Last month, Apple announced that its new iPhone 3G would cost just $199 for the 8GB version and $299 for the 16GB version. AT&T confirmed that pricing Tuesday, but clarified that those prices are only for certain users -- buyers of any iPhone before the iPhone 3G goes on sale July 11, new AT&T customers, or subscribers eligible for an upgrade discount.
For all others, the price is $399 for the 8GB iPhone and $499 for the 16GB iPhone 3G. In a new wrinkle, customers can buy the iPhone 3G without a service plan, but the price is steep at $599 for the 8GB iPhone 3G and $699 for the 16GB iPhone 3G.
AT&T also announced monthly service plans for the 3G iPhone, ranging from $69.99 for 450 anytime minutes to $129.99 for unlimited minutes. The plans include unlimited Web and e-mail access, but not texting. AT&T will charge $20 for unlimited text messages.
Those monthly service fees are higher than for the original iPhone. So will customers blink at those rates, even with a subsidized service plan?
NEW VALUE PROPOSITION
Tim Bajarin, principal analyst at Creative Strategies, doesnt think there will be much blinking. "I believe the new iPhone delivers a different value proposition via software, so the pricing plans will be viewed through the lens of its new software applications capabilities," he said in an e-mail.
Apples iPhone 2.0 software will be preloaded on all 3G iPhones, AT&T said. The software supports a new ecosystem of third-party software and will connect to the Apps Store, Apples mechanism for users to download software over the air.
Apples Web site advertises that users will "find applications in every category, from games to business, education to entertainment, finance to health and fitness, productivity to social networking." And it boasts that the apps will exploit iPhone technologies like multi-touch, an accelerometer, wireless and GPS.
SOFTWARE WILL DRIVE SALES
"The $199 subsidized price point clearly lowers the cost of owning one, and people are already used to paying wireless and data fees through a monthly fee structure," Bajarin said. "While the costs over the long run will be an issue for some, the new software applications that will come out for the iPhone is what will drive the sales of these new phones."
Observers questioned why AT&T is bothering to offer an untethered option. The Chicago Tribunes Eric Beneroff said he was "puzzled" by the announcement. "My first reaction: Something must be missing. Second reaction: Why would anyone pay more for the iPhone if theres no additional benefit?"
Beneroff said an AT&T spokesperson said it is an option for people who dont want to sign a contract. "We agreed someone really must hate contracts to spend more than twice the termination fee for this privilege," he said.
For all others, the price is $399 for the 8GB iPhone and $499 for the 16GB iPhone 3G. In a new wrinkle, customers can buy the iPhone 3G without a service plan, but the price is steep at $599 for the 8GB iPhone 3G and $699 for the 16GB iPhone 3G.
AT&T also announced monthly service plans for the 3G iPhone, ranging from $69.99 for 450 anytime minutes to $129.99 for unlimited minutes. The plans include unlimited Web and e-mail access, but not texting. AT&T will charge $20 for unlimited text messages.
Those monthly service fees are higher than for the original iPhone. So will customers blink at those rates, even with a subsidized service plan?
NEW VALUE PROPOSITION
Tim Bajarin, principal analyst at Creative Strategies, doesnt think there will be much blinking. "I believe the new iPhone delivers a different value proposition via software, so the pricing plans will be viewed through the lens of its new software applications capabilities," he said in an e-mail.
Apples iPhone 2.0 software will be preloaded on all 3G iPhones, AT&T said. The software supports a new ecosystem of third-party software and will connect to the Apps Store, Apples mechanism for users to download software over the air.
Apples Web site advertises that users will "find applications in every category, from games to business, education to entertainment, finance to health and fitness, productivity to social networking." And it boasts that the apps will exploit iPhone technologies like multi-touch, an accelerometer, wireless and GPS.
SOFTWARE WILL DRIVE SALES
"The $199 subsidized price point clearly lowers the cost of owning one, and people are already used to paying wireless and data fees through a monthly fee structure," Bajarin said. "While the costs over the long run will be an issue for some, the new software applications that will come out for the iPhone is what will drive the sales of these new phones."
Observers questioned why AT&T is bothering to offer an untethered option. The Chicago Tribunes Eric Beneroff said he was "puzzled" by the announcement. "My first reaction: Something must be missing. Second reaction: Why would anyone pay more for the iPhone if theres no additional benefit?"
Beneroff said an AT&T spokesperson said it is an option for people who dont want to sign a contract. "We agreed someone really must hate contracts to spend more than twice the termination fee for this privilege," he said.
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