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iPhone owner thinking of upgrading? Cha-ching!

By Andrew Heining / June 8, 2009

Apple senior vice president for Worldwide Product Marketing Philip Schiller talks about the video features on the new iPhone 3GS at an Apple Worldwide Developers Conference in San Francisco on Monday.

Jeff Chiu/AP

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From the "Bring your rich uncle" department:

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The new iPhone 3GS, the faster, larger-capacity, video-capable offering from Apple, has been heralded from Cupertino to Croatia, with attractive pricing that seems likely to draw even more customers to the most popular smart phone on the planet (and away from the just-released Palm Pre).

Something that is well known about the $99, $199, and $299 price points of the new line of iPhones is that they require customers to sign a two-year AT&T service contract, but less-advertised (and in really fine print on the iPhone product page) is the fact that existing customers must pay a premium to upgrade. How much depends on whether you listen to Apple or AT&T.

Apple's fine print puts the existing-user tax at $400. That's $499 for an 8 GB iPhone 3G, $599 for the 16 GB 3GS, and $699 for the new 32 GB model, according to Apple.

AT&T is saying that existing customers could be "upgrade-eligible" and pay $200 less. The word from AT&T, via iPhone, Therefore I Blog:

Upgrade eligibility varies with each customer, but in general you will become upgrade-eligible the further you are into your service agreement. Customers can find out at att.com or in one of our stores if they are upgrade-eligible. If you are not currently eligible for an upgrade but still want iPhone 3G S, we can offer you an early upgrade price of $399 (16 GB) and $499 (32 GB).

TechCrunch's Nicholas Deleon calls the pricing "100 percent ridiculous," and recommends current AT&T customers call the company to get an answer on what they'd pay to upgrade.

Deja vu?

Apple and AT&T ran into similar criticism when they dropped the retail price of the original iPhone in September 2007, just over two months after its launch. A $100 Apple Store credit was offered to assuage those who purchased the phone at its original price, but early adopters – including Apple cofounder Steve Wozniak – were still upset.

Will a similar price drop surface before the new iPhones go on sale June 19?

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