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Apple iPad: Is It Worth the Money?

So young, and already the Apple iPad is a star. The mere idea of the device — before it even had a name — so captivated consumers that come launch day, parts of the Internet ground to a pixelated halt as Apple (AAPL) CEO Steve Jobs unveiled it.

And what’s not to love? The iPad is beautiful, sleek and promises to place oodles of productivity at your fingertips, whether you are sprawled on the couch or stuffed into the commuter train. The company says the iPad is its most advanced technology to date, allowing you to browse the web, check e-mail, navigate interactive maps, display and arrange photos, organize your schedule and download TV shows, movies, music and books on the go with two taps of a finger.


All those capabilities come in a sleek package that’s just 9.5 inches long, a half-inch thick and 1.5 pounds. Unlike a smartphone, the iPad is perfect for two-hand use and finally answers the question, “Can I get by without bringing my laptop?” (Yes — as well as your newspapers, magazines and books.)

In fact, I know a guy whose 6-year-old daughter would give up her Highlights subscription for one.

But is it perfect for your wallet? Here at MoneyWatch, we like to focus on the bottom line: What is the true cost of this gadget? Sure, I’d like to be the first guy on the block to have one, but will in survive a cost/benefit analysis? Let’s run the numbers.

What It Could Cost

First, you have to make the initial capital outlay: The device is available in six versions that start at $499 and run as high as $829.The models vary based on storage capacity— just like iPods — and on type of Internet connectivity: Wi-Fi only, or Wi-Fi plus 3G mobile broadband for connectivity anywhere, just like a smartphone. At the cash register, support for 3G mobile broadband carries a $130 premium over Wi-Fi-only. If you purchase a middle-of-the-road 32 gigabyte iPad with Wi-Fi and 3G data connectivity, that’s $729, plus sales tax.

And the 3G designation comes with another cost: a recurring monthly data plan, sold separately through AT&T. So let’s tack on that data plan — after all, one of the cool things about this gizmo is its portability, so you’ll want to be able to go online whenever you feel like it. It comes in two varieties: a $14.99-per-month limited version and a $29.99-per-month unlimited option. To save from costly overages, let’s choose the latter. In a year’s time, that’s $360, just to get online.

What’s more, while e-mail, news and YouTube are all well and good, it would be a shame not to put that gorgeous 10-inch screen to full multimedia use. Who needs to be at the mercy of United Airlines’ movie choices when the iTunes store is at your fingertips? A movie rental runs $4; a purchase costs about $15 and TV shows are $3 per episode. (Or you can grab classic Star Trek episodes for free from CBS.)

Let’s assume you watch an entire season (say, 12 episodes) of a television show over the course of a year, and perhaps eight movie rentals per year. In total, that’s $68.

Total costs: $729 + $360 + $68 = $1,157.

And in the spirit of honest accounting, we’re going to have to consider the out years. If an AT&T contract is 24 months, and I can resist the urge to upgrade in just two years, let’s say I keep the iPad for four years: $729 + $1,440 + $272 = $2,441.

What It Could Save

So that’s the bad news. But let’s look at the other side of the ledger. Could all that computing power save you money?

By nature of its size, and beautiful screen, the Apple iPad promises to consolidate your newspaper and magazine subscriptions. For now, that’s great news for your wallet — because most news organizations and magazine titles publish their stories for free on their Web sites (though this may change quickly).

For those that don’t, digital subscriptions tend to cost considerably less than their print counterparts, thanks to a lack of printing and delivery costs, not to mention publishers’ fears of driving readers away. For the sake of this exercise, let’s say you subscribe to The New York Times, The Wall Street Journal, Time, and The Economist. The Times costs $11.70 per week for daily home delivery, or $608.40 per year. Online, it’s free — although the paper has promised new payment tiers next year. The Journal costs $2.29 per week for daily print copies, or $119 annually. Online, it’s $103. Time runs $20 per year. Online, it’s free. The Economist costs $127 per year. For online only, you’ll pay $95.

Over the course of year one, your savings for these four publications totals $656. Though the Times hasn’t yet announced its upcoming pricing structure, it’s probably fair to apply an 80 percent “online-only” cost to it, saving a hypothetical $122 for online subscribers, and dropping your savings in year two down to $170.

We’re going to be generous here and also subtract the price of other gadgets you won’t need now that you’ve got an iPad. If you have an Amazon Kindle, it cost you exactly $259. And your average “netbook,” or laptop lite, would cost about $350. So that’s $609 saved in device replacements. (The iPad also replaces a printed day planner and a digital photo frame. But since most people are using their smartphones as planners, and don’t have digital photo frames, I’m leaving this out of my calculations.)

Finally, the iPad promises to replace printed books. According to a recent article in the Wall Street Journal, Apple is exploring pricing at $13 and $15 for hardcover bestsellers and $10 for less-popular titles. If you’re one to buy books from the bookstore at full retail price, that’s a considerable savings. But if you’ve already discovered Amazon, its prices are comparable to Apple’s. In fact, if you use a Kindle, the price is actually $3 to $5 less per book than on the iPad.

With the purchase of 20 books per year on the iPad instead of the Kindle, that’s a potential extra cost of $200 for books.

Total annual savings in the first year: $656 + $610 - $200 = $1066.

Over four years, that’s: $656+ $366 + $610 - $800 = $832.

Not bad, until you remember that your total three-year cost was $2,441. Bottom line: My real cost for an iPad is about $1,600 over four years.

Innovation at a Price

If you see Apple’s new iPad as an investment for your productivity, it’s clear that it’s one on which you may never see a concrete return. You may never live its name down among your friends, either.

But there are, of course, some things you can’t put a price on: saying goodbye to shoulder ache as you choose the iPad over your laptop for your next flight; saving time during a meeting by accessing documents on the fly; and the excitement of owning the hottest, most talked about product in half a decade. And who knows, perhaps using Apple’s latest creation in your local coffee shop could help spark an idea that will catapult you past Steve Jobs on the list of the world’s billionaires.

As for me? Yes, I’ll probably purchase an iPad when it arrives in March. I’m a real newshound during my morning commute, and the screen on my iPod touch is starting to feel a little small.

Plus, I hear CBS MoneyWatch looks awfully good on the iPad.

Andrew J. Nusca is an associate editor for ZDNet and SmartPlanet.

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