What is going to happen to the price of the Touch?

[Peregrine]

With the iPhone dropping in price, now a 16 GB iPhone is the same price as a 8 GB touch (or will be on July 11), will the Touch go down in price. I was wanting to get one before July 13 when I fly to Alaska from Florida, but I don't want to spend $100 more than I need to.

Supposedly there is a 14 day price guarantee at the Apple Store, if the price goes down I can get reimbursed.

Or should I just get the iPhone and not activate the phone? I don't need 2 cell phones.

[Yuiichi]

I'm not really sure what's in store for the iPod Touch come July 11. Here's how I see your situation though:

-Wait at least till the 11th to buy a Touch, as you'll have to pay $10 to get the new 2.0 firmware if you buy it before.
-I assume that by "getting the iPhone", you mean iPhone 3G. Unfortunately, it's not possible to buy one and not activate it, unless you want to pay a hefty penalty that AT&T will be imposing. I also assume that you don't want to buy one now and spend $200 more.

I hope this helps with your decision.

[philbowell]

The price may drop a little, but I wouldn't expect it to drop massively. Don't forget the mobile networks are subsidising the iPhone. That means they are paying Apple for the ability to sell the phones at $199. Without that arrangement we wouldn't be seeing the iPhone at such a cheap price.

[houltmac]

Has anyone seen a direct quote saying the iPhone is actually subsidised at the $199 (8GB) price point? Thinking about it, the parts they are buying/making are being done én mass and have been for a while. I would expect 3G chipsets to be cheaper than 2G (it's far more popular and thus larger masses again), and I would imagine there are other savings I am not thinking of.

Overall I have to wonder if the iPhone really does just cost $199 now.

[baseballboy828]

I'm not sure if the iPod price will drop. You are committing to spending $360 a year on the iPhone in addition to a normal voice plan. The total cost of the iPhone 3G over a free phone on which you don't use data access is $200 for the iPhone + 2 years * $360 a year for 3G data. So the iPhone will cost you $920 to use for your contract, whereas the iPod will cost $300. Apple is getting whatever subsidy the phone companies are doing, so I think they want to make the iPhone cheaper. People look at it and see it as $200 vs. $300 for an iPod, ignoring the high service costs. The iPhone being cheaper makes the monthly bill from the phone company seem less harsh. If they were the same, more people might think about getting an iPod Touch with no monthly service fees attached.

[notabadname]

I'm with BBB on this one. His numbers are right on. Your looking at about $828 US for a full year contract at $69/month. It only costs ATT $8.33 a month to subsidize $200 over a 2 year contract. Easy money for them. They know if you switch, you will probably be a long term customer beyond even that, and buy iPhone version 03, and so on. That is a smart financial move for ATT. It shouldn't affect the iPods normal cost.

[houltmac]

Originally Posted by houltmac

Has anyone seen a direct quote saying the iPhone is actually subsidised at the $199 (8GB) price point? Thinking about it, the parts they are buying/making are being done én mass and have been for a while. I would expect 3G chipsets to be cheaper than 2G (it's far more popular and thus larger masses again), and I would imagine there are other savings I am not thinking of.

Overall I have to wonder if the iPhone really does just cost $199 now.

While quoting yourself may be bad etiquette, I thought that it might be worth pointing out that I am likely right

Check out this link to see why the iPhone may cost as little as $100 to manufacture (I realise there are other costs to Apple, but they are seriously minimal in these quantities).

[philbowell]

Interesting link Matt. I'm somewhat inclined to agree, but I still believe that (as the article suggest in the last paragraph) Apple are still getting a fee from AT&T, O2 etc… Otherwise there would be no benefit for them to partner with a carrier and lose revenue from the contracts, they'd just sell the device for use on any network.

[houltmac]

Remembering that their name is on the line however. If the service doesn't match the promise of the device...

BTW: I also got confirmation from a O2 tech today that the top 3G speeds on the UK O2 network is up to 1.8Mbps (the single slowest HSDPA 3G speed available).

[philbowell]

Ha. That really doesn't surprise me. The state of our wired broadband doesn't provide much hope, let alone the state of the wireless!