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I think Apple iPhone is in serious trouble if US carriers end subsidies
- Thread starter aneftp
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It's no different then signing a contract and paying an ETF for canceling though?
The only difference is that once you pay your phone off, your bill actually goes down.
I really don't follow this thread. Why are some quoting the subsidised price as THE price, it isnt. many seem to want everything for free.
A subsidised price on contract, allows Apple to recieve their standard wholesale price from a Telco. The Telco locks you in for two years to recover the subsidy.
If the contracted plan suits you, thats a good deal as you would have paid for the plan anyway.
I see many who buy a phone on 2 year contract and complain that the plan is too costly, and/or that they cannot upgrade for nix when next years model comes out.
Do the math over the cost of the phone outright plus the plan that suits you, compared to the upfront and the 2 year plan, to see if it is worthwhile. If it isn't, buy outright. Sell at a good price when you want to if you wish to upgrade.
An iPhone is not a $100, or $200 phone, you will pay for it either way, unless the plan is what you would get anyway and you would find you get some discount. A phone is not free nor is the telco plan
A subsidised price on contract, allows Apple to recieve their standard wholesale price from a Telco. The Telco locks you in for two years to recover the subsidy.
If the contracted plan suits you, thats a good deal as you would have paid for the plan anyway.
I see many who buy a phone on 2 year contract and complain that the plan is too costly, and/or that they cannot upgrade for nix when next years model comes out.
Do the math over the cost of the phone outright plus the plan that suits you, compared to the upfront and the 2 year plan, to see if it is worthwhile. If it isn't, buy outright. Sell at a good price when you want to if you wish to upgrade.
An iPhone is not a $100, or $200 phone, you will pay for it either way, unless the plan is what you would get anyway and you would find you get some discount. A phone is not free nor is the telco plan
I disagree. T-Mobile hasn't had subsidies for almost a year now and the resale prices on their phones has largely remained the same. The reason the Nexus has a decent resale value compared to other Android phones is that for the tech that it uses, it is already severely underpriced compared to similar phones even when brand new. So when phones with similar features are 6-9 months old and have come down to around the Nexus prices in resale value, it remains in that area because it offers similar tech and features to said devices. It also helps that Google is only releasing 1 of them per year while other Android OEMs release tons of phones per year.
On the resale value of the iPhone, it's already sky high for various reasons. Far above the $300 you quoted. If I go to Verizon and buy a $199 subsidized 5S right now I can throw it up on eBay tonight for $600 and it will sell overnight. Ending subsidies won't affect this.
If people were forced to pay $649 out of pocket for iPhones then you might have a point, but like T-Mobile, all the carriers will do is move around how you pay for the device. Instead of hiding it in your bill you just make monthly payments instead and the cost of your service is lowered to offset those payments. Yes people are aware that their bills will go down if they hold out for 2 years and keep their phone, but I've seen it first hand, whenever a shiny new device comes out the majority of American consumers can't help but want it. ("Oh you mean I can have this brand new iPhone for $99 right now and only pay an extra $20 per month on my bill?"). Very few will hold out beyond two years and the carriers know it. They'll sell tons of phones without having to subsidize them. Why do you think they've been wanting to do this so long but were afraid to?
So yes people will still walk out of carrier stores with $99, $199 upfront iPhones. The resale value on them will remain largely unchanged and Apple will end up selling MORE iPhones due to frequent upgrade programs like JUMP and NEXT and the fact that financing allows people to pay even less upfront for their iPhones than the $199 that they pay right now. Few consumers do the 24 month math, they only care about the right now. Get the phone now, worry about the payments later.
I made a similar comparison a while ago between two almost-identical devices, save for the GSM radio, an iPod Touch and a matching iPhone: my rough calculation was Apple made around 120% margin on the iPhone. So yes indeed, artificial inflation illustrated.
We tend to copy what's worst in our neighbors
Huh, AFAIK no decent credit card offers a 3-months financing option. At least Apple doesn't force you to get yet another credit card just to finance an iPhone.
Reminds me of a customer I got. While about each of them wanted a 30-day payment time (usually the less they order, the longest they want this period to be), another was remarkable in the sense he always paid on the spot in cold, hard cash, whatever the cost was (and he did order regularly in the 1000's). Real money, no checks or excuses. Just a detail: this guy is not an American.
Verizon iPhone 5s is high resell value because of the unlocking fiasco of other gsm iPhones. Used to be u could pay $2 to unlock iPhones. Verizon iPhone 5s is factory unlocked on gsm side and works lte on most every carriers and reseller except lte.
But of course resell value is high. It's barely February. Wait till September 2014. I said one year old iPhone 5 selling for around $300. Wait for one year iPhone 5s and see it's resell value.
With the new plans on mobile share, I am saving about $90/ month.
I bought a 5s 64gb with the NEXT program. That is like $850. I pay something like $32.69/month for the phone over 26 months I think. So at the end of the 26 month INSTALLMENT PLAN, I actually will still be saving $1500 after the phone is paid off. And if I choose to upgrade this line earlier, I just pay the balance of the total price of the current phone and start all over with NO MONEY DOWN. Not bad at all.
And to whoever compared the NEXT program to financing...it's more like layaway since there is no interest calculated into the price.
I bought a 5s 64gb with the NEXT program. That is like $850. I pay something like $32.69/month for the phone over 26 months I think. So at the end of the 26 month INSTALLMENT PLAN, I actually will still be saving $1500 after the phone is paid off. And if I choose to upgrade this line earlier, I just pay the balance of the total price of the current phone and start all over with NO MONEY DOWN. Not bad at all.
And to whoever compared the NEXT program to financing...it's more like layaway since there is no interest calculated into the price.
It might be harder to sell $649 phone when the $349 phone is just as good.
The result: $649 phone will need to drop in price if it wants to maintain market share.
The result: $649 phone will need to drop in price if it wants to maintain market share.
FYI to some people not in the US. Currently contract prices don't change whether the phone is paid off or not on some US carriers. This makes subsidized pricing more attractive.
If you're going to pay XX amount anyway and don't mind staying with the same carrier it doesn't make much sense not to get a subsidized phone.
If you're going to pay XX amount anyway and don't mind staying with the same carrier it doesn't make much sense not to get a subsidized phone.
Cars are not interchangeable the same way phones are not interchangeable. Just like all cars move you to point b from point a, today's phonemes make phone calls run apps etc.
I regard the nexus 5 in a lesser phone category than the iPhone 5s and not a phone I would want to own. Personally I would rather pay $639 for a new iPhone as I know exactly what my ownership experience will be.
This is very true.
Having iMacs, MacBooks, and iPads, it only makes sense to continue using iOS. While I'm certainly willing to pay a premium, especially for iPhone 6, and genuinely believe that Apple makes the "best" phone, I'm not sure I'd find paying almost 100% over the Nexus 5 palatable.
At $550, sure. $650 - $700, the pricing starts to feel a little disproportionate to me.
the avg consumer isn't gonna go order a nexus 5 from google. they don't even know google makes phones. they want an iphone and will order it at an apple store or at&t etc. Sure, that would be nice if what you are saying would happen, but in all reality it won't. The avg consumer still doesn't understand subsidies and doesn't understand the true cost of phones. "Why would I pay $349 when I can get an iPhone for $99?" They don't care if they pay more per month or "finance" it. The upfront cost is what they don't understand and don't want to pay in the first place.
i'll take a nexus 5 or some similar cheapo phone and a few ipads any day over a more expensive iphone and shelling out extra money for service and an ipad
Nothing wrong with that. I don't like android on a phone platform. But android owns the world. I would rather have a top of the line phone (iphone 5s) as that is tied to me almost 24x7.
It does make sense not to get a subsidized phone if only to give you enough elbow room to negotiate your contract. And yes, if you've been faithful to a carrier, at the end of the contract you can negotiate your price. I was able to get an interesting discount on a plan that was announced at $90, that I paid $65. Then again, my country ranks among the most expensive when it comes to cell phone plants.
I'd say yes and no. If the Android can integrate with a Mac ecosystem, then it would make a viable alternative. I asked this question previously, but no one Android user was ever able to clearly confirm this OS integrated well with OS X, instead pointing out that everything was done through Google's services. No indication about synchronization with private cloud services. So in effect, Android is less flexible than iOS.
Don't underestimate Google's marketing power. A short while ago the avg consumer didn't know Google made a browser. Now, it's ubiquitous, even though inferior to well-established Firefox.
By not understanding this basic economic concept the upfront cost is, they got (and still are) in serious trouble, living paycheck-to-paycheck and abusing their credit cards, only sustainable while money flows in, not when quality employment is scarce.
OP here. The more I think about what I posted the past few days, I've changed my mine: And it depends on this:
Apple isn't in serious trouble in the USA if carriers end their subsidies.
I know make this statement based on Apple's competitor prices.
So Samsung may actually be Apple's friend in this. Hard to believe. Not sure many people remember. But MSRP for Samsung Galaxy S3 was $550 at retail ATT stores. Yes, that was the full price of the Galaxy S3 when it was released in 2012.
With the Galaxy S4, Samsung actually raised the MSRP prices by a good $80 to around $630.
So long as Apple has "friends" keeping up the prices on the high end, Apple may not be in trouble after all.
Apple isn't in serious trouble in the USA if carriers end their subsidies.
I know make this statement based on Apple's competitor prices.
So Samsung may actually be Apple's friend in this. Hard to believe. Not sure many people remember. But MSRP for Samsung Galaxy S3 was $550 at retail ATT stores. Yes, that was the full price of the Galaxy S3 when it was released in 2012.
With the Galaxy S4, Samsung actually raised the MSRP prices by a good $80 to around $630.
So long as Apple has "friends" keeping up the prices on the high end, Apple may not be in trouble after all.
An iPhone 5s and an iPad Air are so completely different. Making a large device is infinitely easier than a small one, even if the components were exactly the same. The R&D for the components/materials/antenna design are COMPLETELY different. So I can absolutely see why they cost similar amounts, or that the iPhone costs more.
That's true when it comes to a PC. But not for a device like the Air. It is also designed to be as small as possible given it's screen size. Besides analyst have been showing the iPad is more expensive.
Nonetheless, should subsidies end, and retail price reaches full transparency for the end user, the result would be less demand, resulting in lower year to year revenue and net profit growth.
Assuming that Apple, as it should, adapts to the new reality, they can certainly avoid the Blackberry-like collapse.
Assuming that Apple, as it should, adapts to the new reality, they can certainly avoid the Blackberry-like collapse.
First that would be true for all other high end devices as well. So either they all collapse or all thrive. Secondly subsidies are not ending, the carriers are calling it by a different name.
The past week, after reading all the different points of view, I believe most Americans will focus more on the 0% and monthly cost, rather than the actual retail price.
So, I do believe for many (the mass market), the free financing will mask enough of the true price where most consumers buying decisions won't be affected, one way or the other.
I've felt for quite a while that phones unlocked in America (and elsewhere) are just ridiculously expensive. It was less of an issue when signing a contract here in the States was no different than bringing a phone to a carrier. (Unlocked, used, etc.) That is now changing here. T-Mobile doesn't have hidden carrier fees and AT&T is offering you a cheaper bill if you bring a device to them. It's starting to make sense to purchase off-contract in America.
What I hope will happen is that phones will be cheaper in the future off-contract. I hope the Nexus 5 and Moto G are making consumers think twice. I hope we see a trend of great and affordable options off-contract. IMHO paying $650 for a phone is just crazy. $850 for an unlocked 64 GB 5S. I feel like I'm taking crazy pills. Let this nonsense end and end soon.
What I hope will happen is that phones will be cheaper in the future off-contract. I hope the Nexus 5 and Moto G are making consumers think twice. I hope we see a trend of great and affordable options off-contract. IMHO paying $650 for a phone is just crazy. $850 for an unlocked 64 GB 5S. I feel like I'm taking crazy pills. Let this nonsense end and end soon.
Two things. One is that the N5 is, by design, an off-carrier device while the iPhone is not. If Apple had come into it from that angle I'd argue the iPhone would be more like $499, not $650. The markup there is for the telco.
Secondly, you're harping on the Nexus but ignoring all the similar devices on the Android side of things.
Galaxy S4 GPE: $649
HTC One: $599
LG G2: $699
Moto X: $569
So the iPhone is actually right in the middle of things when we go by on-contract phones.