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Where the iPhone Failed

Posted by: Stephen Wildstrom on July 3, 2008

In one sense, next week’s launch of the 3G iPhone marks a significant defeat for Apple. Of course, the original iPhone was a huge success in the U.S. and the new version will not only boost sales at home but help Apple become a significant player in the worldwide handset market. What it won’t do is change the dynamics of the handset market as Apple had hoped.and in the long term, that may be bad for consumers.

The original deal between Apple and AT&T (later matched by arrangements with a handful of European carriers) was based on a new revenue-sharing model. Instead lower the purchase price of the phone through subsidies, AT&T agreed to share part of its monthly service revenues with Apple.

The deal worked well for AT&T. One study, conducted this spring, found that nearly half of iPhone buyers had switched from other carriers. But the company was never really comfortable with the arrangement. When I visited AT&T headquarters in Atlanta last month and met with AT&T Mobility CEO Ralph de la Vega and other top executives, it was clear that they found the new iPhone contract far more to their liking.

This is a bit odd, because it actually may be a slightly worse deal for AT&T. Because the company has to pay the subsidy upfront and recover it over two years when it no longer has to make payments to Apple, AT&T has said the new deal will hurt earnings in the near term and boost them down the line. (For consumers, the gain from the subsidy is offset by the extra $10 a month they have to pay for service; on a net present value basis, it's a wash over a two-year contract.) But in business as in life, the value of staying in one's comfort zone should not be underestimated.

So why might this hurt consumers in the long run? The original deal hinted at a future where the carriers' grip on what handsets consumers get to buy might be broken. A significant number of iPhones--no one is sure how many--ended up being sold without contracts, unlocked, and used on networks other than those authorized by Apple. But if you buy an iPhone 3G on or after July 11, you won't be able to leave the Apple or AT&T store (or, presumable, other carriers' stores outside the U.S.) without having signed up for a service contract. This may end up being a big step back for consumer freedom of choice.

Reader Comments


July 3, 2008 11:31 AM

It's $15 more a month if you intend to use any of the text messaging plans.. 200 went from included to $5. 1500 went from $10 to $15. Unlimited +5 as well.

Steve Wildstrom

July 3, 2008 11:53 AM

@Peter. Good point. If you include the 200 text messages, the price increase goes to $15 a month. Then, even on a net present value basis, what Apple wants you to believe is a $200 price cut becomes a significant price increase.


July 3, 2008 1:22 PM

That's enough reason for me not to upgrade to iPhone3G (from my existing iPhone) actually. The increase in $ & contract time vs speed & gps isn't worth it for me now.

If I didn't have a phone at all, I'd get the new one in a second.. But as I see it, the 2.0 software features are all I'm really looking for right now.

Dick Carey

July 4, 2008 1:14 AM

It is amazing to me that many people will pay extra for a narrow band medium such as text messaging while having to peck away at some idea rather than just talking!

Dueche Bag

July 4, 2008 1:44 AM

No one cares...its just a stupid phone. Get a life losers.


July 4, 2008 3:07 AM

It will be cheaper to buy the phone, signup for the contract, break the contract, and pay the early termination fee than buying it unlocked. Then use it on any service you want once unlocked.
The fee is only 250$ and the 200$+ 450$ for the new 3g iPhone.


July 4, 2008 3:57 AM

The price for data increases from $20 per month to $30 per month while the speed of the data increases from Edge speeds to 3G. Most carrier's charge a similar premium for 3G service. Your analysis assumes that the $10 price increase is to cover the cost of the subsidy. Does the increased speed have no value at all? If you assume instead that the additional $10 per month is to offset the additional costs required to build out and maintain a 3G network then there is NO additional charge to cover the cost for subsidizing the iPhone (other than perhaps the additional text fees mentioned in the comments).


July 4, 2008 5:45 AM

Stephen I am convinced people like you make these posts just to get hits to your site! And I have fallen into the trap once more, I viewed this page. There are so many ridiculous negative posts about the iPhone on the net. Lets face facts, the iPhone is the best thing that has happened in the mobile phone industry since it started.


July 4, 2008 6:46 AM

The thing that always got me about new iPhone/AT&T subscribers is not only do you have to pay for the phone, but you dont get a free phone (or any bonus for that matter) for signing a new 2 year contract.

The ideal way is to sign up a new contract with at&t previously, get your free or discounted phone, sell it, then buy the iPhone and put it on your new plan.

For sure AT&T made truckloads alone just on new subscriptions without having to give anything away!


July 4, 2008 8:29 AM

When Jobs stood up and said they listened to what consumers wanted was a cheaper phone for only $199. Well what he should have said is that AT&T will suck that extra money out of you each month. The new phone is no cheaper in fact it is more expensive over the course of a 2 year contract. Smoke and mirrors. And now I am hearing you can buy them without a contract for $400 extra, so now an unlocker will pay $600 for an 8GB model instead of $400 like now. Please, as american consumers we get bent over. The worst thing for a consumer is to have these exclusive deals. Someone should take them to court it seems a bit of a monopoly. We should have total choice as consumers.


July 4, 2008 9:08 AM

Scott - you are totally right about American mobile phone scenario. I think it is a huge conspiracy. These carriers do not charge less if you brought your own phone! Almost all other countries give freedom to consumers. Buy phone + pay lower monthly charges. You can use a good phone for 5-6 years. I hate contracts and especially exclusive deals. As much as I'd love to get new iPhone 3G, I will not stand for such predatory practices ...


July 4, 2008 9:56 AM



July 4, 2008 10:05 AM

If you have the internet on your hand, why would you want to text message? Convince all your buddies to a smartphone and use IM already.

Steve Wildstrom

July 4, 2008 10:29 AM

@Chet--Note that even paying $600 doesn't get you an unlocked phone, just an AT&T phone without a contract. Unlocking will probably continue to be a cat-and-mouse game with Apple, though it looks like truly unlocked phones may be sold in some European markets.


July 4, 2008 11:32 AM

buying a contracted iPhone then terminating the service will cost less than buying it contract free


July 4, 2008 11:48 AM

everyone forgets something very important: after the two year initial AT&T contract is up, the iPhone becomes unlocked. in the US 2007 iPhone buyers will be able to switch to Verizon starting next year. worldwide there are many options. this will generate some real competition in service pricing, and create a strong market for those "preowned" iPhones.

this is only a year away, not the distant future.

Scott Gibbons

July 4, 2008 11:59 AM

Yes, the iPhone is not cheap. Yes, there are lots of people who would like to see the plans be cheaper, get a free phone, free text messages, etc, etc...but can you tell me about the last time that you went to work and you said to your boss...Hey! Today is all for you! I'll work FOR FREE TODAY! ?? Everything costs money...research and developement, buildings, heat, salaries, gasoline, lawyers...what I love is that it is a phone, GPS, iPod, movie player, note taker, decent camera, calendar/organizer all in one beautiful and well designed unit. It does all of the above almost perfectly. It doesn't make the mistake of attempting to do eveything, and then not delivering. This phone is not for everyone, but I am thankful to Apple for giving me a new choice, and making smartphones better for everyone.


July 4, 2008 12:08 PM

The pricing for the service plans may suck but you can always get FREE iPhone wallpapers from


July 4, 2008 12:20 PM

All 3G operators ever try to do is to make customers pay for things which are worth much less on the open market. I would say wait for the Ipod Touch with WiMAX on it. That might be on the way.
3G operators really do not understand the consumer.


July 4, 2008 12:36 PM

Tin, unless they've changed their policy, AT&T treats each IM as a text message. Besides, most people still don't have a data plan, and your IM client has to be running, unlike texting. As for why use texting? A: you have a record of what was said. B: it gives you time to think of a response. C: can be used during a meeting or when you dont want others to hear.


July 4, 2008 1:12 PM

i am really annoyed that americans lack mathematical knowledge....u guys cant do math for sh*t.....i am from nigeria....i learnt to know almost everything possible if i have the chance...well that aside...

the new iphone 3g plan costs $30 more peoples!!!!
Please take some online math course...
previous plan was $20 for unlimited data AND unlimited text...

the new plan is $50 for unlimited data($30) AND unlimited text($20)


July 4, 2008 1:13 PM

ATT charges any subscriber to its 3G network $30 per month, not solely 3G iPhone holders. Other carriers with 3G networks also charge a premium.
The additional fees for SMS are the same as ATT charges non-iPhone customers. Most people prefer deferred payments plans to present value, lump sum purchases. The idea that over the 2 year contract the 3G phone is "way to expensive" is truly a fallacious argument. It's basically just a lease/purchase plan.

Really, I am just so bored with all of the griping. Nobody is putting a gun to your head to buy an iPhone. I predict that Apple's fortune will be staggeringly enhanced by the upgrade to its new Gen2 phone.


July 4, 2008 1:19 PM

SCOTT GIBONS:or whatever ur name is...u suck...i will repeat it again...u freaking suck!!!!

So if the iphone costs a diamond..u will still go for it....u sound like my friendz 4 years hold son....u both have the same sense...sorry to honestly tell u that...

oh u said its for everyone...i guess u dnt pay attention to stuff...
apple wants to sell a lot of their iphone 3g and here u said its not for everyone....

again u really suck bro!!!!!
ofcourse i hope the phone is only for a few handy ppl who will buy like 8000 iphones for each person so apple can still sell the amount they the few ppl that will have it will not only have one but buy other ppls share to just to make apple happy...

i dnt know why i am even wasting my time with u....i am out..peace!!!!

pete mcginnis

July 4, 2008 1:19 PM

How can one not purchase the new iPhone 3G?
Opening day reminds me of my teenage days standing on line for Bruce tickets.


July 4, 2008 1:20 PM

"in the US 2007 iPhone buyers will be able to switch to Verizon starting next year. "

Hardly. The iPhone is a GSM phone (quad band) and in the U.S. can only operate on a GSM network, either ATT or T-Mobile. Anyone posting here who is unaware of the wireless systems in the States really shouldn't be posting. You obviously know nothing about the 3 systems used throughout the world.


July 4, 2008 1:30 PM

I've wanted the iPhone since long before the first version. Even switched to AT&T earlier this year in anticipation of the 3G unit.

Out comes the pricing - ouch. Regarding Scott's comments, yes it is an awesmoe device and nothing is free. However, we are letting cell carriers charge crazy amounts and have crazy rules for mobile service.

I could plunk down the money in a heartbeat, but you know what? Take a hike AT&T - you'll get no more money from me. As much as i want it, I'll skip the iPhone, and my future money goes with someone else when the rules change and consumers get some choice.

PS Dear Google - how's the Android coming?


July 4, 2008 1:37 PM

The new iPhone 3G is such a bad deal for most consumers at least in the US. First of all 3G market is very limited even in areas where the coverage is claimed to be good.

People who buy 3G iPhone will pay the data rate whether or not they live in the 3G area and since EDGE iPhones are no longer available they will be paying extra $15 per month to use EDGE. How messed up is that.

The whole thing with better phone half price is so deceptive its BS. Yes phone is half price, but ownership over 2 years is much more expensive so where are the savings? What can you do with a phone without carrier? Nothing.

As far as unlocked, if you buy $199 8GB iPhone then break contract it will cost you $175 so then you can unlock it and go to another carrier. Its still $375 for unlocked phone which is so much better than buying it contract free from AT&T. That makes no sense.


July 4, 2008 1:50 PM

I have to agree with scott! and i found out one more thing from AT&T that if you own a Blackberry you are paying $30
month for Unlimited Edge network Internet not the 3G just the EDGE network so i think paying $30 for 3G is not so bad for new IPHONE 2.0 because people are paying $30 or more for other phones like blackberry etc.

Bob E.

July 4, 2008 2:01 PM

Scott. What's with the "poor consumer is a victim" attitude. If you don't like the terms of the deal, go buy a couple of tin cans with a string. Sheesh, like "consumer choice" is supposed to be some kind of inalienable right. Its always funny to hear people threaten lawsuits as though they think that capitalism is somehow supposed to be fair. whoever told you that lied.


July 4, 2008 2:36 PM

What AT&T lusts over is inflated economies of gouge, such as the RingTone market. They figure that families will put up with SMS contracts for their teens for the same reason, or they wish to gouge when one texts more. Income for nothing.

Five dollars of SMS ala carte is only 25 SMS messages. Which might cover my actual usage. Or you can spend that five dollars for 200 messages, which can still be quickly consumed, if you suddenly get an unexpected volley.


July 4, 2008 3:08 PM

Everyone is so misleading. The 3g network is fine in every major city I have visited in the last few years - and so is the Edge network. It's amazing to see people knocking it because they had a slow download once or couldn't connect. It's a cell network folks. They don't work that good for anyone.

On the money side - capitalism is 100% fair. If you don't like the price - don't buy it. The iPhone isn't a necessity of life. If you want a free phone, get a free phone. AT&T has a bunch of them. I love my iPhone and I might not upgrade. Guess what? It's my choice. I get to choose how I spend my money. How much fairer can it get? They aren't charging a premium for the iPhone, it's the same as the BB. Of curse, they subsidize the BB too.

You guy's are the same idiots that were screaming last year that the iPhone was too expensive. Guess what? They heard you and now the deal is worse, but they thought you were stupid enough to go for it. Gee, now the iPhone is only $200. How reasonable. Idiots. They cost what they cost. You can't expect them to give them away for the joy of it.


July 4, 2008 3:34 PM

First people gripe about the first iPhone not being 3G. Now they complain that it costs more with a 3G plan . . . hellllOOooo!


July 4, 2008 3:40 PM

the new iphone 3 g plans start out at 69.99 do u have to pay 30.00 on top of that for internet and gps?

Don P.

July 4, 2008 4:45 PM

Remember when Businessweek said Apple should close their retail store's before they even opened their first store? Why in the world do you still think you are smarter than Steve Jobs? Maybe when the iPhone becomes the dominant mobile platform? Nah, I'm sure you'll just still print some more B.S. Oh.., by the way go to Youtube and type in, sydney apple store. 4000 people thru the front doors at the grand opening...


July 4, 2008 5:33 PM

i'm interested in buying the iphone to use as my only phone in the house, my ipod player and navigation for my car. i'm not interested in texting or data plan. can i get the above services for the basic ATT plan of $39 bucks per month? thanks


July 4, 2008 5:43 PM

Sprint has an incredible network and now an incredible phone now too. It does everything the iPhone does but needs a small amount of tweaking. The Instinct could use a capacitive glass touch screen and be a little larger and a redesigned web browser and you'd have the true "iPhone killer". Plus you get unlimited EVERYTHING for 99 a month. Or you could have unlimited everything for 150 with ATT. Why don't companies make a capacitive glass touch screen phone with a nice large screen like the iPhone? That is apparently one of its biggest draws.


July 4, 2008 5:46 PM

No Bill, the 69.99 gives you 450 a month with rollover and unlimited data including the visual voicemail, email, web, gps. If you want texting then you have several choices. Unlimited is 20 a month extra. So if you wanted 450 with rollover plus unlimited text it would be about 90 plus taxes.


July 4, 2008 6:20 PM

I'm considering the iPhone 3G - I'm currently with Sprint and current Sprint users get screwed with the Instinct... supposedly the only plan that will work on it is their 99/m plan - I'm paying under 40/m now... but with that and their customer service or lack thereof lately I'm considering going with AT&T and iPhone.

The only gripe so far is having to pay additional for messaging since their plans include unlimited internet - and it's even worse for family plans, it's either unlimited for 30/m more or .25 per text... how about having a plan for say 200 or 1500 messages for a family plan?

At least it's nice to know what I'm getting into unlike with some of Sprint's practices...


July 4, 2008 6:21 PM

I hear every body, when will the people get tired of sagging economy and Big Business to stand up and do what they say. If I pay for 3G and it is not offered in my area, that is a breach of contract. The customer is not responsible to put up the 3G towers, its these companies the make billions of dollars. They will still have their fancy homes, cars, in-home theaters, pools and large banks accounts. Now flip the script, if it was you or I doing this they would hold us accountable, so offer a better deal for those who don't have the service in their area. Go back to the original plan 20.00 covers all and those who want to opt out will help cover those so-called loses.

Steve Wildstrom

July 4, 2008 6:34 PM

@Rick--No, the iPhone is sold only with a data plan.

W. Gates

July 4, 2008 7:19 PM

I think it is a very nice phone.


July 4, 2008 9:48 PM

I own a current iPhone and a separate GPS. I don't think there is enough in the new unit to warrant me switching at this point. he software upgrade they are sending out sounds just fine to me.


July 4, 2008 10:45 PM

such rude, depressing comments posted on here.


July 4, 2008 11:28 PM

Apple doesn't set price plans for AT&T...some people need to understand that. What are the prices like for other smartphones in the same category? No one seems to mention this.

Rick Coll

July 4, 2008 11:46 PM

ATT has the worst service and network out there...don't waste your money...the best phone on the worst network...only in the US.


July 4, 2008 11:52 PM

Why does the iPhone the only phone that seems to drive everyone so crazy?

The new iPhone 3G pricing plans, including unlimited date and unlimited text...are EXACTLY (repeat...EXACTLY) the same pricing as ALL AT&T's other 3G phones, and just like my Samsung.

You wanted 3G and got it, along with the standard 3G prices.


July 4, 2008 11:55 PM

In Australia you can buy the phone prepaid for AU$729 and pay AU$80 to have it unlocked.

The phone is being carried by three different Australian carriers Optus (Singtel) Telstra and Vodafone...

Users will just as easily be able to buy the phone, unlock it and take it to the carrier of their choice.

Keith Kamisugi

July 4, 2008 11:55 PM

Steve, in terms of being "a big step back for consumer freedom of choice," it's not a matter of "may be" -- it's already happened from Day One of iPhone.

As the monopoly carrier for the iPhone in the U.S., AT&T has little motivation to provide competitive (and clear) pricing, not to mention service.

Apple would have done better for consumers by allowing choice of carriers.


July 4, 2008 11:55 PM

"As far as unlocked, if you buy $199 8GB iPhone then break contract it will cost you $175 so then you can unlock it and go to another carrier. Its still $375 for unlocked phone which is so much better than buying it contract free from AT&T. That makes no sense."

What is the monthly cost from AT&T if I decide to break the contract unlock it and still use AT&T for monthly data and voice? Do they have pre-paid data plans?


July 5, 2008 12:45 AM

I lose a grandfathered Unlimited Nationwide voice plan and SMS, unless I want to pay fifteen dollars a month for fewer minutes and SMS. A twenty five percent increase. Fifteen dollars I'd be less likely to use

You'd hear a lot less whining had they not price gouged SMS. The fact is, ATT is slavering for a fools economy, such as the RingTone market. SMS is the closest thing they can find. Parents will pay five bucks just to keep the kids from complaining.

The spots I am in that have 3g are the spots I am most likely to use the phone as an iPod only. The only really appealing part of 3g is perhaps the on phone App Store.


July 5, 2008 1:05 AM


You need the data plan to use the GPS navigation since the Google maps come from the Internet. Of course AT&T doesn't sell the phone without the data plan, but you might conceivably be able to buy a foreign one unlocked and just start using it with AT&T. But you'd still need the data plan for GPS.


July 5, 2008 1:06 AM

re Drealguy:
Americans don't know math? and this coming form such an advanced country as Nigeria (of all places).
And, how many Nobel prices does Nigeria have? Maybe when you come up with the iNigerian phone I will buy one!


July 5, 2008 1:19 AM

the Iphone is devil.

Muhammad Jawad Hadi

July 5, 2008 3:41 AM

Will apple release iPhone in Pakistan? And how much it will cost me in Pakistan?


July 5, 2008 3:45 AM

I am looking to buy a new phone but don't want the internet, I already have the family unlimited texting and that is all I need. Do I still have to buy an internet plan if I but the iphone? If so what is another good phone?


July 5, 2008 3:46 AM

The iphone provides three things to consumers; phone, internet and ipod... Why the drama over other stuff that the iphone isn't. even Apple says that is what the iphone was designed for. If your angry because it's not the smart phone you wanted, sorry...their are other cell phones that can accomadate you. the iPhone does very well for what it was designed for; even more so with the introduction of the 3G version.


July 5, 2008 3:55 AM

The reason I went with Sprint Instinct Touch screen phone is because UNLIMITED Text messaging is included. So with 2 lines, it saves a ton of money over EXPENSIVE AT&T ripoff plan. Think about it, text messages take tiny amount of data but AT&T charges enormous amount of money ($30 per month for 2 lines!) for them because they can! No they can't. Go with Sprint Instinct. You also get UNLIMITED TV channels (live and on-demand) and Radio and turn-by-turn voice GPS Navigation with real street names announced. And it also has a camcorder that iPhone 3G doesn't! The browser on iPhone is better however. But over $30 per month EXTRA for text messaging for 2 lines on AT&T? That's a ripoff right there! Not for me! And I can get my work push-email (Outlook/Exchange) for FREE with Sprint. Apple would charge $100 per year for the service. Those fees add-up quickly with iPhone 3G!


July 5, 2008 4:21 AM

I am convinced that there are some jobless people who've got nothing better to do than sit on their thick butts and ridicule a company trying to revolutionize industries and appreciate the very simple fact that we humans should think different and not give into normalcy and mediocrity... Pardon my spellings though... iPhone is by far the best integrated mobile device ever, realising this Samsung has flung a clone of their own into the market...


July 5, 2008 4:24 AM

"It is amazing to me that many people will pay extra for a narrow band medium such as text messaging"

What's amazing to me is that the phone companies have the gall to charge extra for a usage that uses a tiny fraction of the bandwidth that a call does.

I mean, a "i "It is amazing to me that many people will pay extra for a narrow band medium such as text messaging"

What's amazing to me is that the phone companies have the gall to charge extra for a usage that uses a tiny fraction of the bandwidth that a call does.

I mean, a "i


July 5, 2008 4:40 AM

Why would anyone think it's OK to pay more for 3G services? Over here in France, we pay the same price for the calling plan, regardless of whether it's EDGE, 3G, whatever, with most data options included in a reasonably low monthly price.....I'm not talking about the iPhone plan though, which has its own, much higher, rates.


July 5, 2008 4:48 AM

You don't have to "wait for the Ipod Touch with WiMAX on it" as Indy suggests. You can get a Nokia N810 WiMax Edition right now. Like with the iPodtouch, you will still need a phone, too. But, with the Nokia Tablet, if you want more than WiMax and WiFi, you can "tether" it to your 3G phone and have 3G internet, too. Without AT&T.

Lewd Obbs

July 5, 2008 4:49 AM

If you don't like the deal on iPhone 3G, don't buy it.
It's hardly a necessity.


July 5, 2008 5:10 AM

The new Iphone 3G is great for USA and consumers but the network operators like AT&T screws everyone on the pricing. We need more competition in USA. Any operator that could offer more flexible plans would be become an over night success. There would be obstacles eg. AT&T who would complain about why screw the market when we got everyone in a corner and they have to pay because there are no options...So i am requesting for new mobile phone operators to come to usa market and make it easy for everyone to get pay as you go phone plans or contract but more reasonable than AT&T.


July 5, 2008 5:13 AM

John just what I was thinking,

how much will a refurb cost?

Getting any ideas ...


July 5, 2008 6:07 AM

3g is only available in a few major cities .... when you take that into account the question changes dramatically.


July 5, 2008 6:19 AM

What a waste of an article. Dumb headline, weak story.


July 5, 2008 7:17 AM

They should either not be allowed to sell these phones in markets that don't have 3G, or at the least ensure that customers know that they are buying a phone that has technology that they will be paying for that they can't use. AT&T is very hush hush about when exactly they are expanding to a given market - look at the web sites that are devoted just to people wondering when 3G is coming to see how many people have been waiting and waiting


July 5, 2008 7:58 AM

Whether you like it or not Pete, Apple will suceed fabulously.

To say Apple has had any measure of failure shows you've got your head up your rectum.


July 5, 2008 8:14 AM

Queue has begun outside of Apple's Fifth Avenue retail store.



July 5, 2008 8:49 AM

Good points in the article. The government needs to step in and protect consumers buy requiring that contracts be limited to three months, as in some European countries, and that phones be usable on other networks. That protects people who buy two year contrcts and then get crappy service when the carrier discontinues cell towers in their area. It would also be nice if the privacy laws would be enforced. ATT gave the government everybodys call records after 911, in violation of the law.


July 5, 2008 9:16 AM

This article is correct about the point the author is trying to make. Apple originally wanted to change the American mobile phone market. Possibly move us closer to the European version where the phones aren't locked. But, with version 2.0's new bindings from AT&T, we return back to the same old same old. The price to purchase without contract extension is prohibitive and that is intentional since all published reports show that AT&T is subsidizing the LOWEST price by approximately $300.00. That means they are making around $300.00 for selling that one. The one thing that has come out of this, more competition on the phone designs.


July 5, 2008 9:22 AM

I think the question you americans should be asking is, why have at&t used this opportunity to pricegouge, when o2 here in the uk are offering a free iphone 3g to anyone already on an iPhone contract, and created an even cheaper entry level plan than before.


July 5, 2008 9:42 AM

I'm pretty sure those of us analyzing and scrutinizing every aspect of the iPhone, whether it be economical or technical, represent less than ~5% of the targeted iPhone market. In other words, a very insignificant minority - no matter what we say, Apple will continue to do whatever it finds most profitable for ITSELF (& its business partners).

Bottom Line: Suck it up, pay the extra $40 / 2yrs, and if you can't or don't want to, then get something else. 3G/GPS have been around for much longer than the 3G iPhone has been marketed anyways, so its nothing new.


July 5, 2008 10:08 AM

So... When Apple conforms to the average set-up of hand-sets they... fail?

The initial set-up, where Apple was being paid monthly for the phone, and got their phone purchased at full price was duping customers...

the deal is always "Well the phone is 399, but if you sign up for a 2 year contract, the cost of the phone will only be $99 bucks!" but with the original plan... it was...

"Here's the iPhone, it's $399, the only method for you to own this is to sign a 2 year contract - if you don't sign a 2-year contract, it will not work on any other network. If you get it to work on any other network, we will brick the device in our next update." now that they are actually doing this the ORIGINAL way, or NORMAL way, they've... "Failed"? they're... "doing their customers a disservice." ?


The original iPhone was a disservice for a few reasons - Locking you into a 2-year contract with no discount on the phone itself, giving you a 2G smartphone (they don't exist outside the Apple iPhone the year it was sold - but it's still top of the line... somehow), and excluding GPS (my 2 year old Sanyo handset, not a smartphone btw, had GPS. My 1 year old Motorola Razr Has GPS, and 3G).

I could say that the people stuck with slower phones now are stuck in what is known as "Bleeding edge remorse." but that would be to assume the original iPhone was in itself bleeding edge.

in honesty, when it first came out I WAS interested until I realized that the iPhone was not 3G - which didn't make any sense to me.

Not to mention their choice of carrier... AT&T? Really? I had a AT&T phone from work, and constantly was reimbursed by my employer for going over my Verizon minutes since the AT&T phone never got coverage in any of the remote area's I had to go in upstate NY - yet the Verizon phone worked flawlessly.

Lastly to end the rant - until they get on a better network, I won't end up getting an iPhone, that's about it now, since the new line of iPhone is now finally better (i'll figure out what Steve Jobs has against colors outside the black and white spectrum but that'll be another day.)


July 5, 2008 10:19 AM

Hey i love my unlocked blackberry bold
Iphone is for losers who have no life


July 5, 2008 11:08 AM

The iPhone is definately a good phone. But wouldn't you say that a more important milestone in the cell phone industry is that fact that you can now get unlimited phone and text for about $35 a month!!!


July 5, 2008 11:11 AM

stupid headline


July 5, 2008 11:27 AM

Anyone who buys any Apple product is a Lemming. And ayone who willingly subjects themself to rigid contracts just so they can have a product that they have deluded themselves into thinking is superior to the competition is about as inteligent as a Lemming.

You people seriously have no problem with the Communist business practices of Apple and AT&T? Perhaps you should live in China if you like Communism so much?

Seriously, why do you people so willingly subject yourselves to their complete control? If you think the iPhone 3G is any better than the competition you are either pridefully and blindly biased or just plain stupid. Your Lemming behavior only encourages Apple/AT&T to continue in thier Communist ways. I can think of at least 3 alternatives to the iPhone 3G that are at least as good and free from all the contract/feature plan B.S.

Ah, but experince shows that I am wasting my breath. Proud/stupid Lemmings cannot be reasoned with. You may as well expect them to actually understand how to build an iPhone from the CMOS/FET logic up.


July 5, 2008 11:29 AM

Why did a great company like Apple go with AT&T in the first place, they have nearly the worst service of all the major handheld servers. I'd like an i phone, but I'd actually like to use it to talk on and cannot afford unreliable service. Sorry Apple, I'm sticking with Verizon or Sprint.


July 5, 2008 11:34 AM

I'm stunned that no one else in the world has (yet) designed a phone as slick as the Iphone.

Verizon and Sprints "iphone-like" phones are a joke.

They don't even have the basic features like wi-fi, etc.


July 5, 2008 11:52 AM

@Alfiejr, Verizon is CDMA, iPhone is GSM - not compatible


July 5, 2008 11:55 AM

Here's what I don't understand. I want the iPhone 3G - in fact, mine is on advance order. Do I wish the price plans were lower? YES! However, what I wish is irrelevant. The real problem here is that people want a high end item that they cannot afford. The reason that I have not already purchased an Audi R8 is that it's a pricey car, and I don't want to purchase it until I know that this money will never be missed. Early adopters like myself always pay more than late adopters. That's just how new product introduction works. What right would I have to call Audi and say, "I'm very disappointed that your prices are so high, and I refuse to buy an R8". They don't WANT everybody to own an R8, just like Rogers does not want everybody to have the iphone 3G just yet. They want suckers like myself to lock into a 3-year term, because they know that we will. They stand to make much more money that way.

The bottom line is, if you notice the monthly expenditure, then it's too much for you to spend. Harsh, but completely true. I was not an early adopter until I could afford to be one.


July 5, 2008 12:20 PM

Funny! all this debate over the iphone plan/features/ want the iphone for the features? Just buy an ipod touch and keep your old phone and plan! Then you won't be so ripped off! I think the folks who are willing to pay for the iphone and plan without hesitation are just trying to show off... and before everyone says this idea is for the "poor",I have 3 ipod touches, 5 cell phones and 2 carriers in my household.


July 5, 2008 12:22 PM

Kieran I am convinced people like you make these posts just because your mindless drones who will rally behind anything that Apple tells you is a must have item to be cool. If someone points out any downside you trumpet the rally call and defend the brand like it was your first born child.


July 5, 2008 12:26 PM

Something is not right with the US launch of the 3G iphone.

You have carriers in countries like Canada who have NO 3G network and are still launching the phone yet T-Mobile is not going to carry it.

The mere fact that AT&T is the sole carrier means that our rate plans and upfront subsidy pricing of the phone isn't subject to any competitive nature. Contrast that to other regions where with a 2 year contract the phone is free (albeit with monthly fee's different than ours - but those fee's were different regardless if iPhone 3G came along).

If Apple "wants to change the world" then sell the device as an open device akin to how Windows mobile, Blackberry and Nokia devices are sold. Don't force your will on the carriers and retailers, it has failed. The Apple device has NOT taken the world by storm, it's taken US consumers by storm who for the first time have features phones in other regions have had for years. There is NO pricing competition in the US for iPhone and no retail distribution pricing changes, if there were then BestBuy and other retailers would be able to carry it. True the user experience is much improved but Apple's contractual agreements with the carriers will always holdback market share.

I'm not bashing here (I'm an Apple fan on the desktop and Notebook side), just been in the mobile/carrier space for years and this is the same complaint I here from the carriers I've dealt with. Apple: Fully distribute the iPhone to any carrier and eliminate your contractual stupidity.


July 5, 2008 12:38 PM

um, i have a nokia n75 (3G) and i do not pay a $30 premium on AT&T.


July 5, 2008 12:51 PM

one thing people dont' talk about are the potential dangers of using the cell phone and all it's radiation (or whatever it's called) so close to the brain. I can only imagine what 20 years down the road awaits all of us cell phone users (including me). One of the beauties of life is the classic letter writing, which is now practically a lost art. Can you imagine someone in 100 or 200 years from now saying, "look, I have a 200 year old text message sent by my great great grand parents!" I recommned, at least once, write a letter to one of your people on your phone address book and see how happy and surpriced they will be to get something so thoughful. It' may not be 3G, but the classic paper, envelope and your handwriting will be priceless.


July 5, 2008 12:59 PM

iPhone is crap. Get the Samsung Instinct, it has: turn by turn gps, two removeable batteries. video tv downstream, txt msg, and open to any apps you can load. Iphone doesn't have any of the above and if you use the gps, watch your battery drain like a SUV on pump gas.


July 5, 2008 1:03 PM

Hey Chet,
If you break the contract, you have to return the equipment , so you are wrong. If you don't you will be charged full price for the phone . At&t isn't stupid.


July 5, 2008 1:36 PM

@Alfiejr -- Your post is misleading.

First, there hasn't been any statement from ATT or Apple about the 2007 iPhone's eligibility for unlocking after 2 years. If you're referring to the hack, that was possible on day one, no need to wait for 2 years. Although, if you upgraded to firmware v2.0 it will make it harder if not impossible to unlock it.

Second, you seem to imply that you can switch to Verizon's CDMA network with an unlocked GSM iPhone? Obvioulsy that cannot happen. However, there is a convergence on the 4G data standard for both GSM frequencies and CDMA frequencies (HSDPA->LTE and EVDO->LTE), but that won't happen for at least 2-3 years. The carriers are notoriously lethargic when it comes to cooperating on a standards based rollout of new technology. Besids, Wi-Max may have a chance as a mobile 4G solution against cellular 4G technologies like LTE.

It gets interesting. So, be ready to fork over another $600-$800 for a 2 yr lock-in for a 4G iPhone in 3+ yrs time!


July 5, 2008 7:23 PM

Supertek -- No Wi-Fi on the instinct. Also, the Instinct doesn't have a 320 x 480 screen either. I'm all for more screen real estate in a candy bar format smartphone. The browsing experience on the narrower Instinct feels distinctly extinct.

BTW, TomTom is supposedly releasing a turn-by-turn GPS app for the GPS equipped iPhone 3G. If you think about it, a TomTom equipped iPhone GPS is actually a better in-car GPS than any of the commercial GPSes sold because none of them have a 320x480 res screen!


July 5, 2008 8:13 PM

WTF, no video recorder on the iPhone? Which dim wit in Cupertino decided to cripple this smartphone essential? I might reconsider just based on this one feature lacking. Even my primitive Palm Treo can record video as can a couple dozen other non-smartphones. Exactly what were those retards in marketing thinking? I know the iPhone can do video, so technically there's nothing preventing it from recording video. (Just do a google search and you'll see that a bunch of video hacks are available for the 2007 iPhone)

Ethan Soutar-Rau

July 6, 2008 12:05 AM

The old iPhone revenue sharing model was an absolutely awful thing for customers. It is what precipitated the iPhone's crippled sim card system and the huge effort that Apple put into denying its customers the choice of different networks.

for those who are bored enuff...

July 6, 2008 3:26 AM read this far: an unlocked V1 iPhone can already take video with a $20 program, which will surely be available among the iPhone apps store. The iPhone is only as locked down as you let it be. "Communist" indeed! What a troll.


July 6, 2008 3:39 AM

My goodness! Odd bunch here. This is supposed to be fun. Lighten up and enjoy the party - it is a toy.


July 6, 2008 3:51 AM

PcNut wrote: "Anyone who buys any Apple product is a Lemming"

Not really. The 3G iPhone includes GPS so we can all find our own way, and avoid cliffs, unlike the millions of Windoze users who have purchased, and repurchased, and upgraded and bug-fixed their computers on a regular basis.

"Quick everyone! Follow me into the Blue Screen of Death."

... and, by the way, Stephen: LAME headline.

John Coppola

July 6, 2008 6:17 AM

I hate when people say that they have the right 'consumer choice'. These companies spent millions researching and creating their products and they can do what they please with them. Someone talked about taking them to court so that they could get their phone however they want. You don't have a right to other people's property.

Aside from that, jobs is missing the boat...again. Greed is getting him. If he unlocked the phones on the other networks, his sales would EXPLODE! Just like his primadonna priced macs, he keeping his iphone software closed and not opening up the platform. In effect, he's slowing his platform growth. Which is only leaving the market open for someone else to come along with a good or better product to take it away from him.


July 6, 2008 6:31 AM

You want something better that the iPhone and without the legal hassle? Just try the HTC Diamond !!


July 6, 2008 7:02 AM

The only way that these sh*t plans are anywhere near remotely being good is if you dont have an iPhone. There is no way I'm going to fork over the extra $40/month + 200/iPhone for the wife and I. The only way I'm staying with ATT at the end of my contract anyway is if they become tmobile. ATT can suck it!

camel jockey

July 6, 2008 8:19 AM

The level of stupidity here by the shirtless jerkoffs is pretty amazing. Douche bags: if you don't like the plan or phone, DON'T FREAKING BUY IT!!!! Keep your LG flip phones and go away.

Dru Richman

July 6, 2008 8:51 AM

Seems to me we have 2 separate issues here - the cost of the iPhone; and the cost of the service plan.

Just to reiterate - Apple introduced the iPhone in June of '07 for $599 and then lowered that price a few months later to $399. In July '08, Apple will introduce iPhone 3G with additional features like GPS, better battery life, 3G network capabilities, improved headphone jack, better audio, etc., etc., etc. for $199. So Apple has, indeed, lowered the cost of the phone AND increased it's capabilities.

In the US, AT&T is the sole provider for the iPhone. This is in part because Verizon rejected Apple's offer to sell the iPhone a few years ago.

Odd as it amy seems, Apple sets the price of it's product and AT&T sets the price of it's product.

If you compare the price of the service plans the AT&T offers for ANY 3G phone..SURPRISE! They're all the same. If you compare the costs of AT&T plans with other 3G plans for other service providers from around the world, strangely enough, AT&T doesn't do that badly.


July 6, 2008 9:19 AM

I still can't understand why they want a $400 premium for a plan-free phone that is LOCKED! Not that I really care as I am more than happy with my Nokia N95-3


July 6, 2008 9:21 AM

I don't care how much it costs! I WILLL HAVE ONE! It's so cool and shiny, and pretty, and new, and you can just touch the sceen instead of having keys, and like, if you can't afford another $30 to text people about what Tammy said at lunch today, then like, yer a loser.


July 6, 2008 10:57 AM

verizon does not charge for evdo whuch is 3g and faster in most areas.


July 6, 2008 11:22 AM

i save a lot of money - because i don't have a cell phone! but even if i had the money, i would not want an iPhone - i would only want a phone that makes voice calls - no IM, no Internet, no music, no videos - but where can you get such a phone today?

Steve Wildstrom

July 6, 2008 11:35 AM

@Dru Richman--The problem is that these issues are not independent and service and handset prices are definitely not set indpendently. The first cut in the price, from $599 to $399 was real. But the "cut" from $399 to $199 is just a reallocation of cost between the price of the phone and the cost of the contract.

The carriers, not just AT&T but Vodafone and T-Mobile and the other global players, have forced Apple into a traditional subsidy model that it hoped to escape. That's the failure the headline refers to.


July 6, 2008 12:16 PM

i am a current verizon customer and am planning on switching to att next week for two new iphones. interesting reading some of the comments on here about people bashing the iphone and att. Is it expensive - yes. will i be paying more than i currently pay - maybe. But guess what - i still have a choice

i have lived in many different countries and guess what... every carrier has problems. The biggest problem in the US is the lack of competiton, and also the expensive nature of pay-as-you-go which is HUGE in almost all other markets.


July 6, 2008 12:16 PM

A moron said it's a stupid phone...i think u have no life at all...go and get one.


July 6, 2008 12:30 PM

I'm with Scott. It should be about what the consumer, not the companies, want. In Europe, they understand this and don't allow the companies to shaft the consumer like they're allowed to here.


July 6, 2008 12:32 PM

I switched from T-Mobile to At&t. The service is absolutely terrible. At&t is trying to make as much money as it possibly can without giving barely anything in return. Now they want to increase the price of the plan plus offer this ridiculus premium for no-contract iPhones. I love Apple but this has simply been a bad move for them. I will certainly not upgrade because of this. The deal with Apple/At&t is not consumer friendly. As soon as my contract is over, if not sooner, I am switching back to T-Mobile.


July 6, 2008 1:14 PM

Here is a good price comparison of AT&T's EXPENSIVE iPhone 3G Family Talk plan vs its competitor:


July 6, 2008 1:59 PM

Mr. Wildstrom: what about the inability to tether the iPhone to a laptop, like you can with so many other smartphones and carriers (I do on Verizon with a MotoQ). At a minimum, ATT should offer a discounted "dataconnect" plan for iPhone subscribers. If I have to pay $60/mo to someone just to occassionally use the web via my laptop and cell phone, it will be Verizon, as EDV0 has the edge over ATT 3G.


July 6, 2008 2:15 PM

That comment is by someone who knows nothing about the mobile industry. Companies such as LG, and HTC are pioneers in the industry whom have much longer shares of customers, and especially HTC has way better phones and more innovative.

Apple is a great "marketing" company, but when it comes to phone such as the HTC Diamond Touch... the iPhone is left in the dark. Why some idiot would pay all that money for an iPhone that does less than an HTC device and be forced to use a crappy AT&T service, must been the same idiots watching the "reality" shows on MTV.

"Lets face facts, the iPhone is the best thing that has happened in the mobile phone industry since it started."

Jobs is no Messiah

July 6, 2008 3:06 PM

I believe Apple has officially taken the title of "Most Evil Corporation" from Microsoft.


July 6, 2008 3:29 PM

The AT&T TILT is a much better phone. The iphone just added 3G and other 'new' features when other better phones like the TILT have had it for a year or longer. People love the iphone so much cuz its the most advertised. There are so many other phones out there that are better. OPen up your eyes people.


July 6, 2008 3:34 PM

In response to nancy & Dru Richma,

Nancy, If Response to "Verizon's & Sprint's iphone clones you may what to look back into history a few years ago just a little at Lg's Prada phone, Not released in the untied states. This is the model for the i-phone unless you want to believe that apple in fact invented the wheel, by all means please continue to do so. You may also want to look into the words "lawsuit" with the two manufacture's over design. Curious whose a clone?

Dru Richma, "If you compare the price of the service plans the AT&T offers for ANY 3G phone..SURPRISE! They're all the same. If you compare the costs of AT&T plans with other 3G plans for other service providers from around the world, strangely enough, AT&T doesn't do that badly"............ Well sir, No not really. Verizon Wireless has been 3g for years and footprint blankets at&t by comparsion maybe %60 percent, The current pricing to use a VZW 3g phone, (most of them) is $15 dollars a month, & yet is not required. So that means you can have you 3g phone with no required data charges, rather per megabyte.
Sprint also uses EDVO and is a whole another bag of apples, I'll stop there.


July 6, 2008 4:03 PM

I think this IPhone launch is not ging to be as spectacular as last one. The cost is too high... compare it with Blackberry or HTC phones who are worthy competitors.

IPHONE: $199 (upfront) + Must get Data Plan + $10 extra for data plan from July 11 = Approx. $199 + $30*24months= $919+tax (Not including voice contract cost)

HTC/BLACKBERRY (T-mobile): $50-$100 Upfront + Just $10 for limited Data which is not required = Approx. $350 max.

Iphone is good but surely not worth extra $600 with ATT.

Just my 2 cents.


July 6, 2008 4:13 PM

Conor has it right. US is anything but the standard for value and service. In Hong Kong today, pay HK$98 ($12 US) for a pay as you go SIM getting you 392 minutes good for 6 months from a top tier carrier AND free international calls to 30 countires, US, Europe, China, etc. You can plop down and talk for 6 1/2 hours to the US for 12 bucks. Equivalent or better service than my ATT here. Ask ATT how much they will charge you to call Hong Kong and talk for 6 1/2 hours. Even with their paid international plan it would be more than $400. If you check the site below remember to divide by 7.8 HK$ to US$ on all the prices.


July 6, 2008 4:20 PM

The weakest link in the iPhone experience is the carrier. The dominating link in the iphone story is the carrier. This is the problem for any phone manufacturer, not just Apple. In the past many years, why did the Samsungs and LGs of the world suddenly gain prominence? Because they were ready to customize their phones as the carriers wanted, whereas the Nokias and the Sony Ericssons initially refused to do so.

The carriers have simply too much control. Last year, when Apple ran a tough negotiation before choosing a carrier, they were just being Apple. They knew they would lose control once they signed up. And giving up control is not something that Apple (Jobs) likes.

Too many people over interpreted it to assume that Apple was changing the game in favor of the consumer. Hardly.

It is in Apple's interest to control the overall iphone experience as much as they can. But it is not in Apple's interest to lock their phones to a carrier. But its the most locked phone on the planet you could buy today.

iPhone 2.0 (the SDK) is another example. The one thing that Apple has left out is the ability to run background applications. The supposed reason is "in the interest of better battery life". That's partly true but not entirely true. Enabling background processes allows a whole class of applications that can swamp a carrier's network with traffic. And AT&T probably drew a line saying that was not acceptable.

There are multiple carriers but that does not equate to competition. All of them are virtual monopolies. Sadly, the only thing that can break this is legislation that (a) allows the use of any FCC certified device on a carrier's network (b) prohibits the lock-in of devices to carriers networks.


July 6, 2008 5:03 PM

I agree that there are some other impressive smartphones out there. The one area where iPhone excels where it counts if you are like me is the browser. I need access to web apps to work, not just for casual web browsing. Between the ability to display the actual page and the great screen, nothing else comes close. I am still just bummed about the inability to tether because in some cases a phone browser - even the iPhone Safari - is not enough.


July 6, 2008 5:35 PM

I first clicked on this link thinking WTF , another iPhone is doomed story.
Well Its obviously not doomed but the story is spot on. I had hoped for the really pleasant experience I had with version 1 of the iPhone but apparently Apple lost this battle and now we have to suck like the rest of the carrier relationships, ah well, lets see what version 3 brings I guess.



July 7, 2008 7:18 AM

Don't you find it hard to text on an Iphone after a few drinks,... I did. Dam thing is hard write with your thumb too!! Fun little thing though! but I still don't like "Jobs"...


July 7, 2008 1:19 PM

The 3G Iphone is going to sell regardless of what people say it doesnt do or have or even how much is the service. Apple will market this thing very well as they always seem to market other products as well. Something to keep in mind though....what is the point of buying the 3G Iphone if you are not in a 3G area? Throughout capital area of Lansing MI it will not run on 3G was one area I noticed. Another area was Jackson Mississippi was the only city in that state with 3G. Just to locations I noticed but you can view that coverage map on their website for further details. NOW for $99.99 a month you get everything with Sprint (Instinct hottest phone of the year) and the coverage of their network far surpasses ATT Coast to Coast of course. So ask yourself do I want a phone that has these capabilities but not be able to utilize them?

Roy G. Biv

July 7, 2008 5:54 PM

The new arrangement will be beneficial for the consumer because it will allow for more competition, which will tend to drive down the price. It will also allow Apple to sell to more vendors, which is good for them. (Long term however, Apple will have to deal with Windows Mobile which will be available on many handsets, not just on one (its own) that is the Apple model.)

Steve Wildstrom

July 7, 2008 6:39 PM

@Roy G Biv--Although the iPhone will be distributed by more than one carrier in some markets, AT&T retains it's exclusivity in the U.S., probably for another four years. So much for competition. Besides, have you noticed that Apple products are priced the same no matter where you buy them? The company's contracts with vendors essentially prohibit them from selling for less than the price Apple sets. Yes, it is anti-competitive. And yes, it is legal, at least in the U.S.


July 9, 2008 12:23 PM

Man all I have to say is that canidian
got CRAPPY deal for the new Iphone 3G So SAD!!!!


November 4, 2008 10:56 AM

Is this article even revelant anymore?


July 21, 2009 1:55 AM

Brand new Mobile phone Plasma tv , Laptop game at cheap price come with complete accessories with one year international warranty.

Email address :

3G S APPLE IPHONE 16GB...........$450USD
3G S APPLE IPHONE 32GB...........$500USD


iPhone 3G S
Stereo Headset with mic
Dock Connector to USB Cable
USB Power Adapter
Cleaning/polishing cloth
SIM eject tool


Email address :

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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