Why are unlocked phones so expensive?

[mammador]

Why are they so expensive? It can't be hardware costs because a radio chip alone does not cost hundreds of dollars. Neither does the screen. When you compare an iPod Touch to an iPhone, the main difference are the display and radios. You get something similar with a Galaxy Player and Galaxy S or whatever Samsung calls their phones. Therefore, how is it OK to pay $250 retail for an iPod Touch but pay $600 for an iPhone 4S? And this price is the same worldwide. How can those paying that exorbitant difference justify it?

The unlocked price is the actual factory price for the phone (inclusive of cost-plus, or any other pricing strategies firms use).

An iPod Touch is not a telephone. Maybe to include all the telephony features,it costs more to make the iPhone.

 

[the DRIZZLE]

My theory is that manufacturers know that if you are buying it off contract there is a good chance that you really want that particular phone so they can squeeze you on price. Whereas most subsidized phones are probably bought by relatively uneducated consumers who just walked into the store and are much more likely to be price sensitive.

 

[luv2liv]

im sooo tempted to buy an unlocked phone from china. cheap chinese knockoff of apple, htc, and sony for sooo much less. was looking at a nice apple iphone4 with android as the brain. anyone got one?

i agree with the OP, phones should not cost that much. but smartphones are in high demand ATM

 

[poofyhairguy]

was looking at a nice apple iphone4 with android as the brain. anyone got one?

Um, all of those are just terrible Android phones.

 

[Suspicious-Teach8788]

only americans who have been brainwashed by carrier pricing for years can ask things like this...

the concept of an unlocked phone is practically unheard of in the US. even for phone enthusiasts here its a foreign concept and people shy away.

 

[poofyhairguy]

 

[SlitheryDee]

Stuff is worth what people are willing to pay for it. That doesn't necessarily have anything to do with the cost of making it.

 

[preslove]

Optimus V was 50 bucks on black friday.

Ding ding ding. Unlocked smartphones are getting less and less expensive for older tech.

 

[lothar]

Why are they so expensive? It can't be hardware costs because a radio chip alone does not cost hundreds of dollars. Neither does the screen. When you compare an iPod Touch to an iPhone, the main difference are the display and radios. You get something similar with a Galaxy Player and Galaxy S or whatever Samsung calls their phones. Therefore, how is it OK to pay $250 retail for an iPod Touch but pay $600 for an iPhone 4S? And this price is the same worldwide. How can those paying that exorbitant difference justify it?

"Everything is worth what its purchaser will pay for it." – Publius Syrus

 

[abaez]

My theory is that manufacturers know that if you are buying it off contract there is a good chance that you really want that particular phone so they can squeeze you on price. Whereas most subsidized phones are probably bought by relatively uneducated consumers who just walked into the store and are much more likely to be price sensitive.

This would make sense if subsidized phones were the majority of phones bought, but this is only the case in the U.S. It is far more common to buy a phone unsubsidized in Europe and other parts of the world.

 

[sgrinavi]

Stuff is worth what people are willing to pay for it. That doesn't necessarily have anything to do with the cost of making it.

+1

Unless, of course, the government sticks it's nose in our business by controlling the price or adding taxes.

Smart Phones are toys for 99.9% of us - not even close to being a necessity - If you don't like the price buy last years model for 20% of the "list price" - they are cheap because, well, that's what people are willing to pay for older tech.

 

[soccerballtux]

Why are they so expensive? It can't be hardware costs because a radio chip alone does not cost hundreds of dollars. Neither does the screen. When you compare an iPod Touch to an iPhone, the main difference are the display and radios. You get something similar with a Galaxy Player and Galaxy S or whatever Samsung calls their phones. Therefore, how is it OK to pay $250 retail for an iPod Touch but pay $600 for an iPhone 4S? And this price is the same worldwide. How can those paying that exorbitant difference justify it?

selling it at the cost of components + 20 % is not how you run a business.
You typically charge ~3x the cost of manufacturing.
1x goes for the parts
1x goes for the engineering
1x goes for the overhead of running the business

 

[soccerballtux]

The real question is why locked phones are so cheap... because the carrier builds the real unlocked cost of the phone into your contract over the course of the 2 years or however long it is. On many carriers you actually pay more over the long haul than you would have with an unlocked phone.

americans are much more interested in paying less now more later.
that's mainly why.
In the EU these high end phones are all unlocked and they all cost 500 euros.

 

[soccerballtux]

I also don't buy that argument. This is no different from many other electronics companies but competition killed their margins. I would love to see Apple's books to see how much they're making off of iPod Touch hardware and iPhone Touch hardware.

we know the iphone BOM is $200 for the 16GB IIRC.
if I had to guess I'd say it's a little more than half that for the ipod touch.

 

[alent1234]

americans are much more interested in paying less now more later.
that's mainly why.
In the EU these high end phones are all unlocked and they all cost 500 euros.

Which is right around $750. And the prices for the plans I've seen in Europe aren't cheaper. Just more choices

And with the iPhone you get 2 major os version upgrades

 

[WelshBloke]

This would make sense if subsidized phones were the majority of phones bought, but this is only the case in the U.S. It is far more common to buy a phone unsubsidized in Europe and other parts of the world.

I'm not sure thats true. Certainly its easy to get hold of unsubsidised phones in the UK and the carriers are set up to allow you to use whatever phone you want with no problems, but I'd bet most people aren't getting them from Expansys or Clove or the like. I'd bet they are buying ex contract phones from eBay.

So I'd say the majority of phones in the UK come via the carriers but a lot are probably unlocked and off contract in the end.

 

[Suspicious-Teach8788]

you realize they sell unlocked phones in a lot of stores in europe? it's kinda like asia where they have stores that sell you unlocked phones. they don't just come from ebay.

but even the carriers will sell tons of unlocked phones. their phones aren't heavily branded like US ones.

for example I bought a Telus Motorola Milestone (GSM Droid). The only branding it had was the fact that the homepage on the browser was a Telus page, and a video they put in some video folder for you to try out with a Telus promo on it. DONE. None of that other shit AT&T will completely load oyur phone down with. Plus, since it's an 850/1900 model, it will work just like any other 850/1900 motorola Milestone, meaning hte basebands are compatible and in fact any Motorola Milestone ROM is compatible....

 

[WelshBloke]

Yeah I live in Europe. There really aren't many high street shops that sell contact free phones. You can get them in some shops but the main push are contract phones.

Branding wise the carrier's have been quite good recently.

 

[hans007]

Yeah I live in Europe. There really aren't many high street shops that sell contact free phones. You can get them in some shops but the main push are contract phones.

Branding wise the carrier's have been quite good recently.

i get the idea that the europeans are catching on the american style marketing.

like they see how it works and works quite well here, and they figure it can happen there too. from a marketing standpoint and a "taking advantage of morons" standpoint it sure does. i would assume there are dumb people who cant do math in europe and asia too. i mean in asia all the video games are microtransactions which can end up costing more than monthly fees right?

 

[mammador]

This would make sense if subsidized phones were the majority of phones bought, but this is only the case in the U.S. It is far more common to buy a phone unsubsidized in Europe and other parts of the world.

In Europe, pay as you go/prepaid is more common. I lived in the UK for much of my life, and it was the most common payment format.

 

[TheStu]

i get the idea that the europeans are catching on the american style marketing.

like they see how it works and works quite well here, and they figure it can happen there too. from a marketing standpoint and a "taking advantage of morons" standpoint it sure does. i would assume there are dumb people who cant do math in europe and asia too. i mean in asia all the video games are microtransactions which can end up costing more than monthly fees right?

I have always disliked that counter-argument. I can do math just as well as the next guy but that doesn't make me able to drop $600 on a device. If my bill is going to be the same regardless, then sure, I will take a subsidy.

 

[hans007]

I have always disliked that counter-argument. I can do math just as well as the next guy but that doesn't make me able to drop $600 on a device. If my bill is going to be the same regardless, then sure, I will take a subsidy.

yeah obviously its like a free loan. but that said, its usually not.

i mean most high end phones cost $650 off contract, maybe $300 on at say verizon. thats a $350 subsidy you get for 24 months commitment, approximately $14 a month.

we have no idea what they would charge without the subsidy , but say a place like tmobile, its $20 difference with or without subsidy / contract.

so if i twas $20 difference at verizon (who knows what they'd put it at) you still lose. its hard to say if you are winning or losing i guessw unless you can tell what it'd cost withou tthe phone.

 

[WelshBloke]

i get the idea that the europeans are catching on the american style marketing.

like they see how it works and works quite well here, and they figure it can happen there too. from a marketing standpoint and a "taking advantage of morons" standpoint it sure does. i would assume there are dumb people who cant do math in europe and asia too. i mean in asia all the video games are microtransactions which can end up costing more than monthly fees right?

We've always had contracts available, nothing has really changed. Theres just a choice of PAYG or contract, and the handsets here are easy to swap between all the carriers.

I honestly think thats the biggest advantage we have. To change carriers or phones all you have to do is swap the SIM, you dont even need to contact them (obviously you do to cancel/set up contracts).

 

[soccerballtux]

i get the idea that the europeans are catching on the american style marketing.

like they see how it works and works quite well here, and they figure it can happen there too. from a marketing standpoint and a "taking advantage of morons" standpoint it sure does. i would assume there are dumb people who cant do math in europe and asia too. i mean in asia all the video games are microtransactions which can end up costing more than monthly fees right?

what??? I thought America was the sole source of dumb morons? Asia and especially europeans are much much smarter than stupid fat americans.

 

[roguerower]

Better question is why the cost of my plan didn't drop once I my contract with VZW expired. I'm not on a plan which is subsidizing the cost of a phone yet I'm paying the same.