PalmAddicts has created a comparison of cost between a free Treo 680 and an iPhone on the AT&T network. To be frank, the results of the comparison shocked me and they may shock you. Not the outcome I was looking for.
Someone might argue that the iPhone’s battery may need to be replaced by then, which is true, but then again I’ve gone through several different Treos over the past 4 years because their either broke or wore out. So for the purposes of this discussion let’s not factor in hardware wearing out. By the time the iPhone battery needs to be replaced, there may be other alternatives, as there are today for iPod batteries which wear out.
Read on for the surprising money shot.
Which is more expensive: a free Treo 680 or an iPhone? [PalmAddict]
A critical error by this site, is simply summing up the costs. The actual method for valuing this is by using the NPV (or net present value) of the costs.
Think of it like this – it costs more to spend $600 now, than $600 a year from now, since your money is earning interest in the bank. I’ll send a more detailed follow-up to the original author, but I hope he actually reads it.
Based on a 5% interest rate, the 2-year NPV for a $600 iPhone is $1427.92 and the 2 year for the Treo is $1183.89. Not quite so snazzy a comparison now.
You are assuming that the money is otherwise in the bank earning interest, which is an assumption.
You also ignored the detail of the article which mentioned that the monthly taxes on the Treo’s rate plan are going to be higher. Given the extremely high rate of taxation of cell phones, I bet it is close to the $10/month that you are talking about.
Also, it’s not as if you get to wait 2 years to pay for the Treo. It’s monthly.
As the original author, I can also say that it has been more than a week since “Anonymous” posted his comment here, he has not sent me a more detailed follow-up.
Even if $1427.92 for the iPhone, and $1183.89 for the Treo, are accurate figures, I wouldn’t consider a $244.03 difference over two years to be a deciding factor in which phone to choose. It’s the other differences between the two phones that the user should be looking at. These price comparisons between the iPhone and other phones and contracts are silly.
…I meant that the price comparisons that claim the iPhone and its ATT contract are overpriced are silly. The PalmAddict article isn’t.