iPhone 3G - $199 wins my support (UPDATED)

Monday, June 9, 2008

The 3G iPhone is here. Well, almost here! Steve Jobs announced the latest avatar of the iPhone in his WWDC keynote today. Unfortunately for the users and technology enthusiasts, the phone is not out until July 11th. In any case, let us quickly look at the tidbits thrown at us during Steve's talk.

The 8GB 3G iPhone will indeed come with the $199 price tag. Other models are also lower cost than before. This is perhaps an industry changing move by Apple which has sought to bring smartphones to the mass market. It has, in the process, also shed the exclusivity tag that accompanies most of its products. The $199 tag is likely below the phone's manufacturing cost. So, it looks like AT&T is subsidizing it for us. Besides, I am sure that Apple will make money through the plethora of applications that are lined up for the iPhone apart from the AT&T service contract itself. Essentially, there seems to be a change in its iPhone business model. Apple, while choosing volume over margin with this move, will have to be cautious not to repeat Motorola's mistakes with the highly successful yet unprofitable Razr line of phones.

The 3G iPhone will be GPS-enabled. This clearly puts gadgets like Garmin's Nuvifone at a disadvantage. The phone also boasts good battery life. It has 5 hours of 3G talk-time, 5 to 6 hours of data browsing, 7 hours of video, 24 hours of audio. Not to mention the highly anticipated enterprise support that will have RIMM gritting its teeth.

OLD: This is the old version of the paragraph. I have updated this with more accurate information and have it below. Please read that......[The 3G data speed demo gave clues about the iPhone's modem capabilities. Steve showed that the iPhone was about 36% faster than the Treo 750 and the Nokia N95. The caveat is that these popular phones are based on slower WCDMA and are not HSDPA-enabled. For the uninitiated, WCDMA stands for Wideband Code Division Multiple Access and is the 3G migratory path for GSM carriers. HSDPA stands for High Speed Data Packet Access (HSDPA) and is a higher speed data optimized evolution of WCDMA. So, while not being a fair comparison, it demo showed that the iPhone supports HSDPA. I would personally have wanted to see how the iPhone performed against other HSDPA phones. That would have given me a better metric to evaluate the modem and also obtain clues about the baseband supplier.]

UPDATED: The 3G data speed demo gave clues about the iPhone's modem capabilities. Steve showed that the iPhone was about 36% faster than the Treo 750 and the Nokia N95. Nokia's N95 is HSDPA-capable. Palm also unlocked the Treo 750 to support HSDPA. (I am still a little hazy about the Treo specs. and would welcome additional information that you can provide me on this.) For the uninitiated, HSDPA stands for High Speed Data Packet Access (HSDPA) and is a higher speed data optimized evolution of 3G. So, Discounting any improvements provided by the OS and the browser, the demo suggests that the iPhone has a higher capability HSDPA receiver. A friend suggests that the difference in performance may be because the N95 uses a category 6 HSDPA receiver capable of download speeds upto 3.6 Mbps. The iPhone looks to be having a Category 8 receiver capable of 7.2 Mbps. This does give me clues about the baseband supplier. While multiple vendors including Qualcomm and InterDigital have Category 8 receivers, this comparison gives me more confidence that Infineon's X-GOLD-608 is central to the 3G iPhone.

The $199 tag is great news to me. I was looking to get the iPod Touch and a GPS device anyways. I will wait for my Sprint contract to expire and quickly grab one of these from an Apple store. I am not alone. All colleagues and friends I talked to today are quite bouyant. People who don't have the 2G iPhone are waiting for July 11th. Those who paid a high premium for the previous iPhone are still willing to trade theirs for a newer, sleeker and faster big brother. The 10 million iPhone target will now be a rather conservative estimate.

In summary, the keynote confirmed rumors that a lot of imagined were outrageous. The $199 iPhone is the mother of all deals and is bound to put other smartphone makers in a spot while giving great leverage to AT&T.

Posted by Vijay Nagarajan at 11:00 PM  


AT&T is now charging $30 for the data plan, which is $10 more than what they offered before. So, over the two years of the contract, you would be paying $240 more. I don't see where the savings are, really.

Anush said...
June 10, 2008 at 9:25 AM  

You are right, Anush. The model is changed so the payment is more on an installment basis tied to the service. Like Sramana Mitra says in her article, it perhaps costs the same here, but this time for the 3G service.

SM also goes on to say that this time around Apple will not get a cut from AT&T meaning that the carrier is looking to recuperate the cost of subsidization by raising the plan costs.

Nonetheless, doesn't the price tag entice you to take a second look now? At $599, I was not even bothering to explore that option but for my curiosity.


Vijay Nagarajan said...
June 10, 2008 at 9:31 AM  

Sprint/Samsung's Instinct should be an interesting player in the mobile phone market as well. Even though it is in no way going to be an "Iphone Killer", the initial beta tests on this Iphone look-alike seem to be quite positive and with a Rev.A network to power it, Sprint does seem to have a reasonably decent phone to help boost its sagging morale.

Anonymous said...
June 20, 2008 at 11:02 AM  

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