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Ahead of the Curve | Tom Yager » iPhone: Apple answers all the big questions

June 27, 2007 | Comments: (0)

iPhone: Apple answers all the big questions

Yes, it’ll cost you, and yes, Apple wants your SSN in iTunes. But you’ll want one anyway

Whatever plans I might have had for this week were put on hold by Apple’s full opening of iPhone’s kimono prior to the June 29 launch. I knew that Apple would hold back as much detail as it could until the last possible minute, but now that crates and crates of iPhones are sitting in the back rooms of AT&T Stores in strip malls across North America, and store staffs have been issued their riot gear and marching orders, it’d be silly to try to keep anything about iPhone under wraps.

Apple has answered most of the non-feature-related iPhone questions that I’d have asked on my readers’ behalf, but several remain open. I’ll give you a taste of the answered and unanswered questions here. The details that deadlines force me to leave out of this column will be in my Enterprise Mac blog. The grand detail will be in my InfoWorld Test Center review of iPhone, which will get underway as soon as Apple supplies an evaluation unit.

That brings me to my first still-unresolved question: When will iPhone review units be sent out? I think that Apple’s decision on review unit timing comes down to its preference for first-line reviewers. Do Apple and AT&T want word of mouth from customers who have laid down their money for iPhone to hit first, or do they want reviews from plausibly objective journalists? This decision (probably made by the time you read this; check my blog) will be telling and potentially trendsetting in itself. Bloggers will buy iPhone for a shot at scooping us big guys on reviews, and of course, once they’ve spent their money and signed their 2-year contract commitment to AT&T, anything less than a glowing review is out of the question.

Now for an answered question: What’s the absolute minimum cost of iPhone? Add it all up and it comes out to $2,034.75, not including taxes, fees and surcharges which, as anyone with a telephone can tell you, account for a healthy portion of one’s monthly bill. That’s the cost of a $499 iPhone, a two-year AT&T contract at $59.99 per month and a $36 activation fee. Activation requires a Mac or PC iTunes client, and part of the process involves handing over your telco billing information, including your Social Security Number, to the iTunes Store. That’s a little squirmy, but hey, everybody from Radio Shack to the mall gondola guy tag you for your SSN when you buy a mobile phone.

AT&T’s iPhone rate plans are no longer a question either. Plans range from $59.99 to $99.99 and are clearly consumer-targeted plans. Daytime minutes are the most expensive part of the deal. iPhone is covered by Cingular’s roll-over policy on unused minutes, so even though the $59.99 plan has a skimpy 450 daytime minutes per month, you can bank them to some extent. All plans include unlimited data service, which AT&T qualifies as “e-mail plus browser.” Historically, that’s code for excluding the use of a handset for wireless Internet connection sharing. Until you hear otherwise from me, don’t bank on being able to tap your Xserve using Remote Desktop on your MacBook Pro with iPhone as your gateway. Still, iTunes can move files in and out of iPhone’s ample 4-8 GB non-volatile memory, and file uploads and downloads are much of the value of a cellular data gateway.

We now know that iPhone’s data service is EDGE rather than 3G. During periods of network calm, my T-Mobile EDGE service, using a BlackBerry 8800 as a gateway, hits ISDN download speed—128 kilobits/second—precisely. EDGE upload speed is slower than dial-up. iPhoners won’t be ripping around the Web at 3G’s typical 700 kilobits/second. Still, don’t be too disappointed. Most GSM/GPRS consumer phones surf at 9,600 bits per second, and EDGE’s coverage is wider than 3G’s.

One last question is answered, yet unanswered: Can you use iPhone without AT&T service, as a sort of Internet tablet-cum-PDA? Apple states that iPhone services “including iPod” require an active AT&T wireless subscription. I’d call that a no, but I can’t say for certain that iPhone powers up saying “don’t touch me until I’m activated.” Wireless hackers are more tenacious than all other varieties. If there is a way to use iPhone without activating it, or to flip it to another wireless operator’s service, it’ll be universal knowledge within two months of iPhone’s release.

It’s my job to find faults and shortcomings, and any $2,034.75 investment deserves scrutiny before it finds a place in your pocket, purse or holster. But I see no show-stoppers in the final details. So, sorry, naysayers, but Apple Stores and AT&T Stores will be mob scenes on June 29 at 6:00. If you actually touch an iPhone and you can afford one, you’re likely to buy it.

Posted by Tom Yager on June 27, 2007 03:00 AM


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Apple doesn't want your SSN, AT&T does. Apple doesn't keep it.

-jcr

Posted by: John C. Randolph at June 27, 2007 03:51 PM

Hi Tom
This is a good summary of questions I was curious about.
I am a bit suprised by your comment "Bloggers will buy iPhone for a shot at scooping us big guys on reviews, and of course, once they’ve spent their money and signed their 2-year contract commitment to AT&T, anything less than a glowing review is out of the question."
I think most people buying iPhones will be buying them to use, and a oportunity to review it will just be a happy extra. Also it seems likely to me that people who get free review copies would be less likely to be objective than people who buy their own because the free review copies are subject to the goodwill of the manufacturer. It is a tightrope that professional journalists must walk and I do not envy them.

Posted by: Daniel at June 27, 2007 04:54 PM

How did you get the minimum price of "$2,034.75"? I did the math and I got about $850. If you could please e-mail me with the way that you got that information, that would be great. Thank you, Stephanie.

----

Hi, Stephanie. That's the price including two years of AT&T's lowest-priced rate plan.
--Tom Yager

Posted by: Stephanie at June 27, 2007 06:16 PM

I'm paying $150 per month for three phones and 1200 minutes. Replacing one of this with an iPhone will only cost me an additional $20 per month or $480 for two years, plus 499 for the phone which brings it to a total cost of $979 for two years.

In your "objective" review you don't offer any counter point to indicate that two-year contracts are an industry standard practice nor any comparison pricing for alternative phones with the same features.

This article reads like you are trying slam Apple and AT&T for rate plans that you don't find appealing. Perhaps you should consider a followup post with price comparisons for Blackberry, Treo and other phones.

Oh and one more thing. Do you own a video iPod? How much did that set you back? Getting the coolest iPod to date with a built-in phone for $499 seems like a bargain to me.

Posted by: Brian Marquis at June 29, 2007 11:09 AM

Yes, the cost 24 month TCO of a iPhone will run you $2,034.75 plus taxes. Plan B, is maybe a high-end Motorola KRZR (or any other high-end phone), for 199.99, and a 450 Minute rate plan (39.99) with Unlimited Data ($24.99) and Enhanced Voice Mail (1.99). That totals $1843.27 for 24 months. Or, $8.35 less per month than the iPhone.

That's less than 1 LEU (Latte Equivalent Unit) per week for the iPhone over what you might get anyway. The novelty value of the iPhone is worth at least that much. And at 4 years you reach the break even point, if you keep both devices that long.

Oh, BTW the 3G decision was in part driven by the current 3G chipsets, which are notoriously power hungry, and would have seriously compromised battery life as well as esthetics. Son of iPhone will undoubtedly offer 3G with newer, low power electronics. And hopefully a card slot and replaceable battery.

Posted by: RL Johnson at June 29, 2007 12:48 PM

I don't think that people who don't currently use a cell phone will be likely candidates for an iPhone, and the AT&T minimum service plan doesn't sound unreasonable. But if you really wish to do a calculation that makes sense, you should deduct the cost of the current phone plan.

And, of course, if you really want to calculate a really accurate cost, you'll have to discount the required payment by whatever interest rate rate you find reasonable, as you don't have to make the payment today. (Not that it makes a lot of difference but when you claim to calculate the cost to the last penny....or last 75 cents, you should be that accurate.

Then, of course, you could sell your currently owned four gig iPod for a couple of hundred dollars...ok...a hundred dollars, lowering the cost more.

And you haven't calculated in the benefit of being able to read that PDF your client or manager or whoever sent so you can approve the multimillion dollar contract. Or the lawsuit you win because you take immediate pictures of the damage on your 2 megapixel camera.

But all of that is beside the point. You want one because it is "cool" --- a fashion statement. You need a phone anyhow, and this is only a few bucks more. If you have to ask, you probably can't afford it. But then this isn't a yacht.

As you note at the end of the piece, if you can get your hands on one and can afford it, you're gonna buy it. (Unless your corporate IT folks won't support it, which is a whole other problem.)

Posted by: Barry D Bayer at June 29, 2007 01:20 PM

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