than likely drive a crappy car… LOL… I love my Macbook Pro but man Apple you need to come down in price or something… I am just saying that almost $200 a month for a damn phone is kind of silly…

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