BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Market Movers >  

The Economics Of The Iphone

Market Movers

by Felix Salmon
Main
Cities vs Skyscrapers   Is a Windfall Tax a Populist Pander?

Recent Blog Posts

Links

Jun 10 2008 12:00am EDT

The Economics of the iPhone

I'll leave the likes of Dan Frommer to do the big-picture corporate economics of the costs and benefits of changing Apple's business model. I'm more interested in the user end: if the price of an iPhone drops by $200, but your phone bill rises by $10 a month, how much of a savings are you really making? Remember that you're tied in to a two-year contract, so over the course of those two years you end up paying an extra $240. Discount that by your own personal discount rate, and it probably ends up pretty much a wash.

And what about the Mobile Me service at $99 a year? ("Exchange for the rest of us", Apple calls it.) Aren't you basically paying a hundred bucks for exactly the same kind of automatic synchronization that Exchange users are getting for free? Actually, in this case, no. It turns out that data plans for business cost $45 a month, $15 more than the consumer plans. (Both are unlimited.) So essentially Exchange synchronization is "free" if you pay an extra $15 a month, which makes $99 a year look like something of a bargain.

. □

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com
Like Portfolio on Facebook

Come on, like us—you know you want to.

Follow Portfolio on Twitter

Follow us and if you're an innovative entrepreneur, we'll return the favor.

The Mix

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

People & Ideas

Whisky To-Go-Go

Now there's a company that let's you taste your knowledge of fine blended Scotches by mixing a whisky of your own. Read More