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iPhone 6 Component Costs Estimated to Begin at $200, Samsung Supplying Some A8 Chips
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Adding the total cost with the carrier for the life of the contract, yes you do pay more that the cost of the phone.
However, paying full price for the phone doesn't get you a better data plan here in the US(ATT, Verizon). So you are going to pay roughly the same amoun over a 2 year period for service.
Not at all.
There are plenty of options in the cell phone market that provide to the customer identical user experience. And or at least, functionality.
Hell, an old Blackberry still makes phone calls, handles texts, emails, etc. with ease.
The attraction of an iPhone over a cheaper, easier to get Android device is that it is made by Apple.
The only counter argument would be investement in ecosystems. Assuming you've invested hundreds, or thousands into iOS applications. BUT, if thats the case, again, all that means is Apple has you locked in and as such can charge whatever they want.
The freedom for the consumer has never been more large, the choice made is made through emotional needs, not rational ones.
Some of you guys would still be waiting for Iphone 6 plus if it wasn't for Samsung supplying those processors...
Of course I felt compelled to comment, because even additional costs would put themselves far below what I and other paid. Not angry by it, but just commenting. It's worth the price in the end.
I know. It was a simple comment about the price paid versus its estimated costs. It's the only smartphone I'd pay that much for.
Yeah you guys need to relax with the R&D argument. Do you really think Apple spent $1.5 BILLION on R&D for iphone 6? Even if everything is factored in, R&D, packaging, shipping etc, don't kid yourself into thinking Apple isn't making HUGE margins...like over 50% on ALL models (not that there's anything wrong with that).
This is gross profit. That's very, very low. It would be interesting to see what the Net is. Likely 8 to 10%, or even less if they're lucky.
With Verizon, if you use their Edge program or pay full retail, you do get a discount of either $10/line (so $240 over 2 years, so not enough to cover the $450 subsidy) for 8 GB plans and less, or $25/line (so $600 over 2 years, or s savings of $150). So still something, though not much.
I highly doubt it is anywhere that low. R&d wouldn't be much due to the large amount of phones Apple sells, shipping is cheap and apple doesn't go all out in advertising like Samsung.
Apple announces its R&D expenses in its public filings. It reported $4.3 billion for the prior nine months ending last quarter. I suspect a bunch of that was on the iPhone, iOS8, and features such as Apple Pay which will help sell the iPhone 6. Adding $10 bucks to each phone's cost for R&D is not an unreasonable assumption, I believe.
But yes, Apple makes huge margins on these phones. And I suspect even better margins on this version of phone in particular the 6 plus.
New iPhones were released only 4 days ago. Your expectations need to be revised.
Welcome to MR, by the way.
Ok I didn't know they spend that much. That's actually quite a lot but it still will be let's say $25 per device for R&D. Add $75 for advertizing, shipping, patents etc, and you're at $300 For a device they sell at $650 in the US, and much more in many other countries. Pretty impressive margins.
I wish people would stop using the term subsidy. AT&T isn't subsidizing my phone. I'm paying off the phone every month as part of my phone bill. Just because you don't pay the full cost of the phone up front doesn't mean its subsidized. I didn't pay the full amount for my new car when I bought it either. No one says car dealerships subsidize new car purchases.
Apple's real margins are in the financials. The gross margins mean nothing at all.
Apple's product is not the hardware alone, but its entire ecosystem, this is its main distinction from others. That's were half its effort goes.
You get a complete software suite with your phone, does android offer this without having to connect to the network and being tracked? Not at all.
You aren't paying for the phone 3 times over. Wish people would stop saying this. You can't include price of the service(which is what everyone pays, regardless if you bought outright or on contract), in the price of a subsidized phone.
Yes, let's forget about costs like staff, buildings, legal, assembly, design, transport, etc. Let alone profit.
My family spends about $1,000/month on food & household items. How about I pay you $1,500 to buy my items and cook my dinners. You'll be makin a huge 50% profit margin. Unbelievable! I'll let you get away with it.
no free lunch...
Not at all.
All you're really doing with the $200 is paying a portion of the device upfront, but your service plan will extract the remaining balanced owed on the device through it's monthly contract billing rates. And if you're not careful, you can end up actually paying more for the device after 24 months if you decide not to upgrade your phone at that point in time as some carriers won't adjust your monthly bill after the phone is paid off, thus perpetually paying for the device portion of your service after it's already paid in full.
See T-Mobile USA's website for the overall concept in separating the pricing structure of the service plan vs. the device itself here.
Not at all.
All you're really doing with the $200 is paying a portion of the device upfront, but your service plan will extract the remaining balanced owed on the device through it's monthly contract billing rates. And if you're not careful, you can end up actually paying more for the device after 24 months if you decide not to upgrade your phone at that point in time as some carriers won't adjust your monthly bill after the phone is paid off, thus perpetually paying for the device portion of your service after it's already paid in full.
See T-Mobile USA's website for the overall concept in separating the pricing structure of the service plan vs. the device itself here.
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the component cost of a banksy piece is about $10
At the intersection of technology and liberal arts the real estate is pretty high
At the intersection of technology and liberal arts the real estate is pretty high
I see the poster you quoted is in Ireland, and as I understand it, dealing with a totally different carrier business model.
Like you, Im in the US, and here, I have yet to see much difference when youre dealing with the major carriers in the US.
Im currently on Verizon, if I dont pick up a new 2 year contract, my monthly bill for service will be the same. Ill wind up being with Verizon for another 2 years anyway, since Ive already done my time with AT&T, and the other carriers dont offer what I feel is acceptable [LTE] coverage. So all the subsidized price does to me is lock me into a contract I was going to have anyway, so why not let them cover 50%+ of the price.
It is not a subsidy, its a loan with not too bad rate.
In Canada on Fido (Rogers subsidiary), you got :
For Iphone 6 64G $600 ("subsidy", extra you pay over the same plan you can take without buying Iphone) + $365, for a $850 dollar phone.
About 9.5% interest per year, not horrible, but its better to finance it yourself on a credit line if you can or pay it cash.