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What Your iPad Will Really Cost You - Hope You're Sitting Down

By Erika Morphy MacNewsWorld ECT News Network
Apr 2, 2010 5:00 AM PT

At US$499, the stripped down, bare-bones version of the iPad -- a 16-GB device that connects to the Internet through WiFi only -- does not seem that expensive. Even the the souped-up 64-GB WiFi + 3G model does not seem overpriced at $829 -- especially if one has become acclimated to Apple's pricing in general.

What Your iPad Will Really Cost You - Hope You're Sitting Down

However, the costs don't end there. Even with the $829 device -- especially with the $829 device, in fact, due to its extra bandwidth and capacity -- the costs are almost certain to continue to mount.

Among them are 3G connection fees, perhaps higher than some consumers may be expecting, and the purchase price of content -- movies, books, videos, magazines, newspapers -- that is being readied for the iPad. All of these "extras" can add a healthy premium to that $829.00 price point.

"You can count on Apple making it very easy for consumers to part with their money," Rob Walch, host of Today in iPhone, told MacNewsWorld.

Connecting for a Fee

The connection fees are the easiest to tally up, but they still may be deceptively high for consumers who decide to go with AT&T's service, which is available without a contract at $14.00 for 250 MB per month, or $29.99 for unlimited bandwidth. The lower tier may be impractical for anyone who wants to take advantage of more than a few of the juicy content offerings.

The costs grow for those who choose to invest in one of the mobile hotspot services providers such as Verizon, Sprint and Clear are offering specifically to support the iPad or iPhone, Walch wrote in a blog post.

In some cases, these mobile hot spots require the purchase of additional hardware too -- $365 in the case of Clear, $99 for Sprint and $50 for Verizon.

The total cost of ownership of these packages may have some shock potential for consumers who are not careful to add up all the costs, Walch said.

For example, consider AT&T's package of $30 per month. That is a total cost of $1,549 over two years. Now compare it to Clear's $40 month fee. Over two years, the total cost of ownership would be $2,024.

At $60 per month, Verizon's mobile hotspot service is even more expensive -- $2,189 over two years -- and Sprint is the dubious winner, with a two-year tab totaling $2,238.

But that's just for starters. The real costs will be in the content consumers buy, Walch said -- costs that are entirely up to the individual. "If you overconsume, anything can be too expensive -- be too costly," he said.

The problem is, these costs are incurred in relatively small amounts -- $17.99 a month for a newspaper subscription, $4.99 for a single app, 99 cents for a TV show. They can add up quickly.

Monthly Breakdown

Also, there is a growing sense -- strictly based on leaks to the media, as Apple and most content providers have been mum -- that iPad apps are going to cost more than typical iPhone apps. Consider Apple's ideal iPad owner. Let's assume she is a serious reader and downloads four books a month on the iPad.

Thanks to agreements Apple reportedly struck with publishers -- including, most recently, Simon & Schuster and HarperCollins -- these books will run anywhere from $12.99 to $14.99 with an occasional $9.99 bargain for a non-bestseller. Let's say she buys four top-priced bestsellers a month, for a total of $59.96.

Our bookworm also is an avid news reader. Here it gets harder to estimate how much her costs will be, but based on the information leaked to publications such as The Wall Street Journal, her monthly subscriptions are going to deliver a bite. The Journal is said to be rolling out its iPad subscription at $17.99 per month.

Other publications have yet to decide on pricing for subscriptions -- or rather, have yet to leak them to the public. According to the Journal, Time Warner plans to have a full edition of Time magazine ready for the launch, priced the same as a print copy at $4.95. It is working on iPad versions for People, Sports Illustrated and other magazines, according to the Journal.

Men's Health will also be available for the full newsstand price of $4.99. On the other hand, Hearst is said to be developing an Esquire iPad app -- a version without interactive advertisements -- for $2 less than its cover price. Issues that come with the glitzy ads are reportedly going to cost more.

The Financial Times is said to be working on an iPad app, which readers can have for the first two months for free. Then they will have to pay between $256 and $391 per year, according to news accounts, depending on the subscription they choose. Total monthly cost for an FT and WSJ subscription plus one issue of Time magazine: $40.93.

More Expensive Apps

Many apps being developed for the iPad appear to be relatively expensive, although plenty of free and 99 cents apps will be available, according to App Advice.

For example, "Rocket Solitaire" has been priced at $4.99, according to App Advice; another example is "LDS Scriptures" at $12.99.

Indeed, there will be plenty of free content on the iPad. Netflix is introducing an iPad app that will be free, assuming one already has a paid membership. The built-in cost for this app, though, will be the connectivity. Streaming movies consume a huge amount of data, so they will have to be watched either on free WiFi or the unlimited bandwidth package.

Ditto for the TV shows. This week, CBS and ABC reached agreements with Apple to stream TV shows for free on the iPad -- similar to the way they stream on the networks' own Web sites, according to The Wall Street Journal.

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