N900 vs iPhone 3GS TCO Calculation

Update 8th Sep 2009: I missed that you can indeed nowadays get from Sonera Finland iPhone with one time payment but still need to lock-in to some plan for min. 12 months, other choice is 24 months. iPhone 3GS 32GB model with 2 year lock-in is 528 euros. So from this perspective iPhone can be cheaper than N900. Still you need to buy a voice, SMS, MMS + data plan from Sonera and I’m not sure will they charge iPhone deals more than just anyone buying plain SIM deal. Maybe someone out there know? Sorry for missing that pay phone day 1 deal from Sonera for iPhone. So clearly if you have the money day 1 buy iPhone in Finland with up-front one time full payment for the device…this way you can squeeze it cheaper or close to N900 style deal. Interesting to see will some operator in Finland take N900 into subsidy deal, Saunalahti maybe?

Here in Finland I have already pre-ordered Nokia N900 on first day it was possible, Sep 2nd 2009. Total cost of the device with local taxes was 600 euros. This is no contract, SIM free, unsubsidized, totally unlocked do-whatever-you-want plain N900. I see and read all the time almost anywhere how expensive this device is and its’ price compared to iPhone or other high end smartphones. From Finnish perspective I understand this low upfront cost + high monthly fees vs. high upfront costs low monthly fees difference that we have between various countries.

In Finland most phones are still bought without contract and lock-in but then they cost more upfront, day 1 for you. Then on the other hand our monthly voice + data packages are among lowest 5 in the world. In our market we have had now about 3 years also this model where you pay little day 1 but are locked in to 2 year contract with your mobile operator, subsidy model. This is how iPhone is sold here thru TeliaSonera or their Finnish arm – Sonera to be precise. Apple’s iPhone 3Gs with 32 GB memory costs 201 euros day 1 and medium voice, SMS, MMS package with additional unlimited monthly data costs 61 euros. This is 2 year contract. Thus with these costs taken into account total cost of ownership (TCO) during 2 year contract is about 1665 euros (201 + (61 * 24)).

From this same mobile operator Sonera I could buy plain medium level voice+data package with a SIM card. This would cost me 20 euros which includes unlimited data with 1 mbit/s speed. Combine this with N900 for 2 years and my costs are 1080 euros (600 + (20 * 24)).

So iPhone 3GS 32 GB with average voice, SMS and MMS + 1 mbit/s unlimited monthly data TCO was 1665 euros. Similar setup with N900 and same kind of SIM deal for 2 years comes to TCO of 1080 euros. iPhone is therefore about 585 euros more expensive during 2 year period. That is more than 50% over the N900+SIM deal. Difference is almost such that you could buy another N900 device…so you could have for the same price 2 N900s with one SIM you would need to change between devices. So personally my decision was easy, went with N900 of course.

My calculation above is not 100% precise but should be on the correct ballpark.

I have to say that I do understand why some people go for the 2 year contract and end up with much higher TCO but still quite often those people should precisely save a bit more, N900 price would drop, software mature and then in about 6 months time buy the N900 without that 2 year contract and high TCO.