There are two ways to calculate the cost of owning an iPhone over the two-year commitment period: total cost and marginal cost.

A basic $59.99 personal plan will cost $1,439.76 over 24 months (before taxes and FCC fees). This puts the cost of iPhone ownership at $1,938.76 for the 4GB model, or $2,038.76 for the 8 GB model.

(The 2-year cost of the no-contract option described above is about $2,075, for a total cost of ownership of $2,575 or $2,675 depending on iPhone model.)

However, with cell phone penetration now at 77% in the US, it's realistic to assume that most if not all iPhone buyers are already mobile phone users. Thus, marginal cost may be a better way to assess iPhone's price. The data portion of iPhone's cost, which is what makes iPhone distinctive from a Internet-free mobile phone, is $480 over 24 months. This puts the marginal cost of upgrading to an iPhone $979 or $1,079, depending which model you choose.

However you figure it, iPhone is not an inexpensive device.

Finally, it's worth nothing that new customers can cancel their AT&T service within 30 days of activation. This makes iPhone a WiFi-only device. We think this removes much of iPhone's value; products such as the Nokia N800 Internet Tablet offer more Internet functionality (though less elegance and ease of use) at a lower price. But the option is there.