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The Devil's in the 3G iPhone Details

By Renay San Miguel MacNewsWorld ECT News Network
Jul 1, 2008 11:58 AM PT

Yes, the new 3G iPhone will cost much less than the first generation of the groundbreaking multimedia cell phone; that is, if you're one of the lucky ones who qualify for a discount. And it's not that Apple and AT&T don't trust those of you who might want to hack or modify your new iPhone, but you will need to have it activated at the store when you buy it, under the watchful eyes of sales staff.

The Devil's in the 3G iPhone Details

AT&T released the pricing plans for the second generation of Apple's hit phone Tuesday, with purchase options that range from US$199 (as Apple CEO Steve Jobs announced at last month's Worldwide Developers Conference) to $699 for a 16 GB iPhone unencumbered by a service contract.

Pricing Details

Consumers can qualify for the $199 8 GB iPhone if they buy any iPhone before July 11, if they are opening a new AT&T line, or if they are eligible for an upgrade through a previous contract. Under these terms, a 16 GB iPhone costs $299. Two-year contracts are mandatory with these lower-price options.

Those not eligible will pay $399 for the 8 GB model and $499 for the 16 GB handset. Again, two-year contracts will be required.

A No-Contract iPhone

Apple and AT&T may have been listening to commitment-phobic cell phone users who want the bells and whistles that come with an iPhone but not the long-term contracts. So AT&T is offering 8 GB and 16 GB 3G no-contract iPhones at $599 and $699, respectively.

"There's this growing trend in the industry toward openness," Ross Rubin, director of industry analysis for The NPD Group, told MacNewsWorld. "There's heightened sensitivity toward early termination fees. ... There have been statements from Apple management saying they were willing to explore nonexclusive models of distribution, so it follows that they would offer a device not tied to a two-year commitment."

iPhone Backlash Brewing?

Is there a danger that Apple fans lured by Steve Jobs' promise of a $199 iPhone at June's WWDC might feel like they're the victims of a marketing bait-and-switch game?

"Perhaps there should have been an asterisk with that number," Rubin said with a laugh. However, even in a summer of $4-a-gallon gasoline, rising food prices and plummeting stock markets, Rubin knows that Apple faithful and gadget enthusiasts will still line up for a faster, sleeker iPhone that can command monthly voice/data fees ranging from $69.99 to $129.99.

"It's still a relatively new market entrant," Rubin said. "The potential for new customers far outweighs the installed base. And it's clearly not a product appealing to people who want a free flip phone with their $40-a-month calling plan."

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