A tale of two reviews

[Pliablemoose]

You know, I never bought into this line of reasoning. I mean, if you're looking at getting a cellphone, you're going to pay for this service, no matter what device you go with, so that cost is going to be paid regardless of which device you get.

IMO, I think it's disingenuous to say that an iPhone4 costs $1500-3300, because you need the monthly service charge to use it. Now, if you want to say it costs $1500 to USE the device WITH CELLULAR SERVICE over the life of the contract, I'm fine with that. But just saying "oh it costs $1500 to buy" is very wrong.

The cost of the hardware itself, does not change if whether you need 450 minutes or 9001 minutes. It's outright wrong to imply that. The phone hardware costs $200 (subsidized) or $640 (unsubsidized), period.

A more accurate might be comparing Virgin's monthly X 24 months

Virgin unlimited text & web 300 minutes/ATT
$600/$1440 A premium of $840 to use an iPhone


Virgin Unlimited everything/ATT
$1440/$3240 An $1800 premium to use an iPhone

So go for the Virgin Mobile deal, buy an iPhone 4 outright and an iPad with a data plan activate the 3G, put the sim in the iPhone 4 and you save $500, have an iPhone 4, an iPad3G...

The crazy thing is that Virgin is still making a profit... The other carriers are raping (I'm sorry politically correct would be surprise sex) us for data and voice...

So buy 3.5 iPod Touches with the savings on the cheaper plan or 7.5 with the unlimited plan savings...

Just depends on your outlook I guess, I'm using a Droid Inc on a prepaid plan with Page Plus, it's saving me some serious $... Enough for me to justify keeping an iPad 3G with active service I really wish I could bring my own phone to Virgin.

I strongly prefer to own Apple stock and make $ rather than give them $... And I really wish I had a grandfathered iPhone plan, some people are saving a ton of $ with their grandfathered plans...

 

[Narmer]

What does it do poorly ?

Hardware limitations.

 

[MrX8503]

You know, I never bought into this line of reasoning. I mean, if you're looking at getting a cellphone, you're going to pay for this service, no matter what device you go with, so that cost is going to be paid regardless of which device you get.

IMO, I think it's disingenuous to say that an iPhone4 costs $1500-3300, because you need the monthly service charge to use it. Now, if you want to say it costs $1500 to USE the device WITH CELLULAR SERVICE over the life of the contract, I'm fine with that. But just saying "oh it costs $1500 to buy" is very wrong.

The cost of the hardware itself, does not change if whether you need 450 minutes or 9001 minutes. It's outright wrong to imply that. The phone hardware costs $200 (subsidized) or $640 (unsubsidized), period.

Why do people have such a hard time understanding what a subsidized phone means?

An iPhone4 does not cost $2000 persay, what it costs is $200 + $2000. The $2000 covers the phone service plus ownership of the phone. What cut of the $2000 service fee goes towards owning the phone is unknown.

 

[Narmer]

Why do people have such a hard time understanding what a subsidized phone means?

An iPhone4 does not cost $2000 persay, what it costs is $200 + $2000. The $2000 covers the phone service plus ownership of the phone. What cut of the $2000 service fee goes towards owning the phone is unknown.

False. It costs either the unsubsidized retail price or subsidized + ETF.

 

[Pliablemoose]

False. It costs either the unsubsidized retail price or subsidized + ETF.

So it costs more than an iPod Touch then?

AT&T's current ETF is $375 + the first month of service

So we're looking at $600+ compared to $300, it's what we've essentially been working with the whole thread, the iPhone 4 is 2X the price of a comparable iPod Touch.

Plus if you're calculating the true price of the contract, you need to add in the 911 fees and taxes every month.

 

[Narmer]

So it costs more than an iPod Touch then?

AT&T's current ETF is $375 + the first month of service

So we're looking at $600+ compared to $300, it's what we've essentially been working with the whole thread, the iPhone 4 is 2X the price of a comparable iPod Touch.

Plus if you're calculating the true price of the contract, you need to add in the 911 fees and taxes every month.

What you just quoted me on was regarding cost to the consumer. What I was arguing with you earlier was about cost to manufacture. You are getting the two mixed up.

 

[Pliablemoose]

What you just quoted me on was regarding cost to the consumer. What I was arguing with you earlier was about cost to manufacture. You are getting the two mixed up.

No, I'm actually not, I read the stuff about teardowns and relative costs of parts in phones and PMP's, and that's a whole different discussion....

 

[Narmer]

No, I'm actually not, I read the stuff about teardowns and relative costs of parts in phones and PMP's, and that's a whole different discussion....

Actually it isn't. No matter how you look at it they are gouging. The iPhone hardware costs, according to the teardowns, are less than $200. Unless the Touch is free to make, I doubt the cost difference is hundreds of dollars.

 

[Pliablemoose]

Actually it isn't. No matter how you look at it they are gouging. The iPhone hardware costs, according to the teardowns, are less than $200. Unless the Touch is free to make, I doubt the cost difference is hundreds of dollars.

And the Nexus one costs $175 in parts, but none of those figures take into account R&D, marketing, etc...

The entire industry makes a massive markup on smartphones and on the plans. Apple does enjoy larger profit margins than the rest of the industry.

It's one reason I was pissed at Google for following what the rest of the industry did (in pricing the Nexus One), they had a chance to cut the margin and change the market, they blinked, and left the market (for handsets anyway).

Were Google really interested in changing things for consumers they could have done so, but as I said, they blinked.

 

[Raduque]

And the Nexus one costs $175 in parts, but none of those figures take into account R&D, marketing, etc...

The entire industry makes a massive markup on smartphones and on the plans. Apple does enjoy larger profit margins than the rest of the industry.

It's one reason I was pissed at Google for following what the rest of the industry did (in pricing the Nexus One), they had a chance to cut the margin and change the market, they blinked, and left the market (for handsets anyway).

Were Google really interested in changing things for consumers they could have done so, but as I said, they blinked.

I've been saying the same thing for a long time about the N1. They had a chance to do something amazing to the market, but blew it with their pricing.

Why do people have such a hard time understanding what a subsidized phone means?

I know what a subsidized phone means, I was in the the wireless industry for two years (on the CSR side). I simply believe that it is wrong to include the cost of the service in the cost of a phone. The phone costs what it costs, and the service costs what it costs, and the service costs is something you're going to be paying no matter what device you're getting.

If you want to say "part of the service cost is is being used to recoup the subsidized price of the phone", that's fine too. But don't go around telling people that a device costs thousands because it has a service contract attached to it.

 

[MrX8503]

Actually it isn't. No matter how you look at it they are gouging. The iPhone hardware costs, according to the teardowns, are less than $200. Unless the Touch is free to make, I doubt the cost difference is hundreds of dollars.

No sane business would sell their product at cost. Also you're not thinking about R&D costs. Apple isn't price gouging anymore than any other manufacturer making phones.

If you want to say "part of the service cost is is being used to recoup the subsidized price of the phone", that's fine too. But don't go around telling people that a device costs thousands because it has a service contract attached to it.

What I'm saying is that the phone doesn't cost thousands, but that some of the $2000 fees goes towards subsidizing the phone.

Anyhow no matter how its sliced an iPhone4 costs more than an iPod touch 4. How much more it costs, no one really knows, but to keep similar profit margins I'm not sure why people are surprised that the ipod touch 4 isn't a direct clone of the iphone4.

 

[Narmer]

No sane business would sell their product at cost. Also you're not thinking about R&D costs. Apple isn't price gouging anymore than any other manufacturer making phones.

I'm not advocating them selling at cost, genius. And I made a specific mention of hardware cost. I would assume that other costs (R&D, marketing, etc...) would overlap. My main point (again) is that the iPhone is not worth hundreds more than a Touch (in terms of manufacturing costs). From its inception, the Touch has been a derivative of the iPhone. This goes to my original point of saying that if the costs of the iPhone and Touch are so similar, limiting the hardware with less memory, a useless microphone, ugly panel, and a digital camera from 1995 is a naked attempt to gouge their customers. This is perfectly fine from a business perspective but customers should be aware that they are getting gouged by apple.

 

[MrX8503]

My main point (again) is that the iPhone is not worth hundreds more than a Touch (in terms of manufacturing costs). From its inception, the Touch has been a derivative of the iPhone.

No one knows how much more an iPhone4 is, but it is more nonetheless. If its not hundreds more, I'm sure Apple doesn't want their flagship phone to be the same as their MP3 player device anyway.

The iPod Touch 3G was not an exact clone of the 3GS either. The touch didn't have a camera nor GPS.

The new iPhone4 incorporates many new expensive features.

Retina display
IPS display
720P Video
5MP Camera
Front Facing Camera
Faster Processor
More Ram
six axis

You really think Apple is gonna throw all of that stuff in for $229? They were able to make the 3rd generation Touch closer to the iPhone because the 3GS wasn't that big of an update. Aside from that, the touch is now thinner which also holds the device back.

 

[Pliablemoose]

Gen 1 Droid $179.11
16GB iPhone 4 $187.51
iPhone 3G $178.96
Nexus One $174.15
Just guessing, but the iPod Touch likely runs in the $130-$150 range

iSuppli #'s. Basically, smartphones cost less than $200 to manufacture, but that doesn't include R&D, advertising, sales infrastructure, etc...

 

[SadTouchLover]

Wow man you are just not getting it.

The new iPhone4 incorporates many new expensive features.

Retina display
IPS display
720P Video
5MP Camera
Front Facing Camera
Faster Processor
More Ram
six axis

You really think Apple is gonna throw all of that stuff in for $229?

]

That's not what we're saying! We're saying that Apple surreptitiously shaved the quality of several of the features to increase profit margin. Do you really think that a 0.7 megapixel camera accurately reflects the price difference between a touch and a phone? No! They were just hoping that gimping the camera wouldn't make a difference to your average dumbass consumer. Do you really think that using crappy, cheap display panels reflects the cost difference? Again, just a sneaky trick to try and fly this in under the radar. Wake the hell up, man!! This was a sneaky, jackass move by Apple to maximize profit and screw over the minority of consumers who actually care about the features and won't just say "Wow it's thinner! With a camera! I'll take two!"

I for one waited months after the release of the iphone 4, which is truly revolutionary, for the touch to come out. They completely let me down with their board-room-bottom-line bullshit. They easily could have put in a camera that didn't suck and a screen that didn't suck and they would have lost 10% of their profits. Profits that are sure to be enormous. GROWL!!!

 

[MrX8503]

Wow man you are just not getting it.
the features and won't just say "Wow it's thinner! With a camera! I'll take two!"

I for one waited months after the release of the iphone 4, which is truly revolutionary, for the touch to come out. They completely let me down with their board-room-bottom-line bullshit. They easily could have put in a camera that didn't suck and a screen that didn't suck and they would have lost 10% of their profits. Profits that are sure to be enormous. GROWL!!!

Uh, I think you're the one that's not getting it. What I'm saying is that if they included all of those features, its not going to cost $229, instead probably $300. That or their profit margins would be smaller than what it was for the iPod Touch 3G.

Its already the most capable MP3 player for $229 in the thinnest form factor, but people cry. Get a Zune or an iPhone4. iPod Touches were never meant to be an iPhone-without-the-phone mp3 player anyway.

 

[Narmer]

Uh, I think you're the one that's not getting it. What I'm saying is that if they included all of those features, its not going to cost $229, instead probably $300. That or their profit margins would be smaller than what it was for the iPod Touch 3G.

Its already the most capable MP3 player for $229 in the thinnest form factor, but people cry. Get a Zune or an iPhone4. iPod Touches were never meant to be an iPhone-without-the-phone mp3 player anyway.

And how do you know this?

 

[MrX8503]

And how do you know this?

The touch was never an exact clone. 3G and below it didn't have a camera, mic, or GPS. The 4th gen also has features missing.

 

[Narmer]

The touch was never an exact clone. 3G and below it didn't have a camera, mic, or GPS. The 4th gen also has features missing.

No point in having a mic until Facetime arrived. As for a camera and GPS, those were understandable (because of a need to differentiate). However, by lowering the memory, offering a far worse panel, and making the mic next to useless (especially in a busy environment), it looks like apple was more concerned with increasing margins than differentiating with the iPhone 4.

 

[MrX8503]

It doesn't change the fact that the iPod Touch was never a clone of the iPhone. The differences are more severe in the 4th gen simply because there are more features. More features cost money.

P.S. There are apps that require a mic such as Shazam. So its not all about facetime.

 

[preslove]

On the original topic.

Anand reviews > * > Engadget reviews.

Engadget is good news site, but a terrible, terrible review site. Anandtech is the premier review site for whatever it chooses to focus on, but not a particularly good news site/blog.

 

[Tom]

No point in having a mic until Facetime arrived. As for a camera and GPS, those were understandable (because of a need to differentiate). However, by lowering the memory, offering a far worse panel, and making the mic next to useless (especially in a busy environment), it looks like apple was more concerned with increasing margins than differentiating with the iPhone 4.

far worse panel ?
useless mic ?

what review are you reading ?

btw, $229 is retail price, not what Apple gets except from direct sales.

 

[TheStu]

far worse panel ?
useless mic ?

what review are you reading ?

btw, $229 is retail price, not what Apple gets except from direct sales.

I think he was referring to the fact that the panel isn't IPS, and the mic is in the back instead of having it on top like the iPhone 4 or in front, or having dual mics like the iPhone 4.

 

[Narmer]

It doesn't change the fact that the iPod Touch was never a clone of the iPhone. The differences are more severe in the 4th gen simply because there are more features. More features cost money.

P.S. There are apps that require a mic such as Shazam. So its not all about facetime.

I doubt Apple gave a damn about Shazam.

The Touch not being a clone has already been agreed to. But the cheapening of it is clear. The reasoning is also clear.

 

[MrX8503]

Only Apple knows why the iPod Touch Gen 4 has less features. I'm just saying that its nothing new, they've been holding features from their Touch line for years.