When Steve Jobs presented his new iPhone this afternoon, he made everyone believe that it was amazingly cheap. At $199 it is cheaper than the previous model, but I’d hardly call it a bargain.

1. The iPhone data plan is going from $20 to $30/month
2. AT&T no longer need to pay Apple $12/month in "revenue sharing"

Lets do the math:

$10/month + $12/month * 24 months = $528

So, AT&T are making an extra $528 off iPhone subscribers compared to the current plan.

It’s no wonder why they can afford to subsidize the purchase price. A $199 3G phone is nothing new, AT&T have 10 of them that are available for free right now, and even their high(er) end 3G smartphones can be found for under $100.

When Steve said it was becoming cheaper, what he really meant to say was "we are finally going to sell them the same way every other manufacturer in the world sells them".