Existing AT&T customers who are not currently eligible for an upgrade discount can purchase iPhone 3G for $399 for the 8GB model or $499 for the 16GB model. Both options require a new two-year service agreement.
That’s for people who are in the middle of an AT&T contract (except iPhone owners), like if you just started an AT&T contract with a free RAZR a few months ago.
In the future, AT&T will offer a no-contract-required option for $599 (8GB) or $699 (16GB).
There we go: that’s the real price of the new iPhone if you need to buy one without a contract subsidy (e.g. if you drop yours in the toilet).
That’s comparable to most smartphones. Most dumbphones are in the $300 range.