iPhones/Galaxy S5/Note 4... Consumer Price Gouging

[SnowLeopard2008]

I don't think he has bought the phone... I think he wishes to buy the phone and is mad that he can't afford it... He clearly has started this thread with a one point agenda... He doesn't even read the posts which address and answer his concerns...

I've come to realize this. Thanks.

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I made a typo. Corrected that and added the iPhone 6 price while I was at it.

It costs more to make the logic board smaller. But for things like displays and digitizers (two significant costs on the iPads), costs increase with size. Same with batteries. LTE iPads use the same basebands as iPhones, and thus are subject to the same IP costs for using cellular technology. While software support for the phone is missing, iPads have plenty of unique software enhancements themselves.

The only real answer is that Apple is able to get away with the iPhone pricing because of subsidies inflating the prices across the board. If those subsidies never existed, the iPhone would very likely be cheaper than its bigger brothers.

That bottom part is pure bull. Subsidies don't inflate the price. The very definition of a subsidy is to decrease the price. Seriously...

Also I noticed later on that you modified your post and I modified mine in accordance.

 

[terraphantm]

That bottom part is pure bull. Subsidies don't inflate the price. The very definition of a subsidy is to decrease the price. Seriously...

Subsidies shield the consumers from the true cost of the device. So while the out-the-door cost is cheaper to the customer, the manufacturer can set a higher price overall than market forces would typically allow. The percentage of customers who buy the phone outright (without any subsidy or payment plan) is pretty small, at least in the US. Apple's prices seem to be largely, if not entirely, set based on how the US market reacts

 

[SnowLeopard2008]

Subsidies shield the consumers from the true cost of the device. So while the out-the-door cost is cheaper to the customer, the manufacturer can set a higher price overall than market forces would typically allow. The percentage of customers who buy the phone outright (without any subsidy or payment plan) is pretty small, at least in the US. Apple's prices seem to be largely, if not entirely, set based on how the US market reacts

That is called capitalism. If they were to tailor the price across each market... then it could be price gouging in certain countries. Also, it would be messy for accounting. It's easier and more fair to have ONE price that you convert into different currencies than to have a local price. Otherwise, how do you judge the local price? You can't do it fairly. But if you have one price for every single damn person in the world, tailored for import taxes and customs that is default for any product entering the country anyway, then it would be the most fair.

Also, your first point (in bold) only proves true if the price point moves frequently. For iPhones, it was $599 at first. Then it went down a little bit. And after that, it has stayed at $649 for the entry model. Also, taking into account inflation, the price has actually gone down... iPhones have largely stayed at the same exact price point for many years.

 

[booksbooks]

Well that is also not correct. They are all different product categories. iPhones and iPads share so many similar components. The WiFi chip, Bluetooth chip, SoC, many other ICs are the same. The only major difference between an iPhone and an iPad is the enclosure, battery and display. The actual computer part of it is extremely similar. But the other products? You can't compare them so generally.

Mac Mini doesn't have a display. iMacs do. So that accounts for part of the price difference. iMac displays are also calibrated, which requires labor and that's not free. Mac Mini doesn't have a dedicated GPU, some iMacs do. iMacs also come with keyboard and mouse, both of which aren't free to make.

Actually, the 13" MBP is cheaper than 15"... I think you meant the 13" should be more expensive. But again, the reason for that is the 15" has different components like more expensive processors (quad core vs dual core), dedicated GPUs (these are expensive), bigger/higher resolution displays, etc.

Also, the size ratio between iPad and iPhone is much larger than 13" MBP and 15" MBP. So the price difference between iPad and iPhone is larger than 13" and 15" MBP.

11" MBA has different components than either of the MBPs. Processors are cheaper since they are ULV. Also, if you remember, the first ever MBA were significantly more expensive than either MBP models. Why? Because it was really hard to make it thinner/smaller/lighter/etc. And it cost a lot more. It was only after a period of time that the costs went down. Again, business/economics 101. Price does down in time because of more volume over time. It costs less per unit if you produce say 10 million than if you produced 5 million. Economics of scale works here.

The Mac Pro is more expensive because the internal components are different. Xeon processors over Core i3/i5/i7. ECC RAM over no ECC. Dual dedicated desktop class GPUs over mobile GPUs or integrated Intel GPUs. 6 Thunderbolt ports and 3 Thunderbolt chipsets.

I can go on and on... but the crux is that you misunderstood the definition of price gouging.

You just countered your own argument with discussing different components and how those are more expensive on say bigger machines. The iPads have much larger glass panels/touchscreens which are the most expensive component of the device. All teardowns show the build costs to be higher than the iPhone by as much as $50 or more.

The rMini has a lower build cost than the Air but higher than the iPhone 6/Plus. Yet they are cheaper retail than the iPhones.

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I don't think he has bought the phone... I think he wishes to buy the phone and is mad that he can't afford it... He clearly has started this thread with a one point agenda... He doesn't even read the posts which address and answer his concerns...

I do read the posts and I do own an iPhone 6 Plus. This post isn't contributing anything.

 

[SnowLeopard2008]

You just countered your own argument with discussing different components and how those are more expensive on say bigger machines. The iPads have much larger glass panels/touchscreens which are the most expensive component of the device. All teardowns show the build costs to be higher than the iPhone by as much as $50 or more.

The rMini has a lower build cost than the Air but higher than the iPhone 6/Plus. Yet they are cheaper retail than the iPhones.

Did you not notice the part about hidden costs? iPads don't have these. iPhones do. Particularly RF cellular fees. You selectively pick out the parts that work for your side and then ignore it when it counters your side.

 

[booksbooks]

iPad mini with Retina display, LTE, 16GB is $529...

Again, it costs more to make things smaller. Also, iPads can't make voice calls. iPhones can. There is extra hardware, software and IP costs.

I see you modified your post. Your logic is flawed yet again. For simplicity, let's say the internal components of an iPhone 6 and 6 Plus are the same. All of the chips are the same, i.e. WiFi, Bluetooth, NFC, SoC, RAM, etc. So what are the differences? Larger, higher resolution display. Larger external casing. Larger glass. Larger battery. Better camera (OIS). All of that isn't free. And that's why the 6 Plus costs $100 more.

Honestly, you guys are comparing apples to oranges and then oranges to apples and wondering why it's different.

Please, you're now going in circles.

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[BvizioN]

I don't think he has bought the phone... I think he wishes to buy the phone and is mad that he can't afford it... He clearly has started this thread with a one point agenda... He doesn't even read the posts which address and answer his concerns...

I've come to realize this. Thanks.

Actually you may be right! Quickly reading through his post can tell you a bit more about this user!!

 

[AFDoc]

I'll use US dollars here, pretax.

My iPhone 6 Plus 128 GB cost me $949. Let's keep it simple for comparison purposes.

Apple

An iPad Air 16 GB Cellular costs $629.
An iPad rMini 16 GB Cellular costs $529.
An iPhone Plus 16 GB costs $749.
An iPhone 6 16 GB costs $649.

For every jump in memory on the iPhones, Apple charges another $100.

Some other phones.

A Samsung Galaxy Note 4 (32 GB) retails for ~$750.
A Moto X (16 GB) retails for ~$525.
A Samsung Galaxy S5 (16 GB) retails for ~$600.

Why is this ok? I mean, we're paying $1000 for a 128 GB phone where this price exceeds the price of:

• A Mac Mini
• An 11" MacBook Air (128 GB)d

And is only $150 less than a 21.5" iMac.

Build of Materials Cost (BOMC) for iPhone 6: ~$200
Build of Materials Cost for iPhone 6 Plus: ~$215
Assemblage: ~$5 per unit.

As others have said the BOMC is likely much lower as component pricing for Apple is confidential and likely lower, or much lower, than what the public has access to on a per part basis.

http://www.zdnet.com/teardown-estim...o-make-iphone-6-plus-just-15-more-7000033998/

Please do not reply with the old, tired "But their R&D needs to be paid!"... "But their advertising costs need to be factored in..." If you know anything about these things you know there's a formula for that where these things are indirect costs associated with your product and that they would not account for such a massive markup from BOMC. There's limits on what you spend on these things given what you sell/think you'll sell. Here's the bottom line:

We're paying more for iPhones than we are any other mainstream phone, in some cases by several hundred dollars (Moto X/S5 vs iPhone 6/Plus), as well as paying more for an entry level iPhone 6 Plus compared to an entry iPad Air Cellular. And when you factor in higher memory amounts like 128 GB, the 6 Plus costs about $1000. With such volume and low build costs, the mark up is over $500.

Why is this ok?

The real bottom line is this..... NO ONE is forcing you to buy anything. NO ONE makes you buy a smartphone. Don't like paying that $500 mark up as you call it? Then don't. Your non problem now solved. Have a good one.

 

[Truefan31]

Doesn't the iPhone have a better camera than the iPad? Flash too? Does the iPad have the m7/8 coprocessor too?

Anyway simply iPhones cost more to consumers because the demand is way more for it so apple knows they can charge more for it. They'll charge what were willing to pay. And I don't have a problem with it. Good business.

 

[terraphantm]

That is called capitalism. If they were to tailor the price across each market... then it could be price gouging in certain countries. Also, it would be messy for accounting. It's easier and more fair to have ONE price that you convert into different currencies than to have a local price. Otherwise, how do you judge the local price? You can't do it fairly. But if you have one price for every single damn person in the world, tailored for import taxes and customs that is default for any product entering the country anyway, then it would be the most fair.

Also, your first point (in bold) only proves true if the price point moves frequently. For iPhones, it was $599 at first. Then it went down a little bit. And after that, it has stayed at $649 for the entry model. Also, taking into account inflation, the price has actually gone down... iPhones have largely stayed at the same exact price point for many years.

I didn't say basing the prices on the US market was wrong. I was just pointing it out.

The first iPhone was only sold unsubsidized. After poor reception to the high price, Apple slightly dropped the price and issued partial refunds. Then the iPhone 3G came along, the phone became subsidized, the price of the phone went up to the initial $600 (didn't increase to $650 until the 3GS IIRC) and the monthly commitment increased.

Without the subsidy, market pressure forced Apple to drop the price. With the subsidy, they can charge out the ass and people are none the wiser.

Yes that is capitalism. But it is also an inflated price. Without the subsidy, the iPhone by all rights should be cheaper than the iPad. The increased price has nothing to do with the technology or cost of manufacturing in this particular case.

 

[SnowLeopard2008]

I didn't say basing the prices on the US market was wrong. I was just pointing it out.

The first iPhone was only sold unsubsidized. After poor reception to the high price, Apple slightly dropped the price and issued partial refunds. Then the iPhone 3G came along, the phone became subsidized, the price of the phone went up to the initial $600 (didn't increase to $650 until the 3GS IIRC) and the monthly commitment increased.

Without the subsidy, market pressure forced Apple to drop the price. With the subsidy, they can charge out the ass and people are none the wiser.

Yes that is capitalism. But it is also an inflated price. Without the subsidy, the iPhone by all rights should be cheaper than the iPad. The increased price has nothing to do with the technology or cost of manufacturing in this particular case.

Not a single shred of evidence. Let's agree to disagree.

 

[booksbooks]

Actually you may be right! Quickly reading through his post can tell you a bit more about this user!!

You're wasting your time. You can't focus on the topic so you resort to attacking the poster. Same old, same old. Boring. Yawn.

I own the phone. I have a 128 GB Plus Space Grey with a white Apple silicone case. If you were more mature and sophisticated maybe you'd realize that I am concerned about the telcomm industry and want to see consumers save money where they can. To not be subject to collusion and other tactics that could adversely affect consumers' bottom line.

Do I know of collusion? No. But I'm interested to to learn more about Apple's contracts with carriers.

Why do smartphones like the iPhone 6 Plus or even the Samsung Note 4 cost so much money to buy outright? Particularly when the same technology from the same companies (e.g., iPads) cost substantially less to purchase outright?

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Not a single shred of evidence. Let's agree to disagree.

What on earth are you talking about.

 

[Truefan31]

You're wasting your time. You can't focus on the topic so you resort to attacking the poster. Same old, same old. Boring. Yawn.



I own the phone. I have a 128 GB Plus Space Grey with a white Apple silicone case. If you were more mature and sophisticated maybe you'd realize that I am concerned about the telcomm industry and want to see consumers save money where they can. To not be subject to collusion and other tactics that could adversely affect consumers' bottom line.



Do I know of collusion? No. But I'm interested to to learn more about Apple's contracts with carriers.



Why do smartphones like the iPhone 6 Plus or even the Samsung Note 4 cost so much money to buy outright? Particularly when the same technology from the same companies (e.g., iPads) cost substantially less to purchase outright?

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What on earth are you talking about.

I think it's the issue of most of us don't care about your concern for the telcomm industry. We all know that the iPhone isn't the only phone in the industry. There's choices. Why apple charges more? It's a business decision. That sums it up.

 

[booksbooks]

I think it's the issue of most of us don't care about your concern for the telcomm industry. We all know that the iPhone isn't the only phone in the industry. There's choices. Why apple charges more? It's a business decision. That sums it up.

And you know what? I don't care about your opinion, so check out another thread: there's choice.

 

[Truefan31]

iPhones/Galaxy S5/Note 4... Consumer Price Gouging

And you know what? I don't care about your opinion, so check out another thread: there's choice.

Oh there it is. I gave you the right answer. It's a business decision. What's the problem? There is choice. I'm choosing to answer the thread. It's a business decision. All the links, costs, comparisons. The answer is: it's a business decision.

 

[FriednTested]

Oh there it is. I gave you the right answer. It's a business decision. What's the problem? There is choice. I'm choosing to answer the thread. It's a business decision. All the links, costs, comparisons. The answer is: it's a business decision.

Dude he is a butt hurt chap who just can't afford an iPhone... You think he wants correct answers...? He posts a thread on a forum (a place where people from around the world post OPINIONS) and then tells people to go away because they give opinions which don't fit into his bubble... Need I say more...?

 

[Truefan31]

Dude he is a butt hurt chap who just can't afford an iPhone... You think he wants correct answers...? He posts a thread on a forum (a place where people from around the world post OPINIONS) and then tells people to go away because they give opinions which don't fit into his bubble... Need I say more...?

Yeah I read every post in this thread. To answer his question correctly without rebuttal. It's a business decision.

 

[booksbooks]

Dude he is a butt hurt chap who just can't afford an iPhone... You think he wants correct answers...? He posts a thread on a forum (a place where people from around the world post OPINIONS) and then tells people to go away because they give opinions which don't fit into his bubble... Need I say more...?

He posts this:

I think it's the issue of most of us don't care about your concern for the telcomm industry.

And you post what you just posted.

The contradictory, inconsistent nonsense of this place is laughable.

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Yeah I read every post in this thread. To answer his question correctly without rebuttal. It's a business decision.

Did you collude to inflate prices? It's a business decision.
Did you collude to fix pricing? It's a business decision.
Did you conspire and carry out attacks on Ukraine? It's a business decision.

This answer, "it's a business decision" is absurd in that it's so vague it's no answer at all.

 

[maflynn]

[MOD NOTE]
I think this thread based on the level of arguing and bickering is done.