The aftermath...
Tuesday, June 9, 2009 at 12:43PM 
OK, So I was wrong about the new iPhone and they did announce it at WWDC 09. I have to say, they left it so late that I did think they might have missed it!
But it will be with us next week and yes, of course I want one!
Lots of gnashing of teeth and lots of upset people over on twitter about the pricing and lack of upgrade pricing here in the UK.
First off, the tethering pricing is just ridiculous, really. Totally off the wall.
Secondly, there is no subsidised upgrade path for existing users - Ouch!
Basically, you need to pay off your existing contact on the 3G iphone (in my case £245) then buy a new phone and a new 18 month or 12 month contract. That would take the cost of the new 32GB iPhone 3GS to over £500 plus £30 per month.
The problem here is that O2 took the hit with the upgrade for existing users from the 1st Gen iPhone to the 3G. I presume the numbers don't work out to do it a second time, so although it looks horrendous, a contract is a contract and there's not a lot you can do about it. In hindsight, perhaps it would have been better to offer 12 month contracts knowing that a new iPhone would be launched in 2009 (well a pretty safe bet!) Had a 12 month contract been available, I probably would have gone for that.
The experience has influenced what I'll be doing about the new iPhone 3GS.
Of course, I need one for my show (no I do, really), so it's a legitimate business expense (phew!) so I could write off the existing contract and let the business pay for it. It would make it feel better to say it's not actually a phone but my mobile Mac. I'd feel better paying £500 for a state of the art mobile internet device (which really what it is). The thing that really grates is having to take out another 18 month contract for £30 per month. I just don't use the phone that much, and what happens in another 12 months time?
The next iPhone is released with HD support, front facing camera, built in iChat, 802.11n, etc, etc.
So we'll be in the same boat again!
Some figures on the new 32GB iPhone 3GS and my options
Terminate contract and Pay Monthly = £245 + 274.23 + 18 x £29.38 = £1048.07 over 18 months
OMG!!!
Now luckily, I have an escape route.
My lad is off to University in September and will need a decent phone. So he will be the lucky recipient of my iPhone 3G with another 5 months contract left on it. So I won't cancel the contract. Yes, I'll still have to pay the £245 over this time but at least it will be getting used, I'll not be just giving O2 a nice present! This leaves me with two options for buying a new iPhone:
Pay Monthly = £274.23 + 18 x £29.38 = £803.07 over 18 months
Pay As You Go = £538.30 over 12 months
PAYG also includes 12 months unlimited web and Wifi. £25 worth of calls will probably last me a couple of months! There's no visual voicemail or call merging but that's no big deal for me, I hardly use it as a phone. There is also no Internet tethering but at the current prices, who cares.
So in 12 months, when the next phone is available, I'll have no contract and can upgrade with no penalties.
So in my eyes, the PAYG deal is the better deal for me!
What have I missed?
Reader Comments (15)
Yes, the PAYG offer makes some sense and I hadn't thought of that. It's still too much money personally but it could make sense if you don't use it as a phone much (which I don't).
I am disappointed with the lack of upgrade path early by O2 but do understand that a contract is a contract.
However the problem for me is that this is technology and technology moves quickly. Hardware every 12 months is not unusual but O2 / AT&T etc want longer contracts which do not fit. This needs resolving if only to stop all of us wanting-to-upgrade-their-iphone-but-can't-afford-to users from getting upset on a regular basis.
Don, you could always go for the 16GB S and cut the price to £440.40.
I'm actually considering the 8GB for £342.50 as a first entry to the iPhone. I currently have a 2 gen Touch 8GB and use a standard mobile but would like to combine the two. My requirements are very simple but the facilities offered in going for the Apple solution seem to fit me.
Did read a few posts here and there suggesting that O2's contract may not last too long into the future.
David
I'd never considered PAYG as an option until Reading this blog post - thanks. Although not too far from your location, my O2 coverage is so bad I have to carry another phone on Vodafone for calls. Fortunately I'm out of contract now on my 1st generation iPhone, so I can start afresh. Why does the iPhone always capitalise the r in Reading?
Don what u could do is sell your current iPhone 3G either on eBay or mazuma mobile who offer £200 for it and u don't even have to include accessories ( great service btw), then buy the new 3gs on pay as you go and then pop in your pay monthly sim in and your only £240 worse off if u get a 16gb 3gs. I might do this but I'm not sure. The pay as u go handset is same as pay monthly so it will work with visual voicemail, I've had to do it myself with a damaged 3g.
@David Reid - the 8GB is not the 3G S, so you wouldn't get the 'cool' apps that come with it.
Don, whilst the cost of tethering seems high, it is no higher than having a broadband dongle on a monthly contract. For those that have a use for it this means that the iPhone will serve an added purpose. I was going to say two purposes, but the iPhone is much too versatile to be so limited! ;-)
What you've missed is that, for whatever version or contract you consider, the iPhone is an absurdly expensive bit of kit to own. Take depreciation and exit fees into account and it enters the realm of fantasy and yet, for all that, the hordes will still be salivating over the next 10 days to get their hands on it. As for the "woe is me, I'm locked in," brigade, surely there are greater injustices in this world?
Take a step back and you have to admire the Cupertino marketing genius. "I hardly use it as a phone," yet you are still considering paying hundreds of pounds to go "one louder." Mad. Just enjoy the one you've got.
I for one am looking forward to 3.0 arriving for my iPod Touch 2G which will hopefully last me for a good few years yet. Open networks abound these days so getting online is not much of a problem to check mail etc. It's a marvellous bit of kit.
I've a Panasonic Lumix LX3 camera, incidentally my first digital camera, and that will also fill my needs for digital capture for the foresseable future. It's not stuck to my phone, but hey ho. My 30-day contract on O2 costs me £9.79 per month which I use with a battered hand-me-down phone.
There was a time when we replaced things when they fell apart.
I agree with the notion of saving *some* money by going for the lower capacity device. In my experience the higher the capacity the more likely you are to just fill it up with albums - which you will never play. My iPod Touch (16gb) currently holds 12.2gb of audio which I think is 101 albums. How many of those will I ever play? After all it takes a matter of seconds to add or remove an album. The same applies to movies and podcasts.
Like others I am a little dissappointed about the prices/tarrifs and I was convinced (up until yesterday) that this time around I could actually justify the cost. We shall see...
I fully understand what you’re saying and yes, the Cupertino marketing genius is a sight to behold. I have to say though that I’m not typical of many Mac fans in that I do really need to keep abreast of the latest and greatest. The iPhone is a cutting edge piece of kit that has all sorts of implications for the future. It’s tightly integrated into the Apple ecosystem and as I make my living keeping on top of Apple and all its facets, it’s really a no brainer that I need to familiarise myself with the new Phone. Not just from the training angel with ScreenCastsOnline, but also to avail myself of any commissioned work that may require it, not to mention to be able to speak with authority on any of the various Mac podcasts I pop up on from time to time.
So I’m really not “Mad” honest!
If I was a normal user with these expensive decisions to make, there is probably no way I could justify any of these choices.
Thurston Deadville - you sound like a right old git there :) Why aren't we using gas lamps and still going about on horse and cart then?
If (like you) you don't LOVE this stuff, then its very hard to explain the deep desire to upgrade.
You way is your way, mine is mine, different strokes and all that.
M.
Fair comment Don.
I suppose I'm just a little jaded by the stuff I've read today about the peasants mobilising against O2. If only people were so passionate about slightly more important things in life. They've still got a phone, which, up until about 6.30pm yesterday, was the best phone around. The world is still turning.
Still, if I were you I'd still try to "borrow," one in some capacity, professional or otherwise. I don't think that getting up to speed on this slight revision is going to take more than a wet Britiish summer afternoon to crack. Surely preferable to having to write off as such a major expense?
By the way I am actually quite fond of macs and really enjoy your great screencasts. My G5 iMac is 4.5 years old and will someday be replaced, but I'm more inclined to listen to it than Apple's marketing division as to determining when that day comes.
I'm going to wait until June 17th when 3.0 comes out, upgrade my Touch 2nd Gen and see what it's like. I've survived all my life without an iPhone and carrying on for a while longer without one will only heighten the sense of delayed gratification if I change my mind in the future.
Anyway life isn't all about financial sense - we'd be very bored and very boring if ALL our decisions were made using these criteria - pint of beer anyone? or won't it fit the monetary plan!?
Obviously you have to be sensible within the confines of your own situation but surely most of us considering buying an iPhone of whatever configuration are adult enough to figure it out, no?
I have to say I'm slightly confused by all the people on the internet complaining that they have to buy themselves out of the contract (which they signed on that dotted line, right by the bit that said something like "This contract is for 18 months. If you want to terminate it ahead of time, you'll have to pay for it in full"). Every phone contract in the UK is like this, always has been. Well, except of course when the iPhone 3G came out. But then o2 explicitly said that they were only allowing people to upgrade early this _one time only... never again_. (Of course in reality I think they did it so they could stop paying out for the EDGE upgrades to their cellular network they were doing to get people a half-decent data service... although the marketing types would never tell you that).
But anyway, regarding getting the new phone... is it possible to just buy a PAYG one, and then put your pay monthly iPhone SIM in it as @Ash suggested? Seems like that would be the best option if o2 allow it.
Oh, and regarding tethering. I don't want to bother with that either. I ended up buying a PAYG broadband dongle for £29 and just pay to use it on the rare occasion I need it (it's £2 a day with unlimited The Cloud wifi). That way you can keep your phone for phone calls and text message whilst you're in the airport/coffee shop/etc.
The thing that annoys me is that I was planning on giving my old iPhone 3G to my wife who would then take out a Pay Monthly contract for the phone at £30 a month and is not an O2 customer. And I'm sure I'm not alone with this so in my view by not offering a reasonable upgrade option then they are potentially losing new customers too.
Yes it's entirely possible I'm using a PAYG iPhone 3G to replace the 3G that got damaged, there's nothing different once your own sim is in there, it's exactly the same and infact if you do get a PAYG iphone you have to change the settings yourself to use it on on PAYG because it's set up for pay monthly data connection.
Y