Yes, the New iPhone Could Cost $800 – You’ll Probably Pay $200, Though

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There’s a double rainbow of trending Twitter topics right now: iPhone 5 $800 and #800DollarsForAniPhone. The people of Twitter are aghast! Aren’t iPhones supposed to cost $200? “For $800, this phone better [insert outrageous task] for me!” says everyone.

Smart phones cost far less than their suggested prices, thanks to carrier subsidization. That two-year contract you lock yourself into every time you pay $200 for a fancy phone? That’s how it’s $200 — because you’ve agreed to pay Verizon, AT&T, Sprint or T-Mobile $80-plus a month for the next two years. In return, you get an $800 phone for $200.

For reference, here’s what Apple sells “unlocked” — meaning you’d buy the phone without agreeing to a two-year service contract, forgoing the subsidized handset price in the process — iPhones for right now: 8-GB iPhone 4, $549; 16-GB iPhone 4S, $649; 32-GB iPhone 4S, $749; 64-GB iPhone 4S, $849.

That’s why it’s important to not lose or damage your phone. Even though you paid $200 for it, it costs a lot more than $200 to replace if you’re not up for a contract renewal.

Aside from all that, this $800 rumor is pure speculation. If there’s a grain of truth to it, $800 is almost certainly the price of one of the models of phones when purchased without a contract. If any carrier tried to sell the new iPhone for $800 with a two-year contract, nobody would buy it.

Actually, don’t quote me on that. You never know with Apple stuff.

The new iPhone — whenever it comes out and whatever features it’s got — will be priced in line with other smart phones sold via wireless carriers in the U.S., though. That’s a given.

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15 comments
bengillott
bengillott

I have been hunting around for a cheap iphone deal over the last few weeks and have found this cracking deal: 

http://www.bengillott.com/seco... but with the iPhone 5 'possibly' coming out later this year, is it worth waiting a few months?

i_Phoned
i_Phoned

It would be like saying the DISH Network DVR-921 cost $1,000!!!! 

Yeah, originally it cost $999, then Costco sold it for $500, and of course if you signed up for new/renewed contract and bought or leased it from DISH, you may have paid around $200.

Niall Hosking
Niall Hosking

Wow I feel sorry for you guys. No unlimited data, paying a fortune for your phone in addition to the contract... wow! My UK HTC One X with unlimited data on T-Mobile costs about $60 a month for two years - and costs nothing. iPhones aren't much more expensive...

Don Slater
Don Slater

US carriers may likely move away from subsidizing altogether in the near-ish future.  Verizon has taken a step in that direction by not allowing customers to keep unlimited data plans if they sign a contract for a subsidized phone.  So while you'll likely not see a contract price of $800, before long we may not have the option for the contract on those phones that cost the carriers so much.

Sam Trutna
Sam Trutna

I wouldn't quote you on that either. People spend $2000 on a sub $1000 laptop regularly so long as it's got the apple logo on it. $800 on a phone? Psshh, as the kids would say.

i_Phoned
i_Phoned

People paid $1,500 (unbundled) for the Motorola Startac Tri-Band phone back in the Mid-1990s. That's $2,193.86 inflation Adjusted from '96!

I don't seem to remember such outrage against Motorola, Apple H8ing PC Bots.

Sam Trutna
Sam Trutna

Because in the mid 1990's cell phones were still new and evolving technology. I remember playing on my dad's first computer (he'd had it about 10 years by the time I sat down on it) that he payed $3000 for in the mid 1980's. Nobody complained back then either because it was new, high end stuff. That Motorola was a noteworthy phone, being the first popular phone with a small form factor, and considering the era making a phone that small was truly amazing. It was new, high end stuff. Do you recall what the other phones of the time looked like? I'm sure busted ones could have been used for masonry. Now consider this, that's not the only cell phone they made in 1996. It would be one thing if the only phone available for purchase was the $1500 StarTac, but it wasn't. Nobody rails against any company for having high end products. We "PC Bots" rail against apple for offering mediocre products at a premium price, and the premium price is the only option. I wouldn't have so much to complain about if they sold a sub $1000 laptop, but they don't. Go take a look at what $1000 buys you if you go with apple. A mediocre processor, 64 GB of flash storage, a tiny screen, and a presumably $500 Apple logo since those parts do *not* add up to $999

Another way to phrase it, in 1996 there was nothing that could compete with the StarTac, it was the best of what was available. In 2012 Apple's base Air ($999) gets stomped by my Toshiba netbook ($450). I have more storage, similar spec processor, same amount of RAM, same screen. Even the $1500 13" version is only marginally better. Nothing Apple offers is the best of what's available, but the charge you like it is. There's the rub, and the fact that Apple fans refuse to even acknowledge this is hilarious.

Dakota44
Dakota44

That iPhone will not cost you $200.  It will cost you that AND the inflated price of your service.  If they were not subsidizing the phones the monthly rate would be lower.   So you are still paying, just in monthly installments.   There is no free lunch. 

mjlogue33
mjlogue33

Why is this a story? This has always been the case.

Sachi Mohanty
Sachi Mohanty

Yeah. We in India we do know that the iPhone does cost $800. To give some perspective about how large a figure that is in India, here are a few other 'facts':

A high school teacher working in a government school (that is public school in the US) earns somewhere around half of that per month.

Perhaps a college professor earns that much in a month.

A doctor starting out earns half of that in a month in a government hospital.

Someone starting out in the famed IT sector in India -- the demographic that might have more interest in iPhones than others -- earn about half of that in a month when starting out.

So a software engineer (forgive the awkward sounding expression) with about 5 to 6 years experience working for one of the top 10 IT companies earns about $800 per month.

I guess that will scare the hell out of anyone planning to pursue some career in the United States that might be ripe for outsourcing.

Yes, you're right: anything that CAN be, WILL be, outsourced.

@sachi_bbsr:twitter 

JennGrace
JennGrace

People buy iPhones for $200 without knowing the will cost $800 to replace? Why don't people know what they are buying? I was surprised the new iPhone would only cost $800 because I knew that is less than the current iPhone. I know this because I talked to the guys at Best Buy. I recommend doing the same.

PrinceHall
PrinceHall

If you have insurance through your cell phone carrier the deductible for a new phone would be 50-100 dollars.

iPad Library Project
iPad Library Project

Google Nexus 7 sells at cost $199, one iPhone 5 sells at $800?

For an average iPhone 4S selling price at $538, if Apple has an average gross profit margin at 53%, then each Apple iPhone 4S costs $252 to produce, excluding advertising and distribution and overhead costs.

How come Apple sells iPhone 5 at $800?

Samsung has sold 10+ million units of Galaxy S3 in the first two months of release, de facto taking away Apple's potential buyers.

Will Apple's fat profit margin be able to last forever?

- iEDU.me iPad Library Project Kids Reading 1000 App-Books A Year