Analysts: iPhone Plan Prices Hit Middle Ground

By Daniel Drew Turner  |  Posted 06-26-2007
The iPhone service plans that Apple and AT&T introduced on June 26 are competitively priced and won't pose a barrier to people interested in buying the much-anticipated mobile phone/Internet browser/iPod, industry analysts said.

The iPhone's plans are not prohibitively priced, but neither are they a bargain, said Samir Bhavnani, research director at Current Analysis West.

"All things considered, the plans offered are competitive," he said. "Not groundbreakingly cheap, but not groundbreakingly expensive."

Individual plans will start at $59.99 per month for 450 minutes, with options of $79.99 for 900 minutes and $99.99 for 1,350 minutes, according to Apple, based in Cupertino, Calif. This will include "unlimited data" for e-mail access and Web browsing, and will also include 200 SMS (Short Message Service) text messages, rollover minutes and unlimited mobile-to-mobile calling within the AT&T network.

One additional cost will be an activation fee of $36, and AT&T will charge a $175 cancellation fee if a plan is terminated before the end of the two-year contract.

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Apple has said that family plans are also available. These range from 700 minutes per month for $80 to 6,000 minutes for $310.

The iPhone's activation method is unique in the mobile phone world. Buyers will not purchase contracts at the point of purchase, including at Apple's own retail stores, but will instead do it on their own computers via Apple's online iTunes store. The iTunes service will also be used to sync iPhones with the user's music, podcasts, movies and other content via a cradle similar to those used with iPods.

"The plans are unique in that they include voice and data in one price," Bhavnani said. "Most plans require opting for voice, then data plans [are] chosen separately. Most data plans are just an add-on, like adding text or picture messaging. … The intent of integrating the plan is to make it easier for consumers."

As for enterprises, Bhavnani said, "The iPhone has no real recommended e-mail solution for enterprise. But you will see people bringing these into the office, though it's not something a large enterprise will officially support."

"I think that they are extremely attractive and are priced right," said Jagdish Rebello, a principal analyst at iSuppli. "$59.99 for a 450-minute plan with unlimited data is at the right price point to attract the die-hard Apple fan to buy the iPhone at an 'entry-level' price point," he said.

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"I believe that when compared with other voice-plus data plans, the plans by AT&T are extremely attractive, with a total cost of ownership over two years being $1,974 plus taxes. Pretty reasonable," he said.

Rebello added, "These plans are comparable to plans being offered by other carriers. The icing on the cake is that users are not paying any service premium for using the iPhone—other than the cost of the iPhone itself."

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