The big headline today is that Apple is dropping the price of their lowest-end iPhone from $199 to $99.  Does anybody really care?  Is there anybody out there who didn’t buy an iPhone and will now buy one because it’s $100 cheaper?

A $100 one-time cost difference means almost nothing. The obstacle to buying an iPhone, for many who otherwise would, is the ongoing monthly charges. When the iPhone (finally) became capable of 3G speeds last summer, the price of the phone itself went down but the cost of the service went up. The unlimited data plan is $45/month for “corporate” service (if you need to access your company mail server or intranet sites). Unlimited text messages cost another $20 (if you do “pay as you go” for text messages, it costs .20 per message). And all that is on top of the charges for voice service, the least expensive of which is $40/month for 450 minutes. So we’re talking $85/month before all the taxes and fees, or $105 with unlimited texting. Then add about 20% for taxes and fees – now you’re paying $102 to $126/month. And that’s if you don’t do much talking. For more voice minutes, you’ll pay more.

When you realize that the TCO is over $1200/year, that $100 off the phone price starts to seem pretty insignificant. If they really wanted to jump start sales, they would lower the cost of the voice/data plans so people could see some real savings over the life of the phone, instead of shaving a little off the phone price.

deb@shinder.net    www.debshinder.com