Is Apple’s $649 No-Contract, ‘Unlocked’ iPhone Worth It?

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We’d heard rumors of a Wednesday launch but, hey, this is Apple we’re talking about. You never quite know what you’re going to get. I took a road trip with Apple once and even though we took turns driving, Apple never slept—even when it was my turn to drive. How weird is THAT?


You can now buy the iPhone 4 directly from Apple for $649. It’s an “unlocked” version, which means there’s no two-year contract involved and you can use it on whichever network* you like. NOTE THE ASTERISK!

*You can use it on AT&T in the United States. And that’s it. You could technically use it with T-Mobile for voice calls but it wouldn’t leverage T-Mobile’s 3G data speeds.

And as our own Harry McCracken points out, you don’t really save any money if you’ll be using the phone here in the U.S., as AT&T doesn’t offer service discounts for off-contract customers:

“Here’s how the total cost breaks down, assuming you choose the cheapest voice and data options and stick with AT&T for two years:

Locked AT&T iPhone 4 minimum cost: $1758.76 ($199 for a 16GB phone, plus two years of voice and data at $64.99 a month)
Unlocked iPhone 4 minimum cost: $2208.76 ($649 for a 16GB phone, plus two years of voice and data at $64.99 a month)

That’s a $450 savings if you opt for the locked phone with the two year contract–a hefty 69 percent discount.”

It’d even be cheaper to buy an iPhone 4 with a two-year AT&T contract, cancel the contract immediately, and then pay the $325 early termination fee. It would run “$2083.75 total over two years—still $125 less than the total cost for an unlocked iPhone and two years of service,” says Harry.

On the flipside, you’re not beholden to any company for two years (aside from the fact that you have to use AT&T), you can always sell the thing, and if you’re a savvy and frequent international traveler, you can swap out the phone’s SIM card for cheaper rates while abroad.

I have a sneaking suspicion that Apple has something else up its sleeve regarding this whole unlocked iPhone thing, and that this most recent offering may just be greasing the wheels for something else down the line.

We heard rumors of a no-contract, carrier-jumping iPhone in the past that would use a universal SIM (subscriber identity module) card that would work on any network and would use software to hop between whichever networks were cheapest in a given coverage area. Something like that is probably at least a few years off and you’d have to get the carriers on board with the idea but if anyone’s going to shake up the wireless industry like that, it might as well be Apple, right?

More on How an ‘Unlocked’ iPhone 4 Would Work