Amazon & Google pricing models = dangerous territory for manufacturers

Discussion in 'Alternatives to iOS and iOS Devices' started by MRU, Nov 3, 2012.

  1. MRU, Nov 3, 2012
    Last edited: Nov 3, 2012

    MRU
    macrumors demi-god

    MRU

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    #1
    Very interesting article on Engadget regarding pricing model for the google and amazon tablets. How skipping profit on devices for profit in content sales may work well for them (google & amazon), but for third party manufactuers it creates a problem in that it installs a false value in consumers, and makes it near impossible or third party's to compete in the market.

    http://www.engadget.com/2012/11/03/editorial-amazon-and-google-are-undermining-mobile-pricing/

     
  2. macrumors 68000

    VulchR

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    #2
    Not sure if it was really necessary to quote the entire article. In any case I read this and I am not convinced that there is much of a threat. However, it would be interesting to see how much Google makes of each Android device by selling information about the user to businesses that use it for targeting advertisements.
     
  3. MRU
    thread starter macrumors demi-god

    MRU

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    #3
    I quoted the entire article so that people viewing on apps like tapatalk don't have to leave the thread to read the article.
     
  4. macrumors 68040

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    #4
    That's why Amazon prefers to sell their tablets at cost. The hook is they think you'll buy Amazon Prime and other stuff from them once you buy a Kindle Fire. It worked for me. I'm now hooked on Prime. :)
     
  5. macrumors 603

    Oletros

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    #5
    Google does not sell user information
     
  6. macrumors 68020

    ugahairydawgs

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    #6
    Not directly, but they sell you (the anonymous you) to advertisers based on your data and usage patterns.
     
  7. macrumors 603

    Oletros

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    #7
    False, they don't sell you, anonymous or not.

    ----------

    And regarding the Engadget editorial, I don't think that it is a real threat to other manufacturers
     
  8. macrumors 68000

    VulchR

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    #8
    I am not sure whether you do not understand how Google makes profits off of Android, or whether have some lawyerly definition of 'selling' that no other reasonable human being would accept, or whether you're just trolling. Frankly, I don't care which. Read this link and then try to justify what you wrote.
     
  9. macrumors 65816

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    #9
    So basically only Mercedes Benz should make cars?
     
  10. macrumors 603

    Oletros

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    #10
    Perhaps the one trolling is you because your link doesn't say nothing about selling you or your information.

    Perhaps the one that doesn't understand how Google makes profit off of Android and has to is you because Google doesn't make money selling you or your information.

    Perhaps the one that has to read that link and the justify what you wrote is you.
     
  11. macrumors 604

    onthecouchagain

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    #11
    Read the comments in that article. A lot of people have very good reasons to disagree with the article.

    Google has struck a very fine balance of affordability with good hardware and specs, and obviously great software.

    When that happens, the consumer wins.
     
  12. macrumors 6502a

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    #12
    The ppl in the comment section are freaking idiots. This has nothing to do with Apple. I think the guy just through Apple name in the article to make fanboys happy but it backfired. This is hurting companies like ASUS, Toshiba and the other tablet makers on android. These companies can't go that low in price because they don't sell software. If they go low they will lose money on their hardware. People need to stop looking at this as a Apple vs Android thing. I see the only choice for these manufactures is to start making Windows 8 devices, cuz I sure don't see MS making hardware and selling it cheap.
     
  13. MRU, Nov 3, 2012
    Last edited: Nov 3, 2012

    MRU
    thread starter macrumors demi-god

    MRU

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    #13
    Exactly my take on the article. Why does everything have to be apple v android, when its not. It's clearly just economics. Lets face it Samsung were the only ones who could feasibly make the Nexus 10 (they manufactured the screen, memory, chipset) and even then it looks like its being sold very close to the bottom line in order to get Android nexus device its foot firmly in the door and make its mark.

    I imagine it will be the top selling Android 10" device without doubt.

    So with the bottom filled with high spec device, then you have to question why should Toshiba, Phillips or LG even try to compete because they can not offer the same machine / hardware for $399 as the profit margin would be too close to the bottom line to make the research and development, marketing and justify the advertising costs, making it worth while.

    It likewise seems to have caused an expectation of very high specs and bottom end pricing within consumers.

    It's a fallous reality one that may not be sustainable to third party manufacturers who can not subsidise bottom end pricing by selling content on the device.
     
  14. macrumors 65816

    Dolorian

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    #14
    This is a common misconception which is sadly repeated too often, but in truth Google does not sells your personal data to anyone.
     
  15. ChrisTX, Nov 3, 2012
    Last edited: Nov 4, 2012

    macrumors 68030

    ChrisTX

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    #15
    A lot of people that don't grasp the general idea of business don't understand why it's not feasible for a majority of the tech companies out there to sell at a loss. People see Amazon, and Google selling at a loss, and think everyone else is ripping them off because they're trying to make a profit. Amazons primary business isn't tablets, and e-readers so they can probably keep it up longer, so long as people buy content from them. Google makes money off of advertising through their search engine so they probably don't care as much either. However companies like Asus, Apple, Samsung, and others rely on hardware sales. Granted Apple makes a ton of money off of software sold through the various iTunes stores. People eventually will start to think $200 tablets are the norm.
     
  16. macrumors G3

    Night Spring

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    #16
    Google may not sell your personal data, but they do use larger patterns from your usage habits to target ads. For instance, if you visit MacRumors regularly, you might see more ads related to Apple products and accessories. It's not a direct sale of user data, but nonetheless, they are leveraging user data to (hopefully) gain more revenue.
     
  17. macrumors 65816

    Dolorian

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    #17
    Yes, this would be a fair description of what Google actually does and is a far cry from the "Google sells your personal data to advertisers" line that is so often repeated. They don't pass along your personal data to anyone, they keep it to themselves and leverage this data to improve their products and services and to also offer better placements for ads. If Google actually sold your personal data or gave it to someone else, it would actually be harmful to their business.

    This is a good short article on the subject:

    http://www.pcmech.com/article/does-google-sell-your-personal-information/

    It gives an accurate description of what Google does with the data they collect.
     
  18. macrumors 604

    onthecouchagain

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    #18
    EDIT:
    Ah, I see some answers are already provided. Thanks.



    What does Google do, exactly? I'm not sure.

    ----------

    Pardon my ignorance as I was under this impression too. What does Google actually do?
     
  19. macrumors 604

    onthecouchagain

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    #19
  20. macrumors 68040

    F123D

    #20
    Without competition, we just end up with companies like Verizon and AT&T where the consumer loses.
     
  21. macrumors 65816

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    #21
    BS argument is BS.

    ipad ruled the roost even when competitors brought out cheaper tablets that weren't as powerful. Compare the original Galaxy Tab to the Ipad 1 or the Xoom to the Ipad 2. No one was complaining then about cheaper alternatives creating a 'false sense of value'.

    But then someone figures out how to turn a profit by selling a still-not-quite-equal-but-pretty-darn-good product at an even lower price and all of a sudden the sky is falling and oh-my-gosh-some-of-these-companies-might-lose-money if they can't maintain their price point.

    There isn't anything keeping these cash-rich, profit-margin-leading manufacturers from competing (except for inertia perhaps). Are you trying to tell me that Apple's vaunted hardware pipeline and legendary negotiation tactics with suppliers are just not up to the task?

    Well, then maybe they should do what their competitors have done.... taken a good hard look at the market and figured out their where they can make money, and changed their business model/strategy accordingly.
     
  22. SlCKB0Y, Nov 3, 2012
    Last edited: Nov 3, 2012

    macrumors 68030

    SlCKB0Y

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    #22
    What information about users do you think Google discloses to third parties?
     
  23. macrumors 68000

    roxxette

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    #23
    Dont bother with those comments, most do it because they dont know better or saw some idiot saying that google blah blah and the heard followed.
     
  24. macrumors 68020

    KentuckyHouse

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    #24
    What this feels like to me is fear. Fear that people might be losing the allusion that you need to spend $500+ on a tablet or $700+ on a phone to get the very best. And yes, I'm talking about Apple.

    The worst case scenario for Apple is the public-at-large realizing they can get just as much phone or tablet for HALF the price.

    IMO, Google has done a very smart thing here. Pull back the curtain and show consumers that you don't have to take out a second mortgage to afford a top of the line phone or tablet.

    I'd love to see Apple take note and drop their prices some, but I doubt we'll ever see that happen.
     
  25. macrumors 6502a

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    #25
    I have to say, I would love to see cheaper new tablets and smartphones from Apple, but it's not going to happen. You will see, however, the model that was last years sell for cheaper. That's the model that they have chosen to use. This way, it keeps manufacturing costs down and profits high. Apple is a premium company which sells a premium product that provides a premium service. It's kind of like Lexus, you buy a reliable car, but will get great service along with it. But enough about Apple, the much more interesting thing is about Android Tablets.

    From what I could tell from the article, i did read all of it, but started to glaze over from all of the whining, is that Google and Amazon are using a different business model than Samsung, Acer, Toshiba, etc. They make money off of ads and content they sell. Samsung and the other device manufacturers make their money off of the hardware they sell. The problem is that they overpriced the tablet for what you get. Google and Amazon brought in that hardware and software and sold it at a more reasonable price for them and for the consumer. It's what you call the beauty of capitalism and great for the consumer. The Nexus partners get paid by Google and Google makes their money back by the amount they serve you ads and the money from the store. Imagine what the wireless industry would look like if we could have this kind of competition...
     

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