When I bought my new MacBook Pro (matte screen, natch) I qualified for a rebate on a second-generation 32Gb iPod Touch that brought the cost of the iTouch down to less than US$100. On an impulse—I despise impuse buys—I bit and bought the iTouch. I’m still waiting for the rebate, and I hate that too, although Apple’s rebate application process was painless and took less than five minutes to complete online.
So here’s the deal with this cheap iPod Touch: Apple gets to unload a boatload of obsolete iTouches just before the release of the updated models (I knew that going in; I’m shocked that the third-generation updates offer only more memory and speed). So I’m feeling a lot less guilty about the iTouch impulse purchase. After all I’ve got less than US$100 skin in the game. But Apple also gets to distribute bazillions of exceptionally cheap gateway drug samples to its iPhone. That, after all, is almost certainly the strategy behind what’s going on here.
And I almost fell victim to it. I’ve been thinking for days about how to justify the cost of the iPhone—it actually sells for less than the comparable iTouch, it does voice command, GPS, crappy photographs and movies, and mobile telephony.
Ahh but there’s a big rub: Total cost of ownership. Apple does its absolute best to hide this bit of the equation; and succeeds remarkably well. I challenge anyone to actually price an iPhone—with the mandatory two-year AT&T contract—on the Apple website without actually buying one. The process goes like this: Click the “Get Started” button and you’re immediately asked to either create a new AT&T account or replace or add to an existing one. Click the appropriate button for your situation and click the “Continue” button. The next screen asks for your billing information for AT&T, including your Social Security number for a credit check. So now you’re into this so far, no way are you going to back out. Apple and AT&T have your Social Security number; they know you’re more likely than not to complete the transaction.
Slowly back away from the Apple website, take a deep breath, grit your teeth, and browse on over to the AT&T website. These are the evil bastards that willfully cooperated with the Bush administration on the warrantless wiretaps, remember? But wait, could it be that AT&T is less evil than Apple in this solitary instance. The answer is yes. You can actually find out how much your total cost of ownership for that iPhone siren call is going to be. AT&T admirably lays out all your options for you, clearly, on a single page. As opaque Apple is about the matter, AT&T is almost totally transparent (taxes and fees aren’t shown).
Tally up the costs and you’ll screech as loudly as I did. Here’s how it broke down for my business partner (who’s also my wife) and me:
| # | Item | Price each | Ext. price |
|---|---|---|---|
| 2 | iPhone 3GS - 32GB | US$299.00 | US$598.00 |
| 2 | Data plan (required; 24 months) | US$30.00 | US$1440.00 |
| 1 | Nation 1400 FamilyTalk with rollover minutes (24 months) | US$89.99 | US$2159.76 |
| 1 | Messaging unlimited families (24 months) | US$30.00 | US$720.00 |
| Total | US$4917.76 |
US$4917.76 plus taxes and fees. That’s absolutely insane—more than US$2500 per year—every year—you know you’ll upgrade when your contract ends. That’s more than I paid for my MacBook Pro.
Compare that to our current voice-only deal with Qwest: US$34.95 per month each for 1300 minutes. When I had a smartphone, Qwest’s unlimited 3G dataplan was US$25 per month. A total cost of ownership of US$1677.60 (plus taxes and fees) every two years (we get free phones). Unfortunately, Qwest is getting out of the wireless game (stupid move) and has become a Verizon agent.
Nice try, Apple; no sale. But, hey, thanks for the exercise and the realization that even US$1677.70 over two years is way too much to pay to be always reachable. There are times that I don’t want to be reachable. Thanks for reminding me.
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