{The Bad}
5 Reasons to Wait

If you earmarked 200 bucks for an iPhone 3G on June 9 when it was announced, you’re not alone. But you know what Mom would say: ”If all your friends jumped off a bridge, would you do it too?” Mom’s got a point. So before you take the leap, here are five key points to consider.

{Reason 1}
Size Matters: Because we all know a 32GB iPhone is coming.

Of course it is. It must be. A 32GB iPod touch is available today for $499. And the price of flash memory has fallen sharply in the past year. In fact, if you search Google for the terms “flash memory” and “Apple effect,” you’ll find dozens of articles about how Apple’s massive orders for NAND flash memory chips have been one of the main forces driving growth in the industry. (Besides the iPhone, flash memory is used in the iPod nano, iPod shuffle, iPod touch, and in 
the solid-state disk drive available as an option for the MacBook Air.)

Recently, prices have been slipping—an 8Gb memory chipset (which is equivalent to 1GB of memory) was down to $2.28 at the end of June 2008. That’s a 31 percent drop from its price of $3.26 at the end of May, and a whopping 72 percent less than its $8.25 price in June 2007. And in early July, the first sign of these lower costs being passed on to consumers in the form of price drops hit Apple’s retail line: The solid-state disc option in the MacBook Air dropped to $599 for a 64GB drive—when the Air was first introduced, that same upgrade cost $999.

Samsung Electronics, which supplies the NAND chipsets to Apple, told its other customers to expect reduced supplies in July so Samsung could fill Apple’s latest order for 50 million 8Gb-equivalent chipsets, which is enough to make 3 million 16GB iPhones, 6 million 8GB iPhones, or some combination. Apple needs to move at least 7.7 million iPhones from the 3G launch to the end of 2008 to hit its goal of 10 million sold, which shouldn’t be too tough since it’s debuting in dozens of new countries. But a late-year refresh could provide a welcome boost, turning July’s hot product into the must-have holiday gadget. Think of all the extra apps, movies, and music a 32GB iPhone could hold—that’s a lot of extra coin jingling around in the iTunes and App Store coffers to boot.

Of course, Apple doesn’t comment on its future product plans, but we expect to see a 32GB iPhone on the market by the end of 2008.

{Reason 2}
Money Matters Too: Because it’s not really cheaper.

Sure, the $199 price tag on the 8GB iPhone 3G looks great, especially compared to $399. And Apple certainly did its part with the “Half the price” tagline. But what does the iPhone 3G really cost? Turns out, the new “half price” isn’t really half the price. Worse, in the United States, over the life of the required two-year AT&T service contract, the new iPhone is actually more expensive than the original.

The 8GB iPhone was most recently selling for $399, with a minimum monthly plan of $59.99. That put total cost of ownership at $1,838.76 for the mandatory two-year contract. The iPhone 3G sells for $199, but AT&T has increased the cost of the data plan by $10 over the cost of the old EDGE plans. With a monthly cost of at least $69.99, the iPhone 3G will cost $1,878.76 over the same 24-month period, and that’s without any text messaging. To get the same 200 texts that are included in the older plans, you’ll have to add a $5-a-month text plan. Over the course of a two-year contract, the new “half-price” iPhone 3G will cost at least $1,998.76, or $160 more than the original iPhone.

Current iPhone owners are eligible to upgrade to 3G at the $199 price. If you’re an AT&T customer with a different phone, however, you’re subject to some secret AT&T math that takes into account how far you are into your existing contract and how good you are at paying your bill on time. If you don’t quite make the cut, you can still get an iPhone 3G, but you’ll have to pay an additional $200 for the privilege.

Of course, those piles of extra cash are getting you GPS capabilities and data speeds approaching Wi-Fi, but the truth is the iPhone 3G is not half the price of the original and is in fact more expensive, despite what Apple’s marketing department would have you believe.