When the iPhone was first announced, I thought to myself “neat.”  then went on with my life.  I had an iPod.  I had a cell phone.  Life was good.

However, a couple of months ago my contract with my wireless provider expired, and a few weeks before that, my iPod was pick-pocketed.

Now, my phone still works fine, but I’m considering upgrading to a smartphone.  I would also like a new iPod.  Suddenly, the iPhone becomes an intriguing option, and the flashy, yet useful (in that “why-hasn’t-anyone-else-done-this-yet?” kind of way), visual voicemail doesn’t hurt.

But, as we’ve all heard by now, Apple is preventing anyone from offering an incentive by dropping the price of the iPhone with a new contract. So, cost is definitely a consideration.

Let’s look at that cost and compare, shall we?

The iPhone supposedly comes in 2 flavors: 4GB for $500, and 8GB for $600. (Rounded. $499 is the same as $500. Deal with it.)  Well, a new 4 or 8 GB iPod nano is $200 or $250, respectively.  I plan to purchase a new iPod anyway, and I’m cheap, so let’s assume I’m looking at the 4GB versions of each.  So, that brings the comparable cost of the 4GB iPhone from $500 down to $300.

“But!” You may shout.  “Most smartphones have media players on them as well; it’s unfair to compare them by reducing the cost of the iPhone by the cost of the iPod!”

This is true; well, the first part anyway.  Any recent “smartphone” would be remiss without some form of multimedia capability these days. I have also played with their media players on other people’s phones and in store displays.  And from my experience, and please do not get personally offended by this if you happen to like them; they all suck.  Do I know the iPhone’s will be any better in practice?  Ostensibly not, I have not seen the finished product yet.  However, Apple has at least some small experience designing in this area, and it’s presumably been part of the iPhone’s design from the beginning.  Besides, if I don’t end up with an iPhone, I’ll be getting a new nano anyway. We’re talking about opportunity cost here; so, for me, this is a fair method of comparison.

So, as I was saying, $300, US, to compare to cingul..er… AT&T’s other smartphones:

• RIM BlackBerry 8800: $500, $350 w/ 2 yr. contract, $300 w/ 2 yr. contract + $50 mail-in rebate.
• Palm Treo 750: $550, $400 w/ 2 yr. contract, $300 w/ 2 yr. contract + $100 mail-in rebate.
• RIM BlackBerry Pearl: $400, $250 w/ 2 yr. contract, $200 w/ 2 yr. contract + $50 mail-in rebate.
• Samsung BlackJack: $325, $175 w/ 2 yr. contract, $75 w/ 2 yr. contract + $100 mail-in rebate.

See where this is going? $300 isn’t a terrible price for a smartphone in this market, some are even at that point with rebates.

Now, I’ll need a voice plan.  450 minutes isn’t enough, I barely fit in 600 now. I can get 900 minutes at $60/mo.

For a data plan, well.. it’s possible AT&T might offer something here since it can’t offer an incentive on the cost of the phone, but let’s not make plans on pure speculation.  However, since the iPhone is just a smartphone without corporate (blackberry) e-mail capabilities, I think it’s reasonable to use the “Smartphone Connect” plans as a reference point: $20/mo for unlimited data.

And we should probably figure on about $10/mo more for miscellaneous services like a messaging bundle or insurance.

To review, that’s $90/mo: $60/mo for voice (900 mins), plus $20/mo for data, and $10 for miscellaneous services. Not terrible for a smartphone, and I think it’s a reasonable estimate given it’s about what I’d pay for a BlackBerry on T-Mo.

Of course, the only reason this works out at all is because I’m planning on buying a new iPod anyway.  Ok, well, that and visual voicemail is sexy.  Just not $200 sexy.  And it all depends on reception, battery life, and call quality too.  It is a phone first, after all… and that new MOTORIZR doesn’t look too shabby either…