You do make sense, but let's brake down an average contract:
Say, an o2 N95 for instance...
Price of the handset= £0
Monthly fee= £25(+£7-£10 for data) 12 month contract= £300 (+£120 if interested in data)
Grand total(including voice(50 mins, and 200 texts, data and phone)= £420 and in 12 months time having the option of getting a new handset for free.
An N95 unlocked(as O2 provides it) on its own, is £499 from Nokia and other retailers.
The networks get the phones at prices unimaginable for consumers due to the volume at which they buy.
So, really, I don't see how we could win, by paying £XXX for the handset, and then signing up to a monthly plan, regardless of how cheap it is.
Oh, and the price of the handset being £0 is based on actually going to the network shop and negotiating a bit...
Okay, let's use this example to get an idea of how Apple's manouevres are working in our interests, rather than against them. Obviously, this situation is far from black and white, so, we should bear in mind that we're probably both a little bit right and a little bit wrong.
You can currently buy an N95 online, unlocked and new from an established retailer for around £380 inc VAT and my guess is that Nokia are retailing them for around £260 not inc VAT. A telco with 02's massive customer base is probably paying around £150 per unit and, at the end of the day, that's probably what Nokia gets for the vast majority of N95 it produces, unlocked sales representing an extremely rare opportunity to make a real profit.
This squeeze means that Nokia and the other manufacturers don't have anywhere near as much money as they would like to spend on R&D and they certainly don't have the margin for error that would allow them to take true risks.
It also means that we, as customers, are essentially getting £100 worth of components in our "£499" phone.
Now, in the case of the iphone, because it isn't coming to us via the pricing illusion machine of the telcos, what you're actually getting is a phone that represents ...
A. a huge R&D invest that no manufacturer feeding from the existing system could ever afford but that Apple could because they are flush with ipod case AND they have no intention of accepting the existing system...
B. a massive risk that no other manufacturer would be cocky enough and, to be fair, skilled enough to take.
C. a bundle of components that are pretty much match the cost of the phone, because we already know that Apple are taking a much slimmer than usual margin on the phone in order to break into this market, because their ipod cash reserve allows them too, and because, like the console makers, they also know that component costs will lower throughout the life of this model, particularly if, as they are gambling, it's a big success.
No, we may or may not agree on whether the iphone is a better phone than the N95, but I feel it is and that it reflects it's, say, £200 + VAT "true" cost, just as the N95 reflects it's £100 + VAT "true" cost.
One of my main arguments against buying through the telcos is that I don't want some lying **** telling me that I'm getting a "free" phone worth £499 when I know they paid £150 and, because of their stranglehold, the manufacturers couldn't even afford a decent amount of R&D.
Now, I don't know about your figures, you must have gotten some sort of special deal from O2 but, according to their website, the N95 is only free if I spend £45 per month on a minutes and text package, DATA NOT INCLUDED:
£30 x 24 months, 600 mins 1000 txts, £90 for the phone
£35 x 24 months, 800 mins 1000 txts, £50 for the phone
£45 x 24 months, 1200 mins 1000 txts, phone is FREE
Now, if we were to go for a SIM only deal (still on a monthly contract), we discover that o2 are actually charging us an additional £10 or £15 per month for the phone, meaning an additional £240 or £360 for the phone for which we have already have paid £90, £50 or gotten for free. This means that we are essentially paying the current retail price for a phone that they bought for half the price - exactly the same sort of outrageous mark-up that the hire-purchase cowboys have been charging people with poor mathematical abilities for years. Subsidized my arse.
NOW, HERE'S THE REAL KILLER, THE AREA WHERE APPLE MAKES A HUGE DIFFERENCE: DATA.
When you buy an N95, at any tariff, o2 will sell you a £3 per month data "bolt-on" which will give you ... wait for it ...
... 2MB of data. Per month.
Want an extra MB? Possibly download a few dozen emails or look at a couple of webpages?
That'll be an extra £3 per ****ing MB, my friend.
And these retards wonder why 3G hasn't taken off in the mainstream!
O2 don't do unlimited (which, in current telco terms, means a fair use cap of around 3GB), so, for the kind of unlimited access Apple are
insisting upon, left to their own devices o2 would have charged you somewhere in the region of £9000 per month.
Do you see the problem here?
Do you understand now why the telcos have to be dragged, kicking and screaming, into the new century?
I just noticed, in their business section, that they offer up to 1GB for £45 + VAT per month but, in real terms, that's still in cloud cuckoo land.
Here's the deal that will let you know that we, the consumer, have, with Apple's help, won:
£39 inc VAT x 24 months, 450 mins, 5000 txts, UNLIMITED 3G DATA and we'll buy our own damn phone, thank you very much.
Then, in 2 years, when the exclusive deal lapses, just watch the prices tumble as every telco scrambles to get into the commodity 4G connectivity game - Game, Set and Match to Apple, Us and our Shiny, New, Cutting-Edge iPhones 