• The New York Times, Tuesday, June 10, 2008 11 AM

Just in case you crawled under a rock yesterday, Apple CEO Steve Jobs took the curtain off Apple's new 3G iPhone, which surfs the Web faster (we've been told it operates at near-broadband speeds), deploys Global Satellite Positioning technology, and retails at the new, seemingly cut-rate price of $199 (the iPhone launched nearly one year ago at $499). Of course, in exchange for the discounted price, you also pay $10 more per month for data service.

But the biggest news of all was what Apple didn't say, says The New York Times' Saul Hansell. Rather, AT&T, the iPhone's carrier, did: according to a press release from the telecom giant, Apple will no longer receive a portion of monthly usage fees. Instead, the carriers are granting Apple a subsidy so it can sell its 8-gigabyte iPhone at $200 instead of $400. As Hansell points out, a $200-$300 subsidy is normal for the industry, as the carriers usually recoup the cost in the form of guaranteed service contracts. In this case, the AT&T-iPhone is for two-years, minimum.

A little quick math reveals that after two years, consumers ultimately have to cough up more cash ($240) than they would have for paying the extra $200 up front. Of course, the much-faster 3G data service might be worth the extra $40. Even so, Hansell says we should be calling this an iPhone price increase, instead of a price cut.

Read the whole story at The New York Times »