IMO, phone prices are kept artificially high by the subsidization the carrier do. If it were like any other CE, cell phones would be cheaper, faster and smaller. Like computers, GPS and MP3 players.
True, without the subsidy model phones would be slightly cheaper. But the accelerated tech aging represents a problem for cell phones, more so for smart phones, also time window for sales is much smaller for smart phones compared to other computers.
It's very common and convenient to build a computer or pick and choose components. As time passes by, partial upgrades can increase lifetime for laptops and desktops, for example adding more RAM or a video card, no such options with cellphones.
I would say smart phones age about twice as fast as laptops/desktops. 5 year old desktops can run newest OS versions and applications, smart phones maybe 2 or 3.
Considering how wide spread the subsidy model is in the US, it represents a necessary evil at this point.
Drunk off the subsidy model, US smart phone consumers would be hesitant to outright purchase phones at ~$400, pretty much annually if they wanted to keep up with the latest.
Pre-paid services are looked down upon in the US while post paid represents majority of US cellular. I believe it's the other way around in rest of the world though I haven't been to Europe or elsewhere since my Nokia 8110 days.
Bottom line, US cellular subscribers exchange their "freedom" for discounted phones, while carriers gain contract locked subscribers and competition is watered down to terms which carriers prefer. Effectively,carriers avoid the brutal competing they would face if majority of customers were free to come and go without long term commitments.
US carriers enjoyed the GSM/CDMA status quo, and avoided from promoting universal handsets that could operate on all carriers. The excuse for not having interoperable 3G handsets across all major US networks has always been the radio chip but that's just an excuse to keep things the same. Number porting was a small victory for the consumers but it's been nullified by the rules carriers set. Contract termination fees, along with coverage uncertainty and plan discounts are effective deterrents to prevent consumers from seeking freedom.
While on the surface it looks ok, the subsidy model is rotten. Phone exclusivity deals and phone discounts mask the real issue.
It is only my estimate but I believe that in a pre paid market, with all phones able to fully function on each and every US network, true competing would force carriers to drop a price for unlimited plans as low as $20 a month. Considering how much more customers pay on contracts, phones don't seem as expensive as they do now, do they?
Sorry for the off topic ranting.
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