Spoiled by the All-in-One Gadget
By SAM GROBART
Published: March 26, 2011
AT&Ts announcement last Sunday that it plans to acquire T-Mobile was quickly analyzed to be bad news for consumers. If the merger is approved, rates are likely to go up, not just for T-Mobile customers, but for everyone, as there will then be only three companies carving up the majority of the national mobile market.
Some consumer advocates and politicians will decry this as Big Mobile enriching itself on the backs of the American consumer. And while that may be true, we will nevertheless continue paying, because the mobile operators well know, and we know too, that for many of us, our smartphones have become invaluable.
It is little wonder why: The smartphone contains massive computing power in a hand-held package. It is connected to a global data network that moves words, sounds and images from one end of the earth to another at the speed of light. It is changing the worlds of communication, commerce, politics, entertainment and countless others.
A rise in rates would bring the United States in line with many other countries. Currently, the United States enjoys one of the more affordable mobile marketplaces in the world. Over the past five years, per-minute costs have gone down in the United States by 50 percent, according to Chetan Sharma, a mobile analyst. In countries like France and Italy, the decline has been only 20 percent.
Roger Entner, an analyst who follows the cellphone market, said: Americans are enjoying the lowest cost in the industrialized world. Right now, we dont know how good we have it.
Consider what a smartphone can do, and the devices it replaces, and its value increases. A refurbished iPhone 3GS is currently on sale by AT&T for $19. With the least-expensive data and voice plans and a two-year contract, a customer would pay around $1,800 over 24 months, including taxes and fees.
But to do all the things a smartphone can do without buying one, that same consumer would need to buy the following:
A cellphone (at least $800 over 24 months: $20 for a device, plus $25 or more per month on a prepaid plan, plus taxes and fees).
A mobile e-mail reader ($430: the Peek 9, an e-mail reader, is $70; two years of service costs $360).
A music player (an iPod Nano is $149).
A point-and-shoot camera (around $200).
A camcorder (around $200).
A GPS unit (they start at $80).
A portable DVD player (they start at $60).
A voice recorder (around $40).
A watch (around $30).
A calculator (around $10).
Total cost: $1,999
In a smartphone, all those devices are reduced to software. They are a tap away, and new functions or services can be downloaded in seconds.
One of the side effects of this is that it becomes hard to appreciate the value of things. We become complacent because we now have tremendous capabilities that we can access with ease (even those of us who are technophobes). Louis C. K., the comedian, made this point when he appeared on Late Night With Conan OBrien in the fall of 2008. Everythings amazing and no one is happy, he ranted about the spoiled nature of the American consumer.
Consider what used to be required to buy a camera, or a GPS unit, or any other kind of gadget: You had to research which model to buy. Time was invested in either going to the store or waiting for the device to arrive in the mail. There was hardware packaging and a piece of equipment inside, all cues that it took someones labor to make it. And because of those cues, we ascribed value to the object, and were willing to pay for it, sometimes handsomely.
Compare that with the smartphone experience. A camera or GPS unit is probably already included in the device. Adding new things, like a special alarm clock app, is a 20-second process of searching and downloading. Many of the cues of the physical world time, mass, tactility are absent. Without them, our sense of value is knocked off its moorings.
The pricing of apps reflects this new territory. Zagats restaurant guide app, for example, includes one year of access to every guide the company publishes for a year.
Added features include a searchable database, the ability to find restaurants near you using GPS, images of restaurants dishes and the ability to make reservations online, directly from the app. It costs $10. The printed 2011 Zagat guide to New York restaurants, which is limited to the five boroughs and has none of those features, costs $16.
And so mobile plans will become more expensive. And because complaining about the phone company predates the arrival of the smartphone (and because mobile operators continue to give us so many reasons to complain), there will be a lot of grousing and grumbling but people will continue to pay. In a few short years, too many people have taken to the smartphone wholly and completely to turn back. And in the greater context of what the smartphone can do, it still looks like a bargain.
Smart phones are typically replaced, ever 1-3 yrs.
