iPhone 3G: everything you ever wanted to know (but were afraid to ask)

By Ryan Block

posted June 12th 2008 2:10PM

If you're anything like us, just about everyone in your family has called you up this week to ask if you think they should get the iPhone 3G; it really doesn't help matters that there's just an absurd amount of (mis)information floating around about it right now, too. So this one's for you and your fam -- we're dishing out the straight dope on iPhone 3G, a to z, so feel free to pass it on.

So, what's with the new iPhone 3G?

Well, it's pretty much the same iPhone as before -- except now it's down to $200, and has way faster 3G data, A-GPS (which is even better than regular GPS), as well as a flush headphone jack (which is great for anyone who doesn't want to use Apple's bundled headphones). Oh, and it's also a little thinner around the edges, and a little thicker at the center. If you want to know what it was like to try out, check out our iPhone 3G hands-on.

How'd they get the price so low? The iPhone used to be crazy expensive.

Actually, depending on how you do the math it's not actually cheaper. Now, in some countries the iPhone is free when you sign up for service, and in the US you'll pay $200 for the 8GB model -- half what it was a month ago -- so you're definitely paying less up front. But the data plans cost more now, so you might wind up spending more money over the long run.

Um, ok.

Look, gadgets only get cheaper as time goes on, and Apple's sold enough iPhones to continue to lower their cost to manufacture each unit. But more importantly, Apple's re-arranged its business deals to get carrier subsidies. Basically, what that means for Apple is they've decided to stop asking their carrier-partners for a cut of your monthly service fees. In exchange, the carriers have agreed to pay a significant chunk of the cost of your new iPhone 3G in order to get you to sign up.

So everybody supposedly wins: Apple sells more devices and still makes good money, AT&T gets more subscribers, and you get a cheaper iPhone. But there is a financial toll to this: AT&T estimates that helping you pay for your new iPhone will actually cost them $600 million through 2010. But clearly the numbers indicate that the short term cost will be worth it for them the long run.

Does that mean Apple doesn't make as much money per phone?

For all we know Apple might actually be making more money per phone now. With the original iPhone 3G, you paid "full price" for an iPhone -- $600 at its high point. Now you'll be paying no more than $200 (and as little as nothing in some countries) for the 8GB model, so we don't really know exactly how much of Apple's price the carriers are knocking off. We think it's fair to assume it'd still be in the $400-450 retail range, though, if it wasn't subsidied. Which it is.

What's up with the data and SMS pricing?

Well, Apple will be in 70 countries (and counting) this year, so you'll get different plans from region to region. But in the US, users will have to sign up for a minute plan that includes an extra $30 rate for 3G data access (and has no bundled text messages). This is $10 more than the original iPhone's rate plan, which was $20 for data and 200 included SMSs. Matching voice plans start at $40 per month, so you'll basically be able to get started at $70 per month. (We've also got a bit more on AT&T's new plans here.)

I heard you can't activate the iPhone at home anymore, is that true?

This is still a little fuzzy. Here's the deal: with the first iPhone, Apple used to let you buy it in the store and take it home to activate. This process is unlike almost every other phone on the market, but since it's Apple, and because you were paying full price for the device, if you never activated it with AT&T or just unlocked it and sent it to your friend in China or whatever, it wasn't a big deal. Apple made their money on the device, and AT&T didn't lose anything.

But since now AT&T is basically picking up a huge portion of the cost of your iPhone 3G, they want to make damn sure you aren't going to unlock it or send it to a friend. From what we've heard, you'll likely have to start the activation process in-store (so Apple and AT&T knows exactly who's buying the device), and then you might be able to finish it off at home. It's definitely not ideal, but it's the only way they can prevent people from basically walking away with a few hundred dollars of AT&T's money. And at the end of the day, it probably won't be WORSE than buying any other kind of phone though -- anyone who's bought a phone from a US carrier in the last 10 years will be well acquainted with the process.

I heard you have to turn over your iPhone when you upgrade, is that true?

Naw, you bought it, it's yours to hang on to. But if you bought one within Apple's grace period, they'll let you upgrade it free. (More on that below.) But if you bought an original iPhone early on -- which means half of your two year contract is about up -- know that when you buy an iPhone 3G you'll be re-upping that two year contract from date of purchase. So if you buy an iPhone 3G on day one, your new contract will expire on July 11th, 2010.

So if I bought an original iPhone, I can trade it in for an iPhone 3G?

Yes, but only if you bought it AFTER May 27th, 2008. Anyone who bought theirs before that has to live with their purchase -- not that anyone can stop you from showing up to your local Apple store and raising a ruckus.

Can I continue using my original iPhone? Will they still update it?

Yes, and yes! Although the first gen iPhone is officially no longer being made, not even Apple would be so bold as to deactivate the 6m iPhones already out there. They intend to release their big 2.0 software release for iPhones and iPods touch on or around July 11th, which will be the same software running on the iPhone 3G.

What if I decide I don't like the iPhone 3G?

Apple and AT&T offer a 30-day money back guarantee (just in case you don't get coverage in the places you most often frequent). After that you pay a $175 early termination fee (ETF), which goes down each month over the course of your 24 month contract.

Is faster 802.11n WiFi supported?

Nope, it's still just 802.11b/g. Seriously though, you're a fringe case if you need more than 54Mbps to your cellphone.

Can I use voice and data at the same time?

Yes and no: unlike the original iPhone -- which did not support EDGE class A, and sent calls to voicemail while you were browsing the web -- the UMTS / HSDPA-based iPhone 3G should be able to handle data and calls at the same time when in 3G mode. So that means if you get coverage, you'll be fine. But if you're in a spot where there's only EDGE service, you likely won't be able to do voice and data at the same time.

I heard rumors that this thing can get up to 40Mbps over 3G, is that true?

Right now AT&T's HSDPA network is supposedly capped out at 1.4Mbps for phones, but we hear the iPhone is rated for HSDPA 3.6 (3.6Mbps), and AT&T claims its network speeds will go even faster than that by next year.

What did they mean by "greatly improved" audio quality?

Well, we heard about it two ways: Apple claims they've both improved the audio circuitry and quality of the signal to your headphones, but also cleaned up the in-call sound quality. We haven't tested this at length though, so we'll let you know if that's the case once it launches.

Can I use the iPhone on any carrier?

It's not unlocked, so no, you can't. While we're sure that iPhone hackers will figure out a way to unlock it for the betterment of all mankind, you're pretty much expected to use it with your designated domestic carrier, and pay the usual exorbitant roaming fees when you leave the country.

I hear that even though it has GPS I can't use it as a nav unit, what's up with that?

According to the SDK agreement, it looks like Apple doesn't want you using your iPhone to replace your Garmin. But it should still technically be feasible, and they demoed their Google Maps app doing geo-caching, so it's really a matter of intended use. Apple, apparently, doesn't want the device to be used that way -- but at the end of the day it may just be a contract mishap. We'll know soon!

Why doesn't it do video / MMS / A2DP / scrub my callouses / pick up my dry cleaning?

Clearly Apple has the technological prowess to make (most of) that stuff happen, but for whatever reason they've chosen not to support it. Maybe it's because of battery life issues, maybe it's because Steve just didn't see the need. Either way, it's a philosophical decision for them, so they may never change it. Bummer, right?

So what the hell do I do with my old iPhone?

The funny thing about a $200 3G iPhone is that it makes it pretty difficult to sell your original iPhone. Unless you know someone who doesn't need the 3G, we'd suggest keeping it as a backup, or even jailbreaking and unlocking for use when traveling overseas (in places have GSM networks).

If you do try to sell or give away your old phone, do yourself a favor and read about how you can completely erase it. Just hitting the format iPhone button won't actually remove all your data, and you really don't want your private conversations and passwords to be recovered by someone else, do you?

All that's well and good, but I have a question you didn't answer.

42. Just kidding. Leave it in the comments below! If it's a good one (and something we have or can get the answer to) we'll add it in!

Reader followup questions

Chris asks: Can these devices be purchased and given as gifts?

No. You will need to walk out of the AT&T or Apple store with the device activated.

Greekjgg asks: What if I want to buy one for work which already uses AT&T for company account? I can't activate in store, obviously, so will it be possible to to buy without a contract?

We don't have details yet but iPhones for business use will likely be provisioned through your company's IT department.

Tons of people ask: If I purchase an original iPhone from a friend will I be able to get the old data plan pricing? Or will I need to sign up at the new, more expensive rate?

Yes. You can get the old data plan price if someone gives you a device and you establish service for yourself.

Chris and SeditioN VII ask: What's the no-commitment price?

We have not yet announced the unsubsidized price.

We follow up: So you WILL be able to buy it without the two year commitment?

We haven't announced whether or not that will be offered.

Vic asks: Will long-time customers who are otherwise eligible for a free or reduced-price handset upgrades be able to lower the price when buying the iPhone 3G?

No one will pay less than $199 for the 8GB or $299 for the 16GB models. As you know, those are subsidized prices.

Matt asks: Say I just recently signed up with AT&T, standard contract. Now I want to get an iPhone 3G -- will I have to pay more than $199 for the phone because it's subsidized? For example, if I were to upgrade to a Blackberry now, I can't get the advertised $99 price (because I am a new, existing subscriber); my price is $374.

It depends on whether or not you are eligible for an upgrade.

We ask: What is the penalty for not activating the phone in 30 days? How will that be enforced?

[no comment given]

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Comments: on | off

(Unverified) Posted Jun 16th 2008 10:28AM

Neutral

Apple is getting all their money at the time of sale, and no monthly revenue from AT&T. Does this mean that they will start charging for software updates, as they do for the iPod touch?

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