Remember those math word problems like, "If a train leaves New York at noon and travels 60 miles per hour, what time will the train arrive in Chicago, 790 miles away?" A question today could be "The 8GB Apple 3G costs $199 with a two-year contract of $150 per month plus 10 percent in taxes. What is the average monthly cost of the phone for 24 months?"
There are many cell phone deals available today for smart phones and regular cell phones. The basic difference between the two types is the Web access feature of smart phones that allows Internet access, e-mail and other services. Many of the deals start by putting a sweet device in your hands at a fraction of the cost by signing a contract typically lasting two years.
Some of the deals are good, but I would consider all offers, evaluate signal quality where the device will be used, and do the math before signing on the dotted line. Popular smart phones, like the Apple 3G or Blackberry, coupled with a decent number of calling minutes, unlimited texting and Web access/data plan clock in at approximately $3,600 before taxes over two years. Add in taxes and the monthly amortized cost of the device and the true cost becomes apparent. Tallied completely, popular smart phones like the two mentioned above can set the user back about $200 a month - the equivalent of a car payment.
Those two-year contracts are extremely profitable to the wireless service providers, so they pay keen attention to each other's pricing structure which, in itself, is a major force in pricing.
The costs may go down over time as more first-time users enter the market with some signing up for the less expensive Palm Pre from Sprint or T-Mobile's G1.
Ron Poland is a professor in the Computer Information Systems AAS program at Clinton Community College. Poland is certified in company repair and networking by the Computer Technology Industry Association (CompTIA). He is also a Cisco certified network assistant. Questions may be sent to him via e-mail at firstname.lastname@example.org.