What threw everyone for a loop, is that the Apple website said the following:
"For non-qualified customers, including existing AT&T customers who want to upgrade from another phone or replace an iPhone 3G, the price with a new two-year agreement is $499 (8GB), $599 (16GB), or $699 (32GB)."Wow... those are big scary numbers. If you want to check out the fury that caused, have a look at the comments here, and the alterations to the post here. So what is the deal if you have a current iPhone under contract? It just wouldn't make any sense to charge $599 for the 16GB phone. That's the same as the off-contract price. AT&T told Gizmodo the pricing is as such:
iPhone 3G S: Device PricingBut that doesn't wash. Some people (myself included) were being told by the Apple website that the 16GB phone would be running $599. A call to my local AT&T store resolved this issue. I'll say upfront that this does not explain the strange wording on the Apple site's fine print seen above. AT&T checked, and
• iPhone 3G S will cost $199 (16GB) and $299 (32GB) for new and qualifying customers.
• If you are not currently eligible for an upgrade but still want iPhone 3G S, early upgrade prices are $399 (16GB) and $499 (32GB)
• No-commitment pricing: $599 (16GB) and $699 (32GB)
iPhone 3G: Device Pricing
• iPhone 3G will cost $99 (8GB) and, while supplies last, $149 (16GB) for new and qualifying customers.
• If you are not currently eligible for an upgrade but still want iPhone 3G, early upgrade prices are $299 (8GB) and, while supplies last, $349 (16GB)
• No-commitment pricing: $499 (8GB) and, while supplies last, $549 (16GB)
So come next month I'll be at least down the the $399 tier. I don't know if I'll upgrade yet, but it's good to have this straightened out.
Edit: As a huge nerd, I found myself wanting confirmation on this whole deal. I contacted two additional AT&T stores. One store seemed to be staffed by a fellow who seemed only vaguely aware of what a cell phone was. He claimed there was no such thing as early upgrade pricing. The second store was staffed by really swell people that seemed quite on the ball. They confirmed that early upgrade pricing was available to current 3G owners, and further, they would be willing to give me the early upgrade pricing on the spot if I wanted to put in a pre-order. They said the online sites tend not to offer the early upgrade pricing even though they should. (Note: I no longer believe this to be true, see second edit below)
AT&T has finally added language to their site that, I think, makes everything perfectly clear.
Existing AT&T customers who are not currently eligible for an upgrade discount can purchase iPhone 3G S for $399 for the 16GB model and $499 for the 32GB model. iPhone 3G can be purchased for $299 for the 8GB model and $349 for the 16GB model while supplies last. These options require a new 2-year service agreement. No-Commitment pricing for iPhone 3G S is $599 (16GB), $699 (32GB). No-Commitment pricing for iPhone 3G is $499 (8GB) and $549 (16GB) while supplies last.So, there you have it. If you want the 3GS, but aren't eligible for the full upgrade, it'll cost you $399-$499. You have to do a new contract, but it saves you $200 up front off the no-commitment price. (not true in all cases, see below)
Edit again: *sigh* there is one caveat. See here.