Why is the iPhone 2.5x as expensive as iPod Touch

Discussion in 'iPhone' started by osx11, Jan 27, 2014.

  1. osx11 macrumors 6502a

    Joined:
    Jan 16, 2011
    #1
    Just curious:

    32GB iPod Touch: $299

    32GB iPhone 5S: $749


    Of course Apple can charge this amount because people are paying for it. But that's still one ridiculous markup.
     
  2. Intell macrumors P6

    Intell

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    #2
    The 5S contains much newer technology, additional parts, and generally has a slightly higher build quality. All that as well as radio licensing fees adds up quickly.
     
  3. iamMacPerson macrumors 68030

    iamMacPerson

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    #3
    You gotta think, the iPhone is a much more capable then the iPod touch. Just spec wise, the iPod touch has the 4/4Ses internals: 800MHz 32-bit Dual Core A5 (4S), 512MB of RAM, 5MP Camera (4). The iPhone 5S has the faster 1.3GHz 64-bit Dual Core A7, 1GB of RAM, and an 8MP Camera with a better aperture. The iPhone also has LTE and 3G where the iPod doesn't, makes phone calls (we all know that) and has GPS antennas.

    The iPod touch still requires that you carry around 2 devices; a phone and MP3 player. iPhone merges them.

    Plus, buying the iPhone 5S on contract makes it same price as the iPod touch, but you do have to sign a 2 year contract.

    I have a feeling you already know all this, but I felt like relaying it. :)
     
  4. aneftp macrumors 68040

    Joined:
    Jul 28, 2007
    #4
    Simple. Capitalism. Laws of supply and demand.

    Clearly iPhone is apple's current cash cow. Today's press conference said it accounts for 52% of all of apples margins.

    I think the cost to make an iPod touch is around $120? Give or take. And cost to make iPhone 5S is around $200?

    That's why Google/Lg can still afford to sell the nexus 5 for $350. LG is still making a small profit from the nexus 5. Cause nexus 5 probably costs around the same $200 to make.

    Of course you have to factor in marketing and labor cost. Still iPhone doesn't cost apple more than $250 overall even factoring those costs.

    Just pure supply and demand.

    People might have forgotten apple tried to sell the original iPhone for $600 8gb in June 2007 no contract. Than lowered it by $200 to $400 by September 2007. Clearly Apple marks up the iPhone. Cause they were still making money at the $400 price point.
     
  5. cyks macrumors 68020

    cyks

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    Westchester County, NY
    #5
    It's a good thing that R&D doesn't cost anything.


    Google doesn't care about or need to make profit with phone sales, they make their money by selling and using the users information.
     
  6. The Doctor11 macrumors 603

    The Doctor11

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    New York
    #6
    The LTE thing alone cost apple $35 and apple likes money.
     
  7. 617aircav Suspended

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    Jul 2, 2012
    #7

    Its not only apple all smartphones are priced this way.
     
  8. Mrbobb macrumors 601

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    Aug 27, 2012
    #8

    If they charge you less, then you will be complaining Apple doesn't know what it's doing by under cutting the iPod Touch!

    Can't win.
     
  9. darricksailo macrumors 601

    darricksailo

    Joined:
    Dec 18, 2012
    #9
    What about R&D?

    And iPhones aren't the only phones this expensive. The samsung flagships are the same price too
     
  10. Shanghaichica macrumors 603

    Shanghaichica

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    #10
    Yes these days Samsung try to make their flagships more expensive than apple's when they are first released.
     
  11. aneftp macrumors 68040

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    Jul 28, 2007
    #11
    Technology is supposed to get cheaper over time.

    The high end cell phone market Apple and now Samsung own has always hovered around $600-700 msrp (previously was held by nokia with their N series back in the days).

    But i don't think Nokia in their heydays ever sold their N series in the millions per quarters like Apple has been selling at those high price ranges.

    Maybe tmobile USA uncarrier strategy to try to
     
  12. 617aircav Suspended

    Joined:
    Jul 2, 2012
    #12

    The tech in these phones are not the same year after year. Tmobile is still selling the phones at the same price as anyone else.
     
  13. barkmonster, Jan 28, 2014
    Last edited: Jan 28, 2014

    barkmonster macrumors 68020

    barkmonster

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    Location:
    Lancashire
    #13
    You don't pay the same price by signing a contract, you subsidise the cost of the device by repaying what's effectively an interest free loan for the remainder of the phone contract as part of it's value.

    O2 in the UK (who I will be leaving ASAP after I suffered their warranty scam with a less than 1 year old phone) offer the iPhone on a "refresh" scheme where the monthly amount you pay is the same as a traditional contract but the 2 parts are specified and can be repaid earlier.

    EG.

    £29 for a 16Gb iPhone 5C + £42 a month = £20pm for the phone & £22pm for the service.

    Previously it was still the same £29 for the 16Gb iPhone and £42pm but the only early repayment they offered was a 25% discount on the total remaining monthly payments if paid in a lump sum.

    This is how iPhones are "perceived" to be affordable. You still end up paying £509 in total for the most basic model regardless of service costs.
     
  14. ThatsMeRight macrumors 68020

    Joined:
    Sep 12, 2009
    #14
    So really, that doens't make it the same price. That makes it $299 + (24 x [insert monthly payment here]).

    Sure, you are paying for data, text and minutes... but you are definitely paying for the phone as well.
     
  15. cynics macrumors G3

    Joined:
    Jan 8, 2012
    #15
    It does have more tech and better tech but it's mostly supply and demand.

    If you had something you could sell for 700 dollars would you sell it for 300?

    Subsidizing closes the gap caused by the amount of people that can't afford the 700 but can afford the 300.

    The main thing is profit margin though. Selling an iPhone for 700 to 10 people maybe more profitable then selling it for 300 to 50 people depending on profit margin.

    Regardless supply and demand. If people stop buying it then it will get less expensive.
     
  16. NuggetSauce macrumors regular

    Joined:
    Aug 10, 2012
    #16
    I paid $300 for a current gen iPod Touch. Paid $99 for my iPhone 5 (Sprint 2 year agreement w/port in promo).

    I'd never pay full retail for a smartphone.
     
  17. BittenApple macrumors 6502a

    BittenApple

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    #17
    You're paying it off in the long run.
     
  18. Krimsonmyst macrumors 6502

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    Dec 18, 2012
    #18
    Not a direct answer to the thread but something someone said - in Australia iPhones are more expensive than other flagships by a decent amount.

    For example, the S4 outright when it launched was $749. The base model 5S was $799 when I launched, and it went all the way up to $1,099.
     
  19. carjakester macrumors 68020

    carjakester

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    Midwest
    #19
    why?
     
  20. CEmajr macrumors 601

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    Charlotte, NC
    #20
    You're paying for it anyway over the course of your contract (full retail). iPhones don't really cost $99.
     
  21. Nolander07 macrumors 6502a

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    Oct 16, 2012
    #21
    Yes, but even if you pay full retail for the phone you still pay the outrageous monthly fees, even if you do not have a contract (at least with the big companies that have good coverage).
     
  22. iamMacPerson macrumors 68030

    iamMacPerson

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    AZ/10.0.1.1
    #22
    Oh I know. Trust me. Its ridiculous.

    Thing is most smartphones are like that, so you might as well get the most expensive one.
     
  23. Applejuiced macrumors Westmere

    Applejuiced

    Joined:
    Apr 16, 2008
    Location:
    At the iPhone hacks section.
    #23
    There's plenty of MVNOs that use the big carriers networks to run their service off.
    And you don't have to pay $100-120 a month for an individual iphone plan or be locked in a 2 year contract.
    Try $35-45 including taxes.
     
  24. Krimsonmyst macrumors 6502

    Joined:
    Dec 18, 2012
    #24

    *Shrug* - we get an 'Australia tax' on a lot of our stuff. Although weirdly while some products have a heavy extra cost, others don't.

    Apple products are at an extreme premium here.

    Edit: to give you another example...in the US the PS4 was $399, in AU we paid $549. And our dollars are pretty similar currently.
     
  25. 617aircav Suspended

    Joined:
    Jul 2, 2012
    #25

    I paid 750 for my iphone, moved to prepaid (aio) and I'm saving $60 a month compared to what I was paying on AT&T contract.

    ----------


    Only the ones that are not smart of have no choice due to coverage would remain on the same plan after buying a phone outright and being out of contract. So many sub $50 plan options out there.
     

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