How much does the iPhone cost?

Question

How much does the iPhone cost?

Answer

,brbrThe overwhelming component of the cost of new phones is NOT the upfront hardware cost, but the longterm cost of the service contract that accompanies the phone. Cell phone service providers regularly give away phones for next to nothing, to secure a twoyear commitment to a service contract of high cost and uncertain future quality. The companies think in terms of the longterm revenue of the contract they count on the fact that customers are usually so focused on the upfront cost that they dont estimate the longterm cost. Several states are considering legislation that would restrict this practice for example, by allowing customers to switch providers while paying only a prorated fraction of whatever subsidy they were given on the initial phone, but this legislation is aggressively opposed by the cellphone companies and their generally Republican allies in Congress and state legislatures, to whom they make large campaign contributions.brbrSo, what is the real, twoyear cost of owning and using an iPhone? We dont know, because neither Apple nor Cingular has made any statement about what the largest component of the cost the service contract will be. Apple says only that iPhone will cost WITH YEAR CONTRACT. brbrCingular currently charges month for a voice plan with minutes, and month for a MB data package. Its possible that they will offer these same rates to iPhone users, though it also seems possible that Cingular, given the business opportunity of being the monopolist service provider without competition of iPhone voice and data services, will be able to charge more than that possibly citing the cost of providing the enhanced data services that the phone enables. brbrSo a conservative estimate is that, including taxes and fees, the twoyear cost of having and using iPhone is more than ,, though the real cost once announced by Cingular could turn out to be considerably higher.