Brave New World: The iPhone

The latest gadget from Apple hit the market on June 29th to extremely high customer anticipation. However, after obtaining their new iPhone, many consumers were unable to activate their new phones because of an overload to the AT&T system. The new iPhone may be flashy and attractive, but like the original iPod (which debuted in 2001), there are likely to be unexpected problems. If history repeats itself, consumers may want to wait to buy the new iPhone until Apple work out the bugs.

One of the most attractive features of the iPhone is that it combines the ever-popular iPod with the utilities of your cell phone. Pocket and bag space becomes plentiful, as this slim slick gadget is only 4.5 inches high and 2.4 inches wide. As one gentleman pointed out to me, it really does save men space in their pockets. The iPhone allows you to listen to music, watch videos, and use the internet, all while being able to place these options on hold if you get an incoming call. In addition, you can easily conference calls. Also, the iPhone has visual voicemail which allows the consumer to pick and choose what message they want to listen to. This is all done with a finger-touch screen.

New users are apparently plagued by activation problems and rollover (when they switched from another provider) issues, as they sought to add their contact lists to the new phone or even make calls. In fact, most consumers were unable to use any non-emergent features that would include everything on the phone with the exception of being able to dial 911. Let’s face it without those features, it’s just another boring cell phone. Activation on the iPhone is reported to be complete if you are a new wireless customer, or current AT&T member, in about 20 minutes. If you are moving from another provider, it can take at the most 24 hours. However, you can supposedly make calls from your new iPhone during that period, but you will still receive calls on your old phone.

Lost in the excitement of the debut were the high price and the significant hidden costs. The initial cost of owning an iPhone is $499 or $599 (for the 4GB of 8GB). Apple has entered into an exclusive contract with AT&T service provider to sell the iPhone, so if you are a Verizon customer you’ll have to be content with alternatives or pay even more to break your contract. The contract with AT&T is a standard two year agreement with the iPhone.

There are three plans that AT&T is offering, $59.99 for 450 minutes, $79.99 for 900 minutes and $99.99 for 1,350 minutes. All these plans comes with unlimited use of “data” i.e. the email and the internet, rollover minutes, 200 text messages, and visual voicemail. There is a $36 activation fee of the phone as well. That means if you go the bare minimum is $594.99, and that’s before the taxes associated with such a purchase. So a brand new iPhone will cost you easily over $600 for the minimum level of service.

Compared to Verizon, AT&T and Apple seem to be offering competitive plan prices. Voice and data plans at (for the DC area) are quoted the lowest at $79.99 for 450 minutes for use with a Blackberry or smartphone, however, this basement plan does have a limited amount of messaging and internet use. The cost of a Blackberry phone is only $299.99 with a $100 mail in rebate. Overall, if I chose the plan for $99.99, which would appear to give me the same unlimited “data” use that the iPhone is using, and buy the lowest priced Blackberry ($199.99), my total cost would be $299.98, if I don’t add features like roadside assistance or ring-back tones. After a year, however, you begin getting some of the money back on the iPhone, since the plans with AT&T are exclusive to the iPhone and lower than Verizon offers. Provided there are no costs that their website leaves out, it would take over 3 years (which does not include increases to the price of the calling plan or features) to make a $435 difference, still not quite making up for the cost of the iPhone. At this point though, Verizon would offer you a new phone for being a Verizon customer for your two-year contract.

Another potential problem with iPhone is the touch screen. The human body creates natural oils that will grease up the screen and eventually make touching less precise. Another problem that Apple had to deal with when the iPod debuted was the short battery life. That problem seems to be rearing its head again with the iPhones.

The problem with maintenance and warranty on the iPhone is that you have to go to an Apple store for maintenance, and if additional repair is needed, you have to pay the shipping costs to send it back to the manufacturer. It is also up to the individual consumer to sync and activate the iPhone from home with their iTunes. It cannot be activated in the store. Also, unlike regular phones that AT&T has, but like pda’s, if it breaks you’re out of luck.

The iPhone is not at all bad. But Apple has proven that the first time is never a charm. Consumers may be wise to delay getting iPhone 1.0. Maybe when 2.0 or 3.0 comes out, it will be worth the price.