iPhone

Apple announced the iPhone a few weeks back and people have been going crazy every since. If you want to get your hands on this technological marvel, you'll have to meet a few guidelines. The iPhone is exclusive to AT&T (Cingular) for the next two years. It is also priced at $499 (4GB of memory included) and $599 (8GB model), so its not exactly an impulse purchase. Lastly, you'll have to sign a two-year contract with AT&T for a plan that starts at $59.99 or current customers can keep their current plan by adding an iPhone data plan for $20. The early numbers report sales of 500, 000 units over the weekend. 100% of eligible stores had iPhones available on Fri and Sat. when the device launched and over 70% of stores still had inventory on Sunday. At least you can say Apple was prepared for the onslaught of consumers that were willing to pony up for this new device. There were a few problems with the launch, however. Around 15% of users spent more than an hour trying to activate their iPhones. There were also issues with the packaging that allowed some phones to crash to the ground when the customer tried to open the box for the first time. These things not withstanding, the launch proved to be quite a success for Apple, who expects to sell more than 3 million iPhones by the end of the year and more than 8 million by the end of 2008.

In a related story, a woman paid a young man $800 for his place at the front of the line when the iPhone went on sale. Her intention was to buy as many iPhones as possible with the $20,000 in cash she had brought to the store and then turn around and sell them on eBay for a profit. As it turns out there was a limit of one per customer, so the lady basically gave the kid $800 for her priviledge to buy one phone. He went to the back of the line and used her money to buy his iPhone and accessories. The $800 amounted to about $80 an hour for the time he spent waiting in line.

In another related story, many people bought the iPhone just to see what it was made of, literally. There are videos on YouTube that depict people breaking the iPhone apart with just about anything and everything including a hammer. Some slightly smarter people took the iPhone apart to determine how much the components cost and estimate the total cost of the phone including manufacturing. The total cost of a 4GB iPhone is about $250 and the cost of the 8GB iPhone is $290. So Apple is making $250 to $310 in profit for each phone sold. Industry insiders say that this is a play on the buzz of the iPhone and when the initial run is over, Apple will reduce the price of the iPhone.