News Analysis

AT&T's iPhone price plans provoke panic or praise (and crazy theremin)

Welcome to Wednesday's IT Blogwatch: in which AT&T reveals how much you're going to have to pay per month for that iPhone you've been lusting after. Not to mention a crazy-good theremin cover...

Gregg Keizer reports :

Apple Inc. and iPhone partner AT&T Inc. announced three new service plans specifically for the iPhone, all with unlimited data, that range from $60 to $100 a month. iPhone owners, however, will be able to choose from any standard AT&T plan.
...
Apple also said today that iPhone buyers will be able to activate the device using its popular iTunes program on either Macs or Windows PCs, a move that should cut down on the time people spend in stores this weekend ... buyers must have an iTunes account -- which in turn requires a major credit card -- as well as a valid Social Security number; the latter is an AT&T requirement and used as part of its credit check process. After the iPhone is activated, iTunes will synchronize audio and video content on the Mac or PC with the phone, as well as import phone numbers and other contact information, calendars, e-mail accounts and browser bookmarks to the iPhone.
...
The iPhone goes on sale Friday, June 29, at 6:00 p.m. local time, for $499 (4GB model) and $599 (8GB), at AT&T and Apple retail stores. Apple's online store will also be selling the phone beginning Friday.

Bert Latamore muses:

Phone sales, particularly for high-end phones such as the iPhone, are closely tied to contract renewals. This means that regardless of the hype, the immediate potential audience for the iPhone is confined to people who are:
  1. Existing AT&T subscribers or are nearing the end of their present contracts and are willing to switch to AT&T; and
  2. Willing to spend $500 up front on a high-end phone (about $2,000 total over the length of the two-year contract AT&T requires with the iPhone) despite the discounts all services offer on other phones, including competing smart phones ...
So while the iPhone may generate lines at AT&T stores Friday morning, many of the people in those lines may find the package beyond their budgets. And some of those who do sign up may find themselves with serious sticker shock.
...
Ultimately the iPhone’s success will depend on its ability to attract a market of new smart phone users. The iPhone's applicability as a corporate device -- providing mobile access to email, corporate IM and enterprise applications -- remains to be seen. However, Apple and AT&T would have to offer significant discounts to compete against Research in Motion and other established smart phone suppliers in the corporate market.

Cynthia Brumfield has, "An embarassing confession to make":

I pay a huge amount of money to Verizon Wireless every month and I’m not exactly sure what I’m paying for or even how to read my bill. I know I’m not alone, but, hey, I’m in this business and I should be able to grasp a lousy mobile phone bill.

When I got hit with the first nauseating bill, I called Verizon Wireless to have someone explain to me how the tally got so high. I’m ashamed to admit that I didn’t understand the explanation either, but did grasp that if I upgraded to a more costly monthly plan, I’d save money (how’s that for a mind-bending paradox?) ... Beats me. I do know that I feel like an idiot when it comes to my wireless bill ... The iPhone itself may be a revolutionary force in personal electronics, but it seems to me that the iPhone rate plan could be an even more important revolutionary force in mobile service billing.

Yet another announcement made by Apple and AT&T this morning propels the iPhone to some level of consumer nirvana never conceived of before. The iPhone can be activated at home using iTunes. No more standing around for 90 minutes in cramped retail stores amid unhappy and oftentimes psychotic customers, not to mention surly and disgruntled employees.

Vince Veneziani agrees:

Now normally I’d say this would be an annoying process that Apple should have dumped on AT&T, though when you think about it, the iPhone is also a music and video player as well, so it makes perfect sense for you to sync it with iTunes. Your videos of “Lost” and “Grey’s Anatomy” are all there, along with all those Billy Idol albums you ripped last week. Surely you want them all on your new, shiny iPhone.

Leander Kahney digs deeper:

Apple's not going to ruin ... the ritual unboxing ... experience by having some ham-fisted, pimply cell-phone salesman open the box for you. Instead, Allen predicts, the buyer will have the iPhone box quickly scanned at the store. When they get home, they'll synchronize the phone with their computer, and the registration process will take place through iTunes.

Customers will choose their AT&T voice and data plans through iTunes, while iTunes is transferring songs and video files to the iPhone (and iSync or Outlook is copying contacts and calendars). The phone will be activated remotely over the cell network.

Michael Parekh warns one to gird one's loins:

One does need to get mentally ready for the financial commitment involved here ... A one-year AT&T contract doesn't seem to be an option.  It's two-years or nothing.  So above the $500 or $600 the user pays for a 4Gb or an 8GB model, s/he is committing anything $1440, $1920, or $2400 for the two years ... And for the top-tier $100 plan?  You don't get unlimited voice or SMS text messages.  What a deal.
...
Wonder how long Apple will wait before unveiling new video iPod models with the screen and touch features of the iPhone sans the phone features. I'll start the pool with a guess of three months, with a new line-up in time for the holiday season.  Any other takers?

Kevin Tofel compares and contrasts:

From a pricing standpoint, the cost is basically included in the plans. I tried to do a direct comparison to the other major GSM provider here (T-Mobile) and the closest plan match is the 1000-minute plan of T-Mo at $59.99 and the AT&T 900-minute plan at $79.99. AT&T does include rollover minutes, while T-Mo offers the MyFaves...there's a few differences like that, so it's not a one-to-one. Adding a data plan to the T-Mobile account bumps you up $30, or $10 more than the AT&T plan, but it includes the T-Mobile Hotspot plan for WiFi as well as usage of the EDGE service. The AT&T plan also includes 200 TXT messages, where the T-Mobile plan doesn't.

Essentially, there's not much cost difference at first glance; what's more interesting is the way the plans are presented. Apple's iPhone is designed to be used on the web and they're calling attention to that fact by including the unlimited data. It's not thrown in as an afterthought service....interesting. Also worth noting for existing customers: you'll need to re-up for a new two-year contract to "activate iPhone features, including iPod functions". Looks like there's no way around the cellular servitude to AT&T through 2009 if you want an iPhone now.

Erica Sadun thinks it, "Stinks":

We seem to have an answer to one of our biggest questions: Can you buy an iPhone and just use the built in WiFi and iPod features? Apparently not.
...
It just seems unnecessary and cruel. TUAW gives Apple's "Minimum new 2-year wireless service plan and activation fee required to activate iPhone features including iPod" a big old hometown raspberry. Boo!

To which Steve Jobs has this succinct retort:

No bitching you cheap bastards.

Buffer overflow:

Around the Net
Around Computerworld Previously in IT Blogwatch

And finally... Dvorak-dot-org-slash-blog: Theremin Cover of Gnarls Barkley’s Crazy

Richi Jennings is an independent technology and marketing consultant, specializing in email, blogging, Linux, and computer security. A 20 year, cross-functional IT veteran, he is also an analyst at Ferris Research. Contact Richi at blogwatch@richi.co.uk.
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