iPhone 3G Pricing Plans!

In my earlier post about the paradigm shift concerning smart-phones designed for consumer, rather than business use, I highlighted the industry's pathfinder, the iPhone (and it's carrier AT&T) as the device (and service) which set the standard that all the other handset makers and phone companies are going to refer to when pricing their products and services. I got an email today from a friend working in the tech department of a bank releasing the pricing information for AT&T's iPhone and service. The implications are pretty savoury

AT&T plans to deliver the 8gb model for $199.00 and the 16gb model for $299.00-- with contract. They're also delivering the same models, without contract, for $399.00 and $499.00 respectively. This is obviously a sharp departure from their earlier strategy of not selling the phone at all outside of contract. The phone, which runs on GSM networks only will work on National carriers such as AT&T (of course) and T-Mobile as well as smaller regional carriers like MyCricket.

AT&T's dropped the price of the contract phone in order to attract more customers. They plan on making up for the pricing revenue lost with the *discounted* iPhone 3G by upping the monthly service plan which includes 450 anytime roll-over minutes and unlimited mobile Internet and email from $60.00 to ~75.00. This price doesn't include text messaging and with taxes, that monthly bill's going to hit something close to $90.00.

Some people are outraged at this information. I have to say though, that as much as I'm excited about everyone getting their hands on these phones which can best exploit services like http://www.mshopper.net/, I'm not that upset with the pricing plan.
That said, the pricing sounds pretty reasonable(not too expensive). The upping of the network costs makes a lot of sense given that the new iPhone's running on bandwidth-heavy 3g instead of EDGE and it actually brings the pricing in line with the rest of their smartphones. Compare their blackberry plan for $90 w/ unlimited text messages a month(phone plan + data plan + text messages). The new iPhone charges listed above should come out to $90.00/month which is ~1080 a year in revenue for AT&T. That's how they can drop the prohibitively expensive price of the old iPhone.
AT&T is setting themselves up so that people living in areas covered by the newer phone service companies like MyCricket are going to be discouraged from these alternatives as the serious savings they'd see by using the phone on that network would be nullified by the no-contract pricing. Compare AT&T's monthly service charges with MyCricket's $45/mo for unlimited everything (txt and mms msgs, mobile web, email, talk time (area only). Regardless of whether the consumer buys the 8gb iPhone unit with contract or goes to MyCricket without it, they'll end up paying the same price annually, which would leave most with wanting to stick to AT&T since it's both more well known and has a larger coverage area. These facts will leave many wondering why AT&T would even offer the iPhone outside of contract if they had successfully priced-out regional rival low-cost service competition. What's there to gain? I think the answer lies in the falling dollar.The ability to buy the phone off-contract in the US is going to allow tourists who come to the US this summer looking to spend money yet don't have the option to buy the iPhone in their home country to pick the device up while here on holiday: taking advantage of the falling dollar.

European tourists have a reason to pick the device up on this side of the pond as well. An admittedly not so recent interview with Jonathan Ive, the chief industrial designer of Apple's award winning wares, has revealed that in the UK, the pricing for the iPod isn't simply the US dollar converted to British pounds but rather, the US dollar value simply up-rated to British pounds. While a top of the line iPod in the States will cost someone $400, its seems that in Britain the consumer's paying £400! That means that while Apple will likely move units off the shelves in England by those over there that are willing to pay the price, they're bound to move unit after unit by tourist consumers that see a great deal for a great device over here.

Finally, I'm interested in seeing how other phone companies respond to this iPhone 3G pricing plan. With their pricing on plans for HTC touches and Samsung Instincts...let the consumer smartphone wars begin! Sprint already has a completely unlimited plan cleverly named "Simply Everything" which includes unlimited minutes, messaging, web and email for $9 more than AT&T's w/ tax price. For some, not having to wonder about the status of your roll-over minutes (or having to worry about minutes overages at all when compared to Verizon) for $9.00 more per month on a smartphone like the Samsung Instinct might just be worth it.