iPhone 3G pricing

Much has been made about the fact that the new iPhone 3G, while having a retail price much lower than the original iPhone ($199 versus $599 for the original iPhone or $399 price for the current equivalent model), has a monthly data plan rate much higher (I pay $20 a month now for unlimited data and 200 text messages, and the equivalent plan on the new 3G will cost $35 a month).

But the truth is, if Apple's goal is to drive up the volume of unit sales, this pricing scheme is great. People hear $199 and that's what they fixate on, not on the monthly bill which will chip away at their wallet over many months. Lowering the retail price of the handset while jacking up the monthly fees is smart pricing strategy.

I personally haven't decided whether to upgrade to the new model, but I have no doubt that millions of first-time buyers will find the new handset pricing just the reason to jump in. Apple set fire to the Motorola house and shattered some windows at the Blackberry mansion, and now, with this new pricing, they've returned with gasoline and a bazooka.