Why are unlocked phones so expensive?

[bearxor]

I reject the notion that smartphone prices are high off contract and that it's all Apple's fault. If anything, they've come down.

I bought my first devices off contract in 2004. A Hitachi G1000 to replace my on contract Toshiba 2032. Cost me $600 with free shipping. An iPhone 4S is $650 now unsubsidized and is a hell of a lot more functional. You can even pick up decent Android phones for less than $500 unsubsidized now.

My question is: Why are subsidized phones so expensive?

I'm eligible for an upgrade now and was wanting to try something other than an iPhone. I looked at the SGS2 and the Focus S. Why are they both $50 cheaper unsubsidized but the same price as a 4S subsidized?

I'm sorry, and I know it might just be my opinion, but if I'm going to drop $200 on a subsidized phone then I'm just going to buy an iPhone. So then I started looking at a Atrix 2 ($50) and a Focus Flash ($50). Then I just told myself 'Self, why would you bother even looking at non-flagship devices'.

Apple is supposed to be the premium brand. Not the 'same price as everyone else brand'.

 

[WelshBloke]

I reject the notion that smartphone prices are high off contract and that it's all Apple's fault. If anything, they've come down.

I bought my first devices off contract in 2004. A Hitachi G1000 to replace my on contract Toshiba 2032. Cost me $600 with free shipping. An iPhone 4S is $650 now unsubsidized and is a hell of a lot more functional. You can even pick up decent Android phones for less than $500 unsubsidized now.

My question is: Why are subsidized phones so expensive?

I'm eligible for an upgrade now and was wanting to try something other than an iPhone. I looked at the SGS2 and the Focus S. Why are they both $50 cheaper unsubsidized but the same price as a 4S subsidized?

I'm sorry, and I know it might just be my opinion, but if I'm going to drop $200 on a subsidized phone then I'm just going to buy an iPhone. So then I started looking at a Atrix 2 ($50) and a Focus Flash ($50). Then I just told myself 'Self, why would you bother even looking at non-flagship devices'.

Apple is supposed to be the premium brand. Not the 'same price as everyone else brand'.

 

[Brian Stirling]

Go buy your iPhone and stop whining!


Brian

 

[Fox5]

Phones are expensive because there's a huge profit margin. The unsubsidized market isn't big enough to be competitive. The subsidized market jacks up the prices of phones in order to offer lower prices on phones, and it's a bit more competitive, even high end android sets drop to a penny after a few months. However, that still caps the cheapest phone's 'real' cost at about $400 over a two year plan.

Almost every other tech market is very competitive and prices drop to close to the cost of the actual cost. Look at the tablet market, that's already happening with the massively falling prices.

Honestly, if I was a regulating agency, I would abolish subsidized phones entirely (they can offer leasing plans for those who can't afford a phone outright, like the PC makers do for laptops), and force roaming agreements as well. IE, every carrier has an implicit roaming agreement with all others (if technically capable) and the costs will be billed based on usage at some reasonable rate.

 

[Pliablemoose]

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.

Agreed, I'd love it if the carriers would take $20/month off when the contract expires.

 

[OS]

the wireless service and phone companies all have huge profit margins;


"29.0 percent operating income margin; record-high 47.8 percent Segment EBITDA margin on service revenues (non-GAAP), up 60 basis points year over year."

http://www.engadget.com/2011/10/21/verizons-q3-earnings-on-track-with-revenues-up-5-4-percent-to/


Profit Margin (ttm): 23.95%
Operating Margin (ttm): 31.22%

http://finance.yahoo.com/q/ks?s=AAPL


People buying iphones from verizon are being reamed twice

 

[TheStu]

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.

I didn't know that TMo actually was cheaper if you bring your own device/buy unsubsidized. Then it actually is cost savings, and if you have a device to use on their network, it is worth it to save up for the off-contract price. But if you don't have a device, or if Amazon is running a sale that is hard to pass up... I got my phone for $0.01, plus contract. But the $/mo was basically the same as it was with my first gen, off-contract iPhone. Slightly different plans, but nothing hugely different.

 

[hans007]

I didn't know that TMo actually was cheaper if you bring your own device/buy unsubsidized. Then it actually is cost savings, and if you have a device to use on their network, it is worth it to save up for the off-contract price. But if you don't have a device, or if Amazon is running a sale that is hard to pass up... I got my phone for $0.01, plus contract. But the $/mo was basically the same as it was with my first gen, off-contract iPhone. Slightly different plans, but nothing hugely different.

yeah its a different plan they offer, they are the only major carrier that does it.

its great if you dont ge tcorporate discounts....

the one thing that sucks is if you get corporate discounts it only works on contract so with corp discounts you are better off on a 2 year deal.

 

[TheStu]

yeah its a different plan they offer, they are the only major carrier that does it.

its great if you dont ge tcorporate discounts....

the one thing that sucks is if you get corporate discounts it only works on contract so with corp discounts you are better off on a 2 year deal.

Oh yea, see I am a govt contractor, I get discounts.

 

[MrX8503]

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.

The iPod Touch and iPhone have different hardware. The iPhone has gps, IPS screen, 8MP camera, while the iPod Touch does not.

 

[Oyeve]

The iPod Touch and iPhone have different hardware. The iPhone has gps, IPS screen, 8MP camera, while the iPod Touch does not.

This is probably, at most, 10 bucks in parts/cost.

 

[alent1234]

iphone has a different antenna and costs more to manufacture as well

 

[MrX8503]

This is probably, at most, 10 bucks in parts/cost.

Well, its all relative.

 

[Munky]

Unlocked phones are less expensive if you wait a few months after launch. In the long run, they're still much cheaper than subsidized phones.