It's probably the cost of having to work with carriers, their various carrier waves, and their crazy carrier demands. You gotta remember before the iPhone, Verizon would put their label on the phones and only run their own OS. Even though the experience is more normalized now, Apple still has to bend over backwards on some parts of the OS to make sure things work. For PC's and wifi tablets, they don't have to make workarounds as much.
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AT&T CEO: Carriers Can't Afford Big Subsidies for Devices Any Longer
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It's probably the cost of having to work with carriers, their various carrier waves, and their crazy carrier demands. You gotta remember before the iPhone, Verizon would put their label on the phones and only run their own OS. Even though the experience is more normalized now, Apple still has to bend over backwards on some parts of the OS to make sure things work. For PC's and wifi tablets, they don't have to make workarounds as much.
I know right?. Rumor has it there's one company that pulled down $41 billion in profit last year. How can they live with themselves?
Way to be sarcastic about something that really is a problem but apparently you're too stupid to understand it. It would be one thing if these companies were trying to make more money by being competitive but they aren't... They are taking advantage of subscribers not having many choices and squeezing every dime out of them that they can. This country has one of the worst internet and cell phone reputations in the world, literally, and it is because of this.
Chupa, I sincerely apologize if my comments were incorrectly aimed in your direction. After re-reading your post, I think I misunderstood your intentions.
My remarks were aimed at those who keep parroting this notion that the only reason the rest of the world has cheap mobile plans is because their socialist governments are paying for it. I erroneously took your remark about subsidies to be in support of that claim.
Cheers, eh?
Blame Powell and his tenure at the FCC.
They allowed the ILECs to install remote terminals (RT) with no requirement for equal access. They said that Cable, Phone, IP over Power Lines and Satelite are all equal. So the FCC gave all the cable companies, etc. de-facto monopolies.
They let the cell companies do almost anything including charging for services that are a free by product of just running the network. Texting is a prime example of a service that was free but was monetized. The 160 character limit is because the idle space on the channel that must be there can be stuffed with data. How much? 160 Characters.
AMerica has seen price increases where the rest of the world has seen the price of access decrease as technology improved.
Our communication setup, companies and all is broken.
That's not exactly true about having to be bought at walmart and the $30 Tmobile plan. You can order the Sim kit from Tmobile. A lot of times if you watch their site you can get it for free, I know they were running it as of last week. Activate the sim on Tmobile site and choose the $30 100 minute, unlimited text & 5GB data.
Plenty of people who bought the Nexus 5 and other phones are using this plan. Tmobile problem is coverage
As for AT&T and no subsidy. I really have no problem with it as long as they drop their plan rates. $40 +/- $5 for unlimited talk,text and 5gig min data.
It sounds like they want to get out of the hardware business and concentrate on selling services and maybe that would help drop the price of hardware eventually also. Too many prepaid companies or local companies(Cricket,ClearTalk,MobileNation) out there are offering better plan rates and bring your own device.
If AT&T goes this way, you can bet Verizon won't be far behind
You can buy a Nexus for $350 and a Moto X for not much more and these are good devices. If going this route drops rates enough & pushes Apple, Samsung & others to lower their flagship phones to the $500 range it's a win. With the savings you could buy you a new phone every year or two.
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I think PART of the problem/answer is that these smartphones are ridiculously expensive in the first place...list price for the cheapest iPhone is like $500 right?
Apple (and other smartphone vendors) have made billions in profits and margins selling them to carriers and basically having carriers by the balls (you don't sell and iPhone, well, there go 50% of your customers!) and charge a very high price. Honestly, they are not worth $500. If I had to pay $500+ for a cell phone, I simply wouldn't. I'd buy something for $200 or cheaper. It's insane, in my opinion, that an iPhone (now on the 5th revision) needs to cost $500+ (either to me or to the carrier).
Apple (and other smartphone vendors) have made billions in profits and margins selling them to carriers and basically having carriers by the balls (you don't sell and iPhone, well, there go 50% of your customers!) and charge a very high price. Honestly, they are not worth $500. If I had to pay $500+ for a cell phone, I simply wouldn't. I'd buy something for $200 or cheaper. It's insane, in my opinion, that an iPhone (now on the 5th revision) needs to cost $500+ (either to me or to the carrier).
Carriers not subsidizing phones basically affect two companies the most: Apple and Samsung. The question will be which of those two will react quicker to mitigate the lack of subsidies. T-Mo shook up the US market. I personally am happy. The subsidies hid the true cost of ownership. Once all the carriers remove subsidies (and they will), we will see downward pressure on handset pricing on flagship phones. Sweet! What remains to be seen is how much Apple and Samsung will be willing to dig into their profits to keep their dominate positions.
Apple profit 2012 approx $41 billion
Samsung profit 2012 approx $27 billion
They both have wiggle room.
Apple profit 2012 approx $41 billion
Samsung profit 2012 approx $27 billion
They both have wiggle room.
exactly...I could only assume that these enormous monthly fees were justified by subsidized devices. With no subsidy, what justification is there for such high fees?
That I couldn't tell you. Maybe that's a future plan for their pre-paid plans that they are planning to aggressively expand to. AIO is run by AT&T.
Only the tip of the iceberg. Don't forget about our completely corrupted political system and the giant oil & gas puppeteers who control said scumbag politicians.
And in the UK they have even better service than Canada.
What you are missing is that the land of the free is massive. Yes Canada is big too but we all know there are parts there with like towns of 10 people, most Canadians live around major cities. In Cell phone service, this makes a huge difference, geographic areas = more towers, longer cables, more power consumption, etc... Who is going to pay for that?
But it's the typical walmart consumer mind we have, we want the best unlimited services and we want to pay $10 for them. Don't get me wrong, our services are overpriced, but we should be realistic with expectations
With more than 75 percent of mobile phone users owning smartphones -- and that number growing towards 90 percent -- Stephenson said carriers will "move into maintenance mode" and that "the model has to change" because carriers "can't afford to subsidize devices like that".
Translation for the rest of us:
With more than 75 percent of mobile phone users owning smartphones -- and that number growing towards 90 percent -- Stephenson said carriers will "move into profit mode" and that "the model has to change" because carriers "are looking at Apple's cash reserve and are now becoming jealous of not having as much money as they do".
Translation for the rest of us:
With more than 75 percent of mobile phone users owning smartphones -- and that number growing towards 90 percent -- Stephenson said carriers will "move into profit mode" and that "the model has to change" because carriers "are looking at Apple's cash reserve and are now becoming jealous of not having as much money as they do".
This is why Apple's shrinking market share is so important. Apple is single digits (about the same as Windows Phone) in some European countries where carriers don't subsidize. It's only a matter of time before US carriers go this route - and the nearly simultaneous appearance of these "next" plans is a coordinated first step. When that happens, iPhone users will have to decide whether to buy a new phone for $600-700, or last year's for $500-$600, or significantly increase their monthly rate to spread out the full price, or buy a $350 Google Nexus phone. Yet every time Apple's shrinking market share is mentioned, most people argue that it doesn't matter...
Choose with your wallet. Go to another carrier, however I am glad they are doing this, the rest of the world operates without subsidies and they have lower rates for service which include data. I am on tmobile with my unlocked iPhone 4S and I pay $30 a month for unlimited data, unlimited texting, and 100 minutes of talk time. If I run over 100 mins, I just use my google voice account and talkatone. I'm quite happy that my bill has gone from $130/month on AT&T to $30/month on Tmobile.
Not sure if this has been mentioned or not (as I have not read the entire thread)....
It is completely within the realm of possibility that AT&T purchases iPhones at discounted or wholesale prices (vs retail price). Maybe AT&T is only paying Apple $560 for 16GB iPhones, in which case they are giving back the entire subsidy from their point of view.
IMHO, the sooner we get rid of subsidies, the better. That way we have competition on two fronts (hardware and monthly service).
GL
I agree that if I am going to pay full price for a smartphone, then the monthly service should be lowered. However, I do know that although some carriers have alluded to new price plans if a customer brings their own device, the real cost is hidden in all of the required options and thus disguises what I may initially perceive as a deal.
I read this article and it has some merits by Maggie Reardon of CNET titled "Why AT&T's new pricing plans are only a bargain for some"
In her article she provides several examples of costs and although the claim made by the carrier is true, it is only true for a very specific demographic.
I like this example that she brings out:
I read this article and it has some merits by Maggie Reardon of CNET titled "Why AT&T's new pricing plans are only a bargain for some"
In her article she provides several examples of costs and although the claim made by the carrier is true, it is only true for a very specific demographic.
I like this example that she brings out:
Apple has been the ultimate beneficiary of the carrier subsidy model in the U.S. The huge price premium of the iPhone over the iPod Touch is driven by the carrier subsidy.
Customers who didn't upgrade when eligible were giving money to AT&T. Probably everyone upgrades now when eligible so AT&T figures why "force" people to upgrade, simply end the subsidy and end the embedded hardware fee.
Interesting. The mobile carriers will now have to compete with one another given people won't be under contract. Add in the fact the smart phones have eliminated the ability of carriers to price discriminate with things like texts and voice, and it appears that the carriers are embracing becoming just a data pipe. They fought for a long time against this, and seem to now be embracing it. Consumers will ultimately benefit from the enhanced competition between the carriers.
When will the phone premium go away? Why does adding a phone cost more than adding a LTE tablet? That will go away, too. That's the one remaining bit of price discrimination.
Funny, not sure AT&T in the long run has many choices, but don't see how this change benefits them.
Customers who didn't upgrade when eligible were giving money to AT&T. Probably everyone upgrades now when eligible so AT&T figures why "force" people to upgrade, simply end the subsidy and end the embedded hardware fee.
Interesting. The mobile carriers will now have to compete with one another given people won't be under contract. Add in the fact the smart phones have eliminated the ability of carriers to price discriminate with things like texts and voice, and it appears that the carriers are embracing becoming just a data pipe. They fought for a long time against this, and seem to now be embracing it. Consumers will ultimately benefit from the enhanced competition between the carriers.
When will the phone premium go away? Why does adding a phone cost more than adding a LTE tablet? That will go away, too. That's the one remaining bit of price discrimination.
Funny, not sure AT&T in the long run has many choices, but don't see how this change benefits them.
I think Google may be doing something next year that may make this go away. You may have to use Hangouts for calling instead of TalkaTone or IPGroove but the $30 Tmobile plan is a awesome plan as long as you're in their coverage area, that's how I have my son setup. $30 plan plus TalkaTone. Text all you want, when it home call using google voice and if you're out and about and need to make a call you can then use the 100 mins if you need
******* off CEOS. You can't afford the subsidies? Fine, get rid of them. Then I assume you will also stop charging us extortion rates for your data then, right? Right? <crickets>
Seriously, what nerve. The charges for data alone are downright laughable, yet this bozo complains about how they can't afford the phone subsidies, despite raking in HUGE profits every year? When will these cellular carriers realize there is going to be a point where they push us consumers too far and we collectively tell them to shove their service?
Seriously, what nerve. The charges for data alone are downright laughable, yet this bozo complains about how they can't afford the phone subsidies, despite raking in HUGE profits every year? When will these cellular carriers realize there is going to be a point where they push us consumers too far and we collectively tell them to shove their service?
Because $200 gets you a bag of parts.
$500 for the 16gb iPhone 5s is more in line with apples actual profit margins.
I find it funny how when Apple reports a quarterly profit of $7.5B everyone on here cheers. AT&T reports a quarterly profit of $3.8B and everyone calling them greedy bastards.
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$199 gets you a bag of parts. $.50/hr gets you a kid in china to assemble your phone for you.
AT&T new plans are still over priced when you can go to StraightTalk and get their $45 Umlimites(actually 2.5GB highspeed data) So with tax it's a bout $50 month x 12 =$600 x 2Years=$1200 + new iPhone @ $650 a grand total over two years =$1850
Families of 4 who think they have to have the newest and latest smartphone probably won't enjoy the no subsidy model though