Review: Apple iPhone 3G (8GB/16GB) | iLounge


Review: Apple iPhone 3G (8GB/16GB)


Company: Apple Computer


Model: iPhone 3G

Price: $99/8GB with 2-Year Contract, $499/8GB without

$199/8GB, $299/16GB with 2-Year Contract, $599/8GB, $699/16GB without

Compatible: PC/Mac

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Jeremy Horwitz

Pros: A faster and more capable version of last year’s breakthrough mobile phone, preserving the world’s best cell phone operating system, a strong combination of voice and data communication features, and iPod-class audio, video, and photo functionality, while adding impressive third-party software expandability and features for business users. Offers enhanced compatibility with international telephone networks, including high-speed towers, as well as keyboard and language support for users in most of the world’s countries. Now includes GPS for limited purposes, and superior sound quality, particularly through its redesigned headphone port.

Cons: Overall cost of ownership is higher than prior model, despite regressing from last year’s stunning design, screen quality, and pack-ins. Battery life for key phone and data features is significantly worse than before, such that users will likely require inconvenient mid-day recharging. Service contracts require additional payment for 3G data services, despite inconsistent or unavailable regional coverage and performance; callers reported certain in-call sound inconsistencies. New model further decreases compatibility with past iPod accessories, including popular ones, while both camera and screen now have noticeable color tints. Defects and battery replacement will likely require Apple Store or other warranty attention during period of use; purchasing and activation can range from simple to confusing or nightmarish depending on your local service provider.

Executive Summary: In an attempt to control gray market resale and unlocking of iPhone hardware, Apple has adopted new pricing, purchasing, and activation policies for the iPhone 3G that are more confusing, restrictive, and time-consuming than before. While some customers will qualify for up-front iPhone 3G pricing that appears to be more aggressive than the iPhone’s, everyone will pay more for the new model and data services than they did for its predecessor. This is offset by the potential of higher data speeds, discussed in a subsequent section of this review.

Apple’s release of the original iPhone in 2007 started with a noble idea: buying a cell phone and signing up for service should be as easy as buying an iPod and downloading music from iTunes. Want an iPhone? Pick it up at a store and activate it yourself at home. Though AT&T glitches clouded the first iPhone’s American launch weekend, at-home activation proved to be a great idea, quickly catching on in dozens of countries. Unfortunately for Apple, users in most of these countries were hacking iPhones to use them on networks that weren’t sharing service revenues with the company. It was great for consumers and the global Apple brand, but cut Apple out of a potential cash flow.

Thus, in what may well be remembered as the single worst change made from the iPhone to the iPhone 3G, Apple unexpectedly did away with streamlined pricing, purchasing, and iTunes activation processes in favor of a confusing variable pricing scheme, as well as more strict purchasing and activation rules. These changes, combined with unspecified failures in Apple’s and its partners’ activation computer systems, managed to simultaneously anger hundreds of thousands of potential buyers on the iPhone 3G’s first weekend in stores; it remains to be seen whether and how these policies will be changed.

Pricing. Apple initially tried to sell the first 8GB iPhone for $599, but had to quickly drop the price to $399 when the first wave of wealthy customers started to dry up. Introduced at the lower price overseas, more price drops were ultimately necessary; Germany’s T-Mobile, for instance, eventually dropped the 8GB model to 99 Euros ($155) to move inventory. Though there were some people who remained willing to buy iPhones at high prices for gray market export, it was obvious that Apple wanted to win over mainstream customers in its countries of choice, and needed more aggressive prices to achieve that goal.

However, rather than actually dropping the iPhone 3G’s price, Apple used a marketing trick to obscure it, promising a 50% price cut that has actually turned out to be subsidized by higher service revenues. The iPhone 3G’s contract-free price in the United States is $599 for the 8GB model or $699 for the 16GB model; prices elsewhere are slightly higher. Customers qualify for certain discounts off these prices only if they meet certain conditions imposed by cell phone providers, then sign up for extended service agreements. Country-by-country iPhone 3G service details are available from this link.

In the U.S., the $599/$699 prices are slashed under one of three conditions: if you are a current AT&T customer who recently purchased another phone from the company, AT&T will sell you the iPhone 3G for $399 or $499 if you sign a new two-year contract. If you’re a new AT&T customer, or a prior customer who hasn’t recently purchased another phone from the company, AT&T will sell you the iPhone 3G for the advertised $199 or $299 price if you’re willing to sign a new two-year contract. Deals in other countries vary dramatically, with some cellular providers basically giving away the phones if you sign up for certain plans, while others sell the phones at higher-than-U.S. prices and require three-year commitments to even more expensive plans.

This all leads to a simple conclusion: you’re going to have to pay more for the iPhone 3G than people did for the original iPhone. In the United States, the minimum service plan is more expensive than before, such that you now need to spend a minimum of $70 per month, up from $60, and must pay separately for text messages—$5 for 200 or 20 cents each. If you go without text messages, you’re committing to giving AT&T at least $1,680 over the life of the contract, or $1,800 with text messages, versus $1,440 with the prior iPhone. In sum, you may pay $200 less up front than the past iPhone, but you’ll then pay at least $240 more over the life of the contract. You’ll pay $360 more if you want the same number of minutes, text messages, and data use as before.

While we view the new pricing as objectionably high, particularly given how overpriced text messaging is, the counter-argument is that users will get better data service now than they did with the original iPhone, so paying more isn’t unreasonable. However, given that users in many parts of the United States and elsewhere do not have access to the 3G networks that are being used to justify the higher monthly service prices, and other users will see marginal or inconsistent performance gains given these networks’ spotty coverage, the first iPhone’s data plan should continue to be offered as an option. Forcing 3G plans on users without meaningful 3G coverage is just plain wrong; we discuss this issue in more detail on the next page of this review.

Buying. As of the date of this review, iPhone 3G can’t be ordered from Apple online or purchased as a gift: you must show up at a store in person to buy and activate one. To be more specific, according to a recently announced AT&T policy, if you’re adding an iPhone 3G to an existing AT&T account, the primary account holder—not the secondary user, or a family member—must physically show up to make the purchase. Most likely, you will stand in a line, and once you get to the counter, you may have to fight with someone about the price and/or the status of your current contract. Thanks to AT&T and Rogers policies and computer problems, iLounge’s editors have all had unpleasant purchasing experiences with their iPhone 3Gs, and as of the date of this review, one editor has been unable to resolve the issues after more than eight hours of waiting in line.

Activating. Instead of allowing you to activate your iPhone 3G at home, the activation process now requires an Apple or cell phone employee to open the iPhone’s box and physically “unbrick” it before you can use it. As noted above, if the employee isn’t careful, your iPhone’s back will be dirty or scratched before you even get to touch it; you may want to insist on handling the phone yourself, or at least protecting its back, throughout the process. At most, the phone will require connection to a computer with a USB cable, or popping of its SIM card tray with the included tool shown here.

Synchronizing. Once you have completed the in-store activation process, you can return home to synchronize your iPhone 3G with iTunes—the USB cable-assisted process that brings contacts, bookmarks, e-mail accounts, calendar data, and media content from your computer to the iPhone’s flash memory. Apart from the rigors of readying all of these types of files to send to the device, synchronization now seems to take much longer than before, as iTunes seems to be constantly backing the device up, managing files, and dealing with things you may have downloaded wirelessly to the device. We have not timed this process, but it suffices to say that it is more time-consuming than before.


Editors' Note: iLounge only reviews products in "final" form, but many companies now change their offerings - sometimes several times - after our reviews have been published. This iLounge article provides more information on this practice, known as revving.

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