MAC BLOG SAFARI
Mac Bloggers Gnash Teeth Over iPhone Pricing Numbers

AT&T will start selling the new 3G iPhone bright and early July 11, and the company is recommending that brand new prospective iPhone customers come prepared with a photo ID and Social Security number for a credit check. AT&T is also recommending that new customers show up at the their local AT&T stores a few days early to complete a credit check that will reduce wait time -- if last year's initial iPhone launch was any indicator, lines may be streaming out the doors.

Upon purchase, AT&T will pleasantly -- presumably -- charge customers a $36 activation fee and require the buyer to sign on to a two-year contract. The 8 GB model is $199 and the 16 GB is $299. Customers who are in the early upgrade price range -- the parameters of which aren't nearly as clear as those for new or out-of-contract buyers -- will be able to get the new iPhone at higher prices: $399 and $499, respectively. Customers won't be able to use either model with GoPhone Prepaid, but some customers will be able to buy a 3G iPhone without a contract for a premium price of $599 to $699 at some point in the future after the launch.

Customers can buy a 3G iPhone without a commitment, Wes Warnock, a spokesperson for AT&T, confirmed. Even so, there are some key questions that remain unanswered, like, "Does the customer have to activate the 3G iPhone in the AT&T store?"

"Beyond that [the fact that the option exists], we're not providing any additional details at this time," Warnock told MacNewsWorld.

Price Grumbling in the States

One of the iPhone's sticking points in the U.S. is the device's other price -- the increased data rate of $30 per month vs. the old $20 per month for the EDGE-based original iPhone. AT&T may be able to justify the higher price for the hit its network will probably take when millions of 3G iPhone users start downloading applications from the upcoming App Store. Then there are the pricing plans available in sum total, too.

"AT&T stinks in price hands down, and for me, personally, customer service. I will be sticking with Sprint unless there is some miraculous happening that occurs at AT&T which lowers the iPhone prices down to competitive levels, and not the gouging that they are doing since people want the hottest piece of eye candy on the market," noted Digital Skunk on the MacRumors.com post on the subject.

Then there's the upgrade fee, which seems to be unavoidable.

"WTF?!" noted Mac Dummy. "Customer loyalty counts for absolutely nothing these days!" Mac Dummy added.

Still, Who's Not Going to Upgrade?

"Almost every original iPhone owner I know that lives in a major metropolitan area with 3G coverage is going to upgrade to iPhone 3G," Raven Zachary, a research director for The 451 Group, told MacNewsWorld.

"If you're rural and don't benefit from 3G speeds, then $199 may not be worth the upgrade for the other hardware improvements -- GPS (Global Positioning System), improved headphone jack, etc.," he added, noting that the resale price of the old iPhone may very well stay about $200 for some time.

"The reason why the resale price may stay [about] $200 is because of the unlocking community. There are still a lot of people in the United States -- but especially overseas -- who want to use an iPhone on a non-sanctioned carrier. The way in which the iPhone 3G is being sold makes it difficult to purchase a unit without activating it on an approved carrier. This will work in favor of the used iPhone market on Craigslist and eBay," he explained.

Worldwide, it's hard to say how it's going to shake out, but buyers in Canada might be more irritated with their iPhone options than residents anywhere else. "You're seeing a customer revolt on the pricing that Rogers Wireless has announced, and no unlimited data plans are available," Zachary said. "Take a look at www.ruinediphone.com -- already there are over 23,000 petition signatures," he added.

Back to the 'Unlocked' iPhone Cost

"Why are so many people freaking out about the Unlocked iPhone's $700 price tag?" asks Over the Air blogger Eric Zeman.

"People who want an unlocked iPhone will have to pay the full retail price of $700. Guess what? That's what cell phones actually cost," Zeman noted, adding that a unlocked version of the Motorola (NYSE: MOT) Q9h will cost $500 to $530; the HTC Touch starts at $400 and the Nokia (NYSE: NOK) E90 runs from $750 to $1,000.

Several commenters noted that the $700 price tag won't necessarily nab a customer an "unlocked" iPhone, but it would still offer an option for canceling AT&T service and hacking the unit to work on a non-official network. Commenter Garry, however, really got to the heart of the matter:

"In other countries, the business model doesn't bind one into a contract due to which there is more flexibility and I believe provides a fair ground for competition and better service," he noted.

Meanwhile, Do Other Phones Even Exist Any Longer?

A report from investment bank RBC Capital Markets states that 56 percent of all consumers who are in the market for a smartphone intend to purchase one of the new Apple (Nasdaq: AAPL) iPhone handsets, indicating the scope of the 3G iPhone's pent-up demand, according to AppleInsider.

Wow.

"Count me as one of the pent-up!" commented Lafe on the AppleInsider.com post on the subject. "Why is 7/11 taking so long to get here?"

Still, there are other smartphones, or at least relatively intelligent phones, hitting the market this summer. The Sprint (NYSE: S) Instinct has been getting some decent reviews and attention, but it might not be the kind of phone that would attract new customers to Sprint. "It will help Sprint to reduce churn. ... It won't be converting any non-Sprint users, such as the iPhone did for AT&T, into Sprint customers," Tony Rizzo, a research director of mobile technology for The 451 Group, told MacNewsWorld.

"I'm very interested in seeing how the supposed RIM (Research In Motion) clamshell phone will do -- that is taking another direction in that a lot of younger people prefer folding phones. Of course, RIM also has the Bold coming out at the end of July or in August on AT&T, and the supposed touchscreen RIM device for Verizon will be supposedly be showing up before 2008 is out," Rizzo said, noting that HTC, LG and Motorola also have some new models coming out soon, as well as lots of Windows Mobile 6.1 hardware in the works.

"The bottom line is that there are a wealth of cool devices at plenty of price points. ... It will be a buyer's market," he said.

Of course, that's only for customers willing to entertain iPhone alternatives.