Clearly you know nothing about economics. It costs Apple more than just the cost of materials to make an iPhone. Companies charge what people are willing to pay for a product or service. Don't like the price, don't buy the product. Grow up.
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Why Don't Carriers Just Let Us Upgrade?
- Thread starter blairh
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Clearly you know nothing about economics. It costs Apple more than just the cost of materials to make an iPhone. Companies charge what people are willing to pay for a product or service. Don't like the price, don't buy the product. Grow up.
THe HTC EVO was $550 with no subsidy when my mother in law bought one (don't as me why). All smartphones are on the $400-600 range. The BOM on the 4S is supposedly around $200, which makes it priced about average for electronics. 1/3 in parts, 1/3 in R&D/engineering, marketing, long term support, etc, and 1/3 in profit.
But here in the States, we don't get a reduction of monthly charges if we buy the phone outright. The carrier gets the same amount of money each month.
$199 phone, 2 year contract, $70/mo
$649 phone, no contract, $70/mo
There are no advertised prepaid options - unless sprint is finally with Virgin Mobile. You can finagle with ATT go phone, but think you are very limited with data.
It's judgmental, condescending remarks like this, with a zinger at the end that give Apple enthusiasts a bad name. Too bad they are required to boosts the authors ego.
And people wonder why fanboys are viewed as immature little boys. Now with their super hero gone, their level of fear & insecurity will skyrocket.
Imagine the lawsuit when the first people with a $5000 ETF realized what they had done to themselves.
So cost for Apple of buying millions of phones from a contract supplier is $200 per phone and you think it is greed to sell you 1 phone for $600 without a contract?
You are forgetting the $200 Apple pays it's supplier does not include costs for development, distribution, marketing or service. Those Apple stores located in premium locations aren't cheap real estate either. To complete it all, there is PROFIT...
Of course, if you were a company and asked Apple about buying 10,000 or 20,000 I-phones for your staff, there would be a discount.
No more off base than people thinking they should get a break for not fulfilling their contract that was discounted on the front end.
You all want a deal, but don't want to honor the deal you made.
Your comment displays your lack of ability to conduct a civil discussion. Are you 12?
OMG. Apple is pocketing $400?
So I guess all the engineers, customer service reps, programmers, etc. at Apple work for free? And all the Apple Stores are in rent free zones? And developing iOS is free?
Price gouging? Please....
The CellCos need to make their money back which is why they don't generally accelerate fully subsidized upgrades. That said they are dumb to no prorate early upgrades for people in a 1-3 month window. $250 is ridiculous if you only have a month or so until a full subsidy. They'd keep a lot more customers happy if the fee was proportional.
NOPE. This would be right IF you got a discount for signing up with a carrier with an unsubsidized phone. However, since you don't in fact get that discount and pay the same monthly rate as someone with a subsidized iPhone, essentially when you buy an unsubsidized phone, and use any of the major carriers you're paying, say, AT&T for something you aren't even getting.
How are you overpaying by buying with a subsidy, when you pay the same monthly rate no matter what?
Explained above. Pick your poison. Either you want to upgrade badly enough to pay for an unsubsidized device or you wait. Which is more important to you?
Doesn't matter. You need to consider it from the carrier's perspective rather than being stuck in your own. They're in the service business. They make money on selling service. They do make money selling devices but it's not as significant. It really doesn't matter which device you intend to buy.
In my experience you have more leverage under contract if your plan generates a good amount of revenue for them. If you just have one line then you'll have no leverage. I've had them grant early upgrades but my account had multiple lines and cost me a few hundred per month.
Plenty of people do that. Stop assuming that what you do is what everyone else does. Whether it makes financial sense or not depends on the situation of the particular individual being discussed. Try "I find it to be a huge ripoff" next time and provide the why behind your assertion to actually add to the discussion. Your particular situation may not apply to the next person.
Not entirely true. Which carrier offers lower rates if you pay full price on a device? Whether subsidized or not, you pay the same service rates as the subsidized customers. They're just locked into a contract. Even if you switch carriers you're not saving anything on service. You're just avoiding the ETF. That being the case, you only save if you switch carriers frequently enough that you're doing so for periods of time less than typical contracts. It's not quite the straightforward rule applicable to everyone across the board that you're suggesting.
No, they're not pocketing $400. This may be a surprise to you but products cost more than just the cost of materials. This is a very old dead horse. These devices don't develop themsleves, manufacture themselves, market themselves, distribute themselves or support themselves. Parts are just one tiny part of the equation. There's certainly still plenty of profit in there but it's certainly not $400 per unit.
If you can successfully run a business by selling products only for the cost of materials then by all means do so and prove us wrong. Good luck with that business model.
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LOTS of people do that. In fact, I buy unsubsidized. It makes better financial sense when you travel out of the U.S. a lot.
Good point, thanks for calling me on that I was not aware that the cost was not higher with a subsidized phone.
Apples net margins are high, but not that astronomical. Microsoft and intel had higher margins back in the 1990's
Yeah. Maybe the 16GB iphone. And maybe without the cost of accessories like the charger, headphones, printed materials, packaging....freight to the US, etc. etc.
And if you want an iphone for $200 then you won't mind it coming with no OS, and no warranty and no phone support or in-store exchange. You think all that stuff is free? Apple has to pay for their call centers, R&D labs, software labs, etc. The profit isn't nearly as high as you think it is.
So let me get this straight, you are buying a top-of-the-line high tech device with support, software and warranty coverage and you want it at cost (which is considerably higher than your suggested $200 after you include the cost of software develpment, warranty, etc.)? Grow up and learn a thing or two about business. If you think Apple is price gouging you have no idea what it takes to design and build these devices at all. Nothing wrong with ignorance, but educate yourself before you speak with authority on something.
The thing that I really hate is that there aren't any OPTIONS
To the carrier apologists on here, yeah WE GET that they are in business to make a profit, but their market is an oligopoly so there is no competitive reason to give customers other options, as this would cause the other two to follow suit which.
You are currently given 2 options: Pay full cash price or a 2 year contract.
If they had something where you could pay an extra $100 and have only a 1 year commitment, I would jump all over that.
To the carrier apologists on here, yeah WE GET that they are in business to make a profit, but their market is an oligopoly so there is no competitive reason to give customers other options, as this would cause the other two to follow suit which.
You are currently given 2 options: Pay full cash price or a 2 year contract.
If they had something where you could pay an extra $100 and have only a 1 year commitment, I would jump all over that.
Hence AT&T and others spending millions in/around DC to make the laws as impossible as could be for REAL competition to occur in almost all areas around the country
Why most of the Pro-AT&T people ignore this is quite telling.
Many here say, "Don't like it? LEAVE AT&T" to which I ask..."Where?". The only other option I had in my last city was Verizon which was the same price and same policies. There is nowhere else to go and many here say the same thing.
So, consumers are fighting back by arguing while sticking around b/c they have no other options.
Fighting with your pocket sounds "cool" online yet many needs the phones for work, family, etc...
Honestly? It's just an assumption.
Let me rephrase it: I can't imagine how it would take AT&T or any other carrier 24 months to make back the cost of the subsidy.
Hey you know what would be really cool? If you could just pay the difference of what you owe them.
When I bought my first iPhone (the 3GS) I was about 28 days from my eligibility date. I knew that in the past they had given me a 30 day grace period so I attempted to upgrade to the 3GS. The manager told me that they couldn't do this with iPhones because Apple wouldn't allow them to do so. Always worth a try though.
FYI for discussions:
Apple makes over 2/3 of the world's smartphone profits among major vendors.
Most manufacturers make anywhere from 20-40% gross margin per smartphone. Common analysis is that Apple makes about 55% gross margin per iPhone.
After costs, Apple has about a 30% operating margin (up to 3 times other makers). So if if they sell it for $600, their net profit before taxes is $180.
With 130 million phones sold, that's over $23 billion dollars net profit to add to the other tens of billions Apple has stashed away, most of which is not being used for R&D or anything.
Apple makes over 2/3 of the world's smartphone profits among major vendors.
Most manufacturers make anywhere from 20-40% gross margin per smartphone. Common analysis is that Apple makes about 55% gross margin per iPhone.
After costs, Apple has about a 30% operating margin (up to 3 times other makers). So if if they sell it for $600, their net profit before taxes is $180.
With 130 million phones sold, that's over $23 billion dollars net profit to add to the other tens of billions Apple has stashed away, most of which is not being used for R&D or anything.
I think your math is a bit off, but I get your point. So what, they are making too much money? Is that it? Should they arbitrarily lower prices or hand out rebates like candy until they make only $20 billion? $10 billion? $1 billion?
This is a FREE market. No one is making ANYONE buy Apple products. People buy them because they want to. And Apple prices them to maximize profit. It's what they are SUPPOSED to do. Apple shareholders expect it and demand it.
Having strong cash reserves allows Apple to make strategic acquisitions, secure sources of parts, invest in new ideas. They are not a charity, and they are not here to make cheap stuff for us to buy. There is nothing unfair, illegal, or immoral about having a wildly successful business. If more companies were as committed to innovation and quality like Apple, we'd live in a better place.
Our gadgets would also be a lot more expensive, but that's why there's Samsung, Motorola, HTC, etc.
I beg your pardon. I'm simply giving common analyst figures so people don't have to constantly debate what the profits are vs. BOM.
They can make all the money they want.
Let's not go overboard. Most of their money is sitting in overseas banks so they don't have to pay USA taxes. They're not using that cash to invest in new ideas or jobs.
We also need companies that don't exist solely for making huge profits.
Without low innovation, low profit items, billions of people would not have been able to afford to be as connected as they are now, and Apple wouldn't be able to profit from the existence of all that infrastructure.