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How does apple profit?
- Thread starter Italianblend
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I dont' think you fully comprehended what I posted. Read it over again and, if you'd like, I can clarify more.
I'm not questioning any of that, I'm just suggesting that simply looking at the bill of materials is not enough to determine profitability. Just because it's hard to calculate doesn't mean it should be ignored.
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Just out of curiosity, how much cheaper is the service for unsubsidized phones vs. subsidized?
No, it does not cost Apple $200 to make the phone. That's simply some website's estimate of the cost of the materials, Apple's costs are higher than $200.
Saying it costs Apple $200 is like saying the materials to build a house are only $50,000 but it's sold for $200,000 so the construction company makes $150,000 profit.
I agree there. But let's make a clear distinction. We are talking about contract-free not unlocked.
Because buying unlocked phones has a great big advantage for people who travel internationally, as they can use a local carrier anywhere they go. This is MUCH cheaper than paying roaming charges. In the case of the iPhone its also much more reliable/convenient than relying on a jailbreak/unlock. As such, it is worth the premium for many people to buy contract-free UNLOCKED phones for that purpose.
Also, people who travel internationally for many months at a time may be able to save money by canceling their phones for 3-4 months and then resuming their service when they get back. 4 months of avoiding service fees = $400+ saved, and thats just for one trip.
However, if you are using a locked headset and you aren't really going overseas often enough to justify basing your decisions around your travels, I think being contract-free for a while has a few perks, that is you can be flexible enough to do anything you want without penalties or complications.
But that is all applicable to heavy international travelers only.
That is why I never understood people who want to renew their 2 year contracts immediately after their current one expires. I would rather "save" my upgrade ability for when the next phone I really want comes out (so a few months, maybe a little longer if something is really highly anticipated in the pipeline).
But being contract-free forever (and buying headsets at full price in the mean time) has no benefit what so ever. Even for freedom, because termination fees are just $375 and get smaller each month you stay with a carrier.
So if 8 or 9 months down the road you want to jump ship your termination fee is only $235, for example. That's much better than having paid a $400 premium for the phone at launch. And the upside is you get to pick out a new discounted phone.
So yeah, if you are living here and you don't go anywhere but for maybe a small vacation where a phone isn't even that crucial (I would say if you are going on vacation for 2 weeks its easier to ride it out than to make your phone decisions based on that) then a contract plan is the way to go. For international travelers who often find themselves overseas, contract-free and unlocked is the winner.
Maybe you need to figure out what that salty taste was in your cereal this morning!
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Agreed, sounds like a lot of people orders did not go through.
This should be a HAPPY time for iPhone users
I am happy!
The only stupid questions are the ones not asked.
I think it was a very good question, people should be able to ask any question on this board no matter how common you may think it is and not be belittled for it.
Apple also takes a cut of the monthly revenue from carriers. I believe this was an industry first. That's why they are THE most profitable smartphone vendor. I'm still wondering how they pulled that off, but then again AT&T saw a lot of subs jump on their roles for every iPhone exclusive.
i am guessing that is how ATT got the exclusive rights to the iphone by agreeing to that deal. Now I wonder if you must agree to this to get the iphone. Pretty smart on apples part.
You can get an unsubsidised deal with 250 minutes, unlimited texts and unlimited data for £10 per month including VAT ($15.65). Subsidised contracts start at roughly double that but don't have as many minutes, texts or data.
It gets more complicated because the cost of the iPhone varies depending on the monthly tariff. You can currently get a free 16GB iPhone 4 on most 24 month contracts costing more than £35 ($54.70) and I would expect the 16GB 4S to be the same.
I thought that Apple no longer took any money from the carriers from the monthly bills?
The fact this explanation is needed reveals the sad/non-existent state of economics education.
And people wonder why we're (20?) in education worldwide. Personally I think people have lost their work ethic and, for some reason or another, acquired this notion that they're owed something, or that they don't need to work for what they want.
Can you elaborate on what you mean? As in, I don't know whether to agree or disagree because I don't know what your point is.
Right, basically the carrier is making you a loan to buy the phone.
A few years back, AT&T's stock price dropped a bit when they revealed that they had over a half billion dollars tied up in iPhone subsidies.
It's also why they had to double the ETF. People were gaming the subsidy system by getting a $500 phone for $200, then leaving with just a $175 ETF, leaving the carrier with a $125 or more loss each time.
So because some people aren't experts in microeconomic principals, that makes our educational system garbage?
You do not have to be an 'expert in microeconomics' to understand a product costs more to build than simply adding up the cost of the materials used to make it. The only requirement to understand that should be a brain.
