Piper Jaffray says iPhone 3G's real cost to users: $407

Posted:
in iPhone edited January 2014
With a public increasingly puzzled about the actual cost of an iPhone 3G, researchers now see Apple losing some of its early sales to buyers waiting for a less costly upgrade.



The financial firm's senior analyst Gene Munster explains that the multi-tiered iPhone 3G prices, which vary depending on the customer's existing status with AT&T, masks the real cost of entry for many users.



The typical price for an 8GB iPhone is more likely to be a considerably higher $407 based on what most will actually pay, according to the report. That cost is just above the $399 price for non-upgradable AT&T customers and is more than double the $199 price touted by Apple and AT&T in their marketing campaigns -- a sticker price which is strictly a "best case scenario" not likely to be seen by many, Munster says.



The often-criticized monthly plan is also said to be a shield for the true cost of owning a phone and may well scare off some customers. Equaling the original iPhone's plans, including the 200 text messages, costs $75 per month, or $15 more per month than what subscribers have to pay for the earlier handset. Even with ideal pricing, an owner of an iPhone 3G ultimately pays $360 more than they would have before over the life of the phone's two-year contract.



A combination of the two pricing woes is predicted to leave many customers left in an unenviable position at launch. The impact of this is could be serious enough to force many customers to wait up to roughly 18 months before making the purchase, no matter how interested they are in Apple's second-generation hardware.



"Buyers will wait until their contract on their current carrier expires, or AT&T subscribers become upgrade eligible," the analyst claims. "As a result, we believe initial iPhone 3G sales will be diluted, but that sales will increase over the next 18 months as the average cost decreases."



Researchers at Piper Jaffray are nonetheless convinced Apple will have little difficulty blossoming its marketshare in the US within as little as a year. Munster cites both a survey of 200 cellphone owners and the potential $1 billion market of the just-launched App Store as factors in growing Apple's command of the US phone market from an estimated 3.4 percent today to approximately 8 percent in mid-2009.



As many as 45 million iPhones are still predicted to ship within all of 2009, he adds.
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Comments

  • Reply 1 of 153
    kickahakickaha Posts: 8,760member
    Quote:
    Originally Posted by AppleInsider View Post


    The actual average price for an 8GB iPhone should be as high as $407, according to the report. That cost is just above the $399 price for non-upgradable AT&T customers and is more than double the $199 price touted by Apple and AT&T in their marketing campaigns -- a sticker price which is strictly a "best case scenario" not likely to be seen by many, Munster says.



    What?? This makes no sense... a combined pool of $399 and $199 purchases leads to an average price of $407? On what crack addled planet is this??



    And yes, not many people will see that $199 price... like, say every person who *isn't* an AT&T subscriber. Wow, there's gotta be like, what four of them out there, right? No? *Millions* you say? Well golly gee, I guess Gene's talking out of his ass again.



    Care to edit this entry to make it clear what's going on, or link to the actual source article you got it from? Because right now, this is pretty poorly explained.
  • Reply 2 of 153
    tripotripo Posts: 74member
    it was well about time,that someone says the truth.

    The phone is actually well over 600$( = gets right about twice as expensive) and in fact, it's not just the $ that scares people- it's also the tight "regime" of signing a contract with the carrier . How come , that we can not pay cash !??! WTf !? \
  • Reply 3 of 153
    nagrommenagromme Posts: 2,834member
    And this is a problem for iPhone because.... it's the same situation for any other phone?
  • Reply 4 of 153
    I think there will be a thriving iPhone 2.5G market once the 3G drops. Ebay will see lots of action for those old phones. I wonder though, will purchasers of the first generation iPhone pay the same price as current owners, or will AT&T try to force the new plan on them even though they do not have 3G phones? I may just sit this one out and wait a few months to upgrade. I want to see how the new 2.0 Apps work with my original iPhone before making a decision.
  • Reply 5 of 153
    footballfootball Posts: 47member
    Apple will have to bite me hard until I get this pig for $199.



    I purchased it originally for $399 and would have upgraded for $199 but the pricing has been fairly mysterious. It does appear that I am going to get jammed on the upgrade so I will wait (unhappily).
  • Reply 6 of 153
    eodchopeodchop Posts: 12member
    I am keeping my current 1st Gen iphone. It works well, and my contract is has only a year left. I may buy a new iphone but it will be on the black market when my contract is up. I urge everyone to stay away from att&t until they stop screwing us my making us sign a new contract.
  • Reply 7 of 153
    eduardoeduardo Posts: 181member
    As a current AT&T client-I must say I won't be getting the 3G iPhone. I was very interested in upgrading my current phone; but the new pricing plan and the added charge to send/receive text was a deal breaker for me. I have a current AT&T family plan that includes texting (200 per month).



    Too bad AT&T is the sole provider-in this case competition amongst the mobile telephone providers would be a good thing.



    I'll just admire the 3G iPhone from afar (I guess my SonyEricsson W600i will have to do for yet a longer time).
  • Reply 8 of 153
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by Football View Post


    Apple will have to bite me hard until I get this pig for $199.



    I purchased it originally for $399 and would have upgraded for $199 but the pricing has been fairly mysterious. It does appear that I am going to get jammed on the upgrade so I will wait (unhappily).



    What do you find mysterious about it? If you have an original iPhone under contract with AT&T then you are eligible for the $199 price. Your AT&T account or friendly CSR rep will inform you are eligible or not.
  • Reply 9 of 153
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by eodchop View Post


    I am keeping my current 1st Gen iphone. It works well, and my contract is has only a year left. I may buy a new iphone but it will be on the black market when my contract is up. I urge everyone to stay away from att&t until they stop screwing us my making us sign a new contract.



    You'd rather spend $600 or more for a 3G iPhone that you can still only use on AT&T? How exactly does that make sense?
  • Reply 10 of 153
    This article desperately needs re-editing. It makes no sense as currently formatted. Gene can be illogical at times, but not as crazy as this presentation in AI makes it seem. And "blossoming" is not a verb as it's (mis)used here.
  • Reply 11 of 153
    crebcreb Posts: 276member
    I don't get...Apple products have always been pricey, but that never dissuaded those who appreciate design, and the other factors that Apple concentrates on while the others don't. The iPhone 3G is not the be-all-end-all for me as I own other mobile phones, but it should be enjoyable to use and own.
  • Reply 12 of 153
    ivladivlad Posts: 740member
    Im more than HAPPY to pay $600 for iPhone but to Apple--not AT&T. I just want Apple to get my money so they can invest it into something new.
  • Reply 13 of 153
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by iVlad View Post


    Im more than HAPPY to pay $600 for iPhone but to Apple--not AT&T. I just want Apple to get my money so they can invest it into something new.



    Can you explain that? What carrier are you going to use the iPhone with?
  • Reply 14 of 153
    hiimamachiimamac Posts: 584member
    But now that its subsidized - where the heck is the insurance?



    Huh, huh, yeah, well? LOL.





    But for real, if its more to own (data plan higher (personally, I think its going to be a way smaller launch somewhat "air" like - that I hope insurance is added seeing how they can ZAP the phone anyway right! R U with me?



    They can find, locate, and ZAP the phone, therefore WE SHOULD BE ABLE TO PURCHASE INSURANCE so when we drop it, lose it, it falls off a boat, we can buy a new one for $50.... Lawsuit?



    Quote:
    Originally Posted by nagromme View Post


    And this is a problem for iPhone because.... it's the same situation for any other phone?



  • Reply 15 of 153
    nasseraenasserae Posts: 3,158member
    Quote:
    Originally Posted by iVlad View Post


    Im more than HAPPY to pay $600 for iPhone but to Apple--not AT&T. I just want Apple to get my money so they can invest it into something new.



    Don't worry. Based on many reports, once you buy an iPhone Apple will get $600 from you through AT&T.
  • Reply 16 of 153
    nasseraenasserae Posts: 3,158member
    Quote:
    Originally Posted by solipsism View Post


    Can you explain that? What carrier are you going to use the iPhone with?



    I know, there might be a secret carrier in the US that have compatible with 3G iPhone that we never heard of
  • Reply 17 of 153
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by hiimamac View Post


    But now that its subsidized - where the heck is the insurance?



    Huh, huh, yeah, well? LOL.





    But for real, if its more to own (data plan higher (personally, I think its going to be a way smaller launch somewhat "air" like - that I hope insurance is added seeing how they can ZAP the phone anyway right! R U with me?



    They can find, locate, and ZAP the phone, therefore WE SHOULD BE ABLE TO PURCHASE INSURANCE so when we drop it, lose it, it falls off a boat, we can buy a new one for $50.... Lawsuit?



    Interesting idea, they might add it later, but it may be more expensive than their other insurance because of the cost of the device, the resale value of the device for the 200 countries not included in the initial launch, and the higher rate of theft for iPhones and iPods.



    Not to mention, you can use ZiPhone and others to change the IMEI of your device.
  • Reply 18 of 153
    dale soreldale sorel Posts: 186member
    Now all the bitching about the price of the iPod Touch can cease.
  • Reply 19 of 153
    k.c.k.c. Posts: 60member
    Quote:
    Originally Posted by Dale Sorel View Post


    Now all the bitching about the price of the iPod Touch can cease.



    Oh don't be silly. Bitching is what these forums are for.



    I find it comical that anyone things AT&T is going to do anything but make as much money as they can on the iPhone. Same for Apple.
  • Reply 20 of 153
    rot'napplerot'napple Posts: 1,839member
    Quote:
    Originally Posted by AppleInsider View Post


    The often-criticized monthly plan is also said to be a shield for the true cost of owning a phone and may well scare off some customers. Equaling the original iPhone's plans, including the 200 text messages, costs $75 per month, or $15 more per month than what subscribers have to pay for the earlier handset. Even with ideal pricing, an owner of an iPhone 3G ultimately pays $360 more than they would have before over the life of the phone's two-year contract.



    I don't have an iPhone and I still don't get it! Somebody please explain to me... If I purchased the original iPhone at a cost of $399.00 and a plan at 59.99 for a 24 month contract (not adding activation fee, surcharges, taxes, etc., just the basics), I come up with $1,838.76 (399.00 for the iPhone + 1,439.76 for the 24 month contract for 59.99 for voice/data/sms plan).



    This article is very poorly written by AI or Gene Munster is tongue tied. Am I to believe the article when it says I won't be paying the 199.00 iPhone price that Apple highly touts? If I go to the Apple store I am going to be charged a higher price?



    But if I am only charged 199.00 for the iPhone and add the AT&T plan of 69.99 plus 5.00 for 200 SMS for a 24 month plan I come up with 1,998.76 (199.00 for the iPhone + 1799.76 for the 24 month contract for 69.99 data/voice and 5.00 200 SMS plan).



    1,998.76 - 1,838.76 = 160.00 difference between original cost of iPhone and basic AT&T plan versus the 3G iPhone and basic AT&T plan.



    Take that 160.00 difference and divide by 24 months and you come up with $6.67 more a month for 3G service. I wonder what cable charges a month if I upgrade my tv to handle HD and then upgrade my cable service to accept HD? Would it be $6.67 more a month?



    Also, let us not forget the 8 GB iPhone started out at 599.00 until it was reduced by 200.00 around two months after the iPhones introduction to the 399.00 price enjoyed up until the 8GB 3G iPhone hits the shelves tomorrow at 199.00 and the uproar it created by dissatisfied early adopter who were only given a Apple store credit of 100.00. So if we take that knowledge and add that to the equation of 160.00 - 100.00 (higher iPhone payment paid by earlier adopters) = 60.00 and if one does not need the SMS text message plan (like myself) that comes to 24 months x 5.00 = 120.00. Take that 120.00 - 60.00 and it leaves you with a 60.00 savings if I got the 8GB 3G iPhone tomorrow versus the original early adopters who paid the 599.00 original price for the 8GB iPhone less price reduction of 100.00 plus 24 month contract at 59.99.



    Like I said, just by number crunching the basics of the old iPhone and plan with the new 3G iPhone and plan, without consideration of activation fees, the charge to port you phone number, surcharges, taxes, accessories, etc., I do not get where Gene Munster comes up with people paying a lot more because I don't see it outside of the 6.67 extra a month which to me is what I pay for a single fast food visit.



    Somebody please elaborate the concept of this article regarding people are paying much more than they think! I'm so confused...
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