Apple joins AT&T with no-contract iPhones

No-contract iPhones are now available at both Apple and AT&T stores.

(Credit: CNET)

Apple has joined AT&T in offering iPhones without a contract at a hefty price.

Last week, AT&T announced plans to sell iPhone 3Gs without a two-year contract for $599 and $699, but Apple did not respond to inquiries as to whether it had the same idea in mind. Now AppleInsider is reporting that the company has indeed rolled out the similar no-contact offer at its stores, which makes sense, given the tight partnership between the two companies.

It's still a little difficult to get a sense of how many people would jump on such an offer. Such offers are very common in other parts of the world, but mobile-phone shoppers in this economic climate might prefer to take their savings up front, especially since all iPhone 3Gs sold in this manner will still be locked to AT&T's network.

The moves, however, are probably just another signpost on the road to the next iPhone. Another AppleInsider report on Friday that AT&T has started offering the $199/$299 subsidized prices to existing customers without iPhones who have yet to become eligible for upgrade pricing seems a strong sign that the carrier wants to clear inventory ahead of a new model.

Last year, Apple and AT&T ran their iPhone inventory down to essentially zero ahead of the launch of the iPhone 3G. They might do something similar this year, because if the plan is to announce a new iPhone at the Worldwide Developers Conference in early June and ship it later (perhaps timed with the "summer" launch of the iPhone 3.0 software), demand for the iPhone 3G would fall off a cliff after the announcement.

[lonestarState]

Soon I will be able to search my custom BuildaSearch creation using my no-contract iPhone. Might look into jail-breaking the mobile unit!

[ddhboy]

Yeah, but you still have to activate it in the store right? So you can't just break ranks with AT&T all together.

[Tom Krazit]

AppleInsider said no, but I haven't been able to verify that yet. Would make sense, though, the in-store activation was added with the iPhone 3G to lock it to AT&T right at purchase.

[ThatGuy2-1]

Unless it's going to be unlocked phones, I don't see it being a "big" seller. Sorry, people are already staying away from it because of AT&T's high plan/data costs, extra $s for exchange server (free on the BB?) and the lack of push, MMS, video and other simple functions (which may be fixed with FW3.0), but a LOCKED phone for that price?

[bonesbautista]

I don't understand what Apple's thinking here. Locked to the ATTWS network, locked to an ATTWS iPhone plan, no subsidy for paying for that data/media plan. Really, I'm wondering more about the nitwits that would pay $300 more for a device when there's no benefit. ATTWS ends up being the winner here because it doesn't have to pay the subsidy to Apple.

[fcz1]

Does anyone find it odd that in the background of that picture there are signs for Virgin, a competitor of AT&T?

[rollcage]

It's not that odd. The story is more about Apple releasing phones without a contract and Virgin Mobile is an iPhone partner in Australia...

[Tom Krazit]

It's a reflection in the window: the Apple store in downtown San Francisco is across the street from a Virgin Records store. Or was, I should say, the Virgin store is going out of business.

[BogusBasin]

Next up: Apple released a netbook for $300. It looks like a laptop with a screen, full keyboard and trackpad. Inside there is nothing but a battery the full size of the laptop. It connects to the iPhone and uses the processor and memory from that. 48 hour batter life for the book and the phone. Game over. Amen

[clamenza]

Game over for Apple, maybe.

[Steven M.]

This is hilarious! I've had a no-contract iPhone for 21 months now. It's called "Pick Your Plan" and I paid the regular price for my iPhone on day one of its release. If you pay $599 or $699, you are a sucker.

[marin-jim]

Would you elaborate on this? I haven't seen this approach....

[lightningrob]

I'm only interested in this if I can skip the voice plan and pay only for the data plan.

[Vegaman_Dan]

iPhone vs Touch

The OS updates for the iPhone are free because the unit is a subscription based item and the costs of the phone are spread out over the life of the unit- that's what Apple was trying to say last year. It was an accounting decision.

The OS updates for the iPod Touch were charged $10 because it was a one time purchase without a subscription, therefore the same accounting decision was 'legally required' as per Apple at the time.

Now the iPhone is available from several sources sold only as hardware without a contract. Does that mean the OS updates for the iPhone will have to determine if it is a subsidized model? Will the unsubsidized / contract free phone be charged for any and all OS updates as Apple had done with the Touch? Will the iPhone continue to get free updates?

Will this mean that Apple will be no longer able to justify charging $10 to Touch owners for something iPhone owners get for free?

[Vegaman_Dan]

The OS updates are $20, not $10 as I mentioned mistakenly.

[clamenza]

No accounting decision requires a company to charge for upgrades. It's such a bold-faced lie that the fanboys and gals buy into and the supplicant media repeat, it's more than embarrassing. I don't think they've justified it at all, except to the mindless commercialized consumer-bots.

[Galenn20K]

This is ridiculous and not worth it, Apple needs to end its contract with ATT soon or else they'll never really get the money out of it that they really want.

We all KNOW Apple is Greedy to a Fault.

[jrfields321]

I wondered if they are going to charge $30-$45 for the data plan on theses phones. I understood that charging an extra $10 more was to make up the difference in the price of the 3G iPhone over the 24 month period ($240). I think that If they do not match the price of the 2G iPhone's data plan, then this is only a means for them to dump their existing inventory out to jail breakers.

[lang0502]

It is a waste of money to get the phone without a data plan. If you don't want a contract there's a cheaper way to do it: buy the regular $199 phone, cancel service after 30 days. You pay $175 cancellation fee (and the $80 for the one month of service). You are only out $455 using this method and your phone is free and clear (still locked to AT@T like the $599 version).

[ddhboy]

I'm willing to bet that if you do that, it negatively impacts your credit score.

[codynews]

@ddhboy: You are willing to bet, but you'd lose. The $175 is the cancellation fee. No impact on credit score. The impact on credit would be if you DIDN'T pay the cancellation fee and just quit paying your bill.

[mavrick_2cool]

I agree with lang0502. This $599 is total rip off. Even if you consider tax and activation the final price will be (199 + 175 + 80 + 35 + 30tax) = $519. This phoe is free from contract and can be used with any service provider. ATT rep told me ATT doesn't unlock it but you can get it unlock outside. :)