6 ms·

As phone subsidies go away there's going to be a lot more price pressure on mobile hardware vendors.

by tsotha 11y ago

smackfu 11y ago
It will probably create a gap in phone prices. The under $100 phones, for people who pay the full price up-front and don't need anything too fancy. And the $450+ phones, for people who pay $20 a month for a phone installment purchase plan on something like AT&T Next. IMO, a $300 phone doesn't really fit well in that world. Too pricey for an upfront purchase. And once you go monthly, most people aren't too price concious when comparing $15 per month vs $20 per month.
- soylentcola 11y ago
  At the same time, when I'm buying a new phone (unlocked and up front) I don't go for the $100 phones but I do take price into account. Not that it does much for OEMs selling at those lower margins but it's a large part of why I buy $350-450 phones like the Nexus 5 or Moto X instead of the $650+ iPhone. I think you nailed it on the installment plans though. Splitting up the cost and spreading it out makes a few hundred dollars less obvious (psychologically at least).
- mkozlows 11y ago
  People are more price-conscious than you'd think. I mean, even Apple -- the brand that cater the most to the price-insensitive -- has always sold a decent number of its $550 and $450 phones. The more people see real prices, even if they finance them, the more they're going to reconsider the definition of "splurging."
  - smackfu 11y ago
    The $450 phone was $0 upfront, and the $550 phone was $100 upfront, but they all cost the same per month after that. Scrounging up $200 for a flagship $650 phone is tough for some people, even if they can pay the monthly cell phone bill. Now, with financing, all the phones are $0 upfront. The $450 one is $19 per month, the $550 one is $23, and the $650 one is $27. So I'd wager they sell more of those flagships to people.
    - mod 11y ago
      More than difficult, it just hurts to pay $650 for a phone. I bought a moto g (~$160), I think it's a good balance for me. I want to be able to use the web, basically, and voice commands. But I don't need to play any games or use it for more than communication + entertainment when bored and away from home. I also want it to be reliable, which is primarily battery life--which the Moto G is, clocking a 2+ days with my typical use.
baldfat 11y ago
Well the issue is people STILL won't see the bottom line price. They will get the monthly price. A LG G3 is $17 a month and an iPhone 6 is $25. People do horrible math and don't see that they are paying $200 more for an iPhone 6.
- deleted 11y ago
  [deleted]
- merpnderp 11y ago
  People will pay $5K more for an equivalent Toyota. It doesn't mean they are doing horrible math. Maybe they've sold a previous Toyota and realized, used, they bring in significantly more than the Chevy.
  - baldfat 11y ago
    Me: You know your paying $200 more for that phone right? Them: No, really? Me: It is $8 a month more and at 2 years that is 24 * 8. So in 2 years you are paying $192 more. Them: Shocked look and than they try to do the math in their head and can't and just shrug. This has happened with family members and strangers People can't do simple math in their head. My definition of simple math is business math and specifically do a 2 digit times a 1 digit number.
    - merpnderp 11y ago
      Are you really an adult if you can't do basic maths? I mean in the modern, self actualized, responsible for you own actions, type of adult?
      - tsotha 11y ago
        It may not be obvious if you surround yourself with engineers and programmers, but there are a whole lot of adults out there who can't do that kind of math in their head.
      - mod 11y ago
amrrs 11y ago
that means Apple will be in trouble?
- bunderbunder 11y ago
  I doubt it. As another poster pointed out, phone companies are still offering payment plans on new phones, so to an approximation all they're really offering is a bit more price transparency on the same old pricing model. Also, let's be blunt: Users of Apple products aren't exactly the most price-sensitive consumers in the market. If anything, it'll just make them less likely to buy new phones like clockwork every two years. But if so then probably all smartphone manufacturers will experience something similar.
  - mkozlows 11y ago
    Apple's $650 flagship will probably continue to do fine. But the $450 phones really got a lot of mileage from being "free." If you were buying a phone in 2012 from a normal contract carrier, there really wasn't any way to pay less than $450, because $450 was $0. With real pricing, a $350 phone is $100 less, and anyone who was considering buying a two-year-old phone to save $200 is probably very interested in saving another $100.
    - bunderbunder 11y ago
      Did they? I have seen maybe 2 or 3 5c's in the wild ever, so I just assumed they had tanked on the market. While it's certainly not a random sample, I commute by public transit so I do spend a lot of time watching a lot of people fiddle with their smartphones.
- dharma1 11y ago
  I think that depends on the pace at which Android is developing. Android hardware is incredibly low priced and there isn't a significant difference between iPhone and a mid range android phone in terms of hardware. If the quality of the OS experience is as good or better than Apple, then Apple marketshare will shrink eventually. They are still making a killing in terms of profit margin, and shifting a lot of units so as a company I'm sure Apple will continue to do well for a long time. Android struggled for a long time with user experience and visual quality, but Android 5 and Material Design has been a huge win for them and I'm pretty sure that trajectory will continue.

As phone subsidies go away there's going to be a lot more price pressure on mobile hardware vendors.

by tsotha 11y ago

As phone subsidies go away there's going to be a lot more price pressure on mobile hardware vendors.

It will probably create a gap in phone prices. The under $100 phones, for people who pay the full price up-front and don't need anything too fancy. And the $450+ phones, for people who pay $20 a month for a phone installment purchase plan on something like AT&T Next. IMO, a $300 phone doesn't really fit well in that world. Too pricey for an upfront purchase. And once you go monthly, most people aren't too price concious when comparing $15 per month vs $20 per month.

soylentcola 11y ago
At the same time, when I'm buying a new phone (unlocked and up front) I don't go for the $100 phones but I do take price into account. Not that it does much for OEMs selling at those lower margins but it's a large part of why I buy $350-450 phones like the Nexus 5 or Moto X instead of the $650+ iPhone. I think you nailed it on the installment plans though. Splitting up the cost and spreading it out makes a few hundred dollars less obvious (psychologically at least).
mkozlows 11y ago
People are more price-conscious than you'd think. I mean, even Apple -- the brand that cater the most to the price-insensitive -- has always sold a decent number of its $550 and $450 phones. The more people see real prices, even if they finance them, the more they're going to reconsider the definition of "splurging."
- smackfu 11y ago
  The $450 phone was $0 upfront, and the $550 phone was $100 upfront, but they all cost the same per month after that. Scrounging up $200 for a flagship $650 phone is tough for some people, even if they can pay the monthly cell phone bill. Now, with financing, all the phones are $0 upfront. The $450 one is $19 per month, the $550 one is $23, and the $650 one is $27. So I'd wager they sell more of those flagships to people.
  - mod 11y ago
    More than difficult, it just hurts to pay $650 for a phone. I bought a moto g (~$160), I think it's a good balance for me. I want to be able to use the web, basically, and voice commands. But I don't need to play any games or use it for more than communication + entertainment when bored and away from home. I also want it to be reliable, which is primarily battery life--which the Moto G is, clocking a 2+ days with my typical use.

baldfat 11y ago

Well the issue is people STILL won't see the bottom line price. They will get the monthly price. A LG G3 is $17 a month and an iPhone 6 is $25. People do horrible math and don't see that they are paying $200 more for an iPhone 6.

deleted 11y ago
[deleted]
merpnderp 11y ago
People will pay $5K more for an equivalent Toyota. It doesn't mean they are doing horrible math. Maybe they've sold a previous Toyota and realized, used, they bring in significantly more than the Chevy.
- baldfat 11y ago
  Me: You know your paying $200 more for that phone right? Them: No, really? Me: It is $8 a month more and at 2 years that is 24 * 8. So in 2 years you are paying $192 more. Them: Shocked look and than they try to do the math in their head and can't and just shrug. This has happened with family members and strangers People can't do simple math in their head. My definition of simple math is business math and specifically do a 2 digit times a 1 digit number.
  - merpnderp 11y ago
    Are you really an adult if you can't do basic maths? I mean in the modern, self actualized, responsible for you own actions, type of adult?
    - tsotha 11y ago
      It may not be obvious if you surround yourself with engineers and programmers, but there are a whole lot of adults out there who can't do that kind of math in their head.
    - mod 11y ago

amrrs 11y ago

that means Apple will be in trouble?

bunderbunder 11y ago
I doubt it. As another poster pointed out, phone companies are still offering payment plans on new phones, so to an approximation all they're really offering is a bit more price transparency on the same old pricing model. Also, let's be blunt: Users of Apple products aren't exactly the most price-sensitive consumers in the market. If anything, it'll just make them less likely to buy new phones like clockwork every two years. But if so then probably all smartphone manufacturers will experience something similar.
- mkozlows 11y ago
  Apple's $650 flagship will probably continue to do fine. But the $450 phones really got a lot of mileage from being "free." If you were buying a phone in 2012 from a normal contract carrier, there really wasn't any way to pay less than $450, because $450 was $0. With real pricing, a $350 phone is $100 less, and anyone who was considering buying a two-year-old phone to save $200 is probably very interested in saving another $100.
  - bunderbunder 11y ago
    Did they? I have seen maybe 2 or 3 5c's in the wild ever, so I just assumed they had tanked on the market. While it's certainly not a random sample, I commute by public transit so I do spend a lot of time watching a lot of people fiddle with their smartphones.
dharma1 11y ago
I think that depends on the pace at which Android is developing. Android hardware is incredibly low priced and there isn't a significant difference between iPhone and a mid range android phone in terms of hardware. If the quality of the OS experience is as good or better than Apple, then Apple marketshare will shrink eventually. They are still making a killing in terms of profit margin, and shifting a lot of units so as a company I'm sure Apple will continue to do well for a long time. Android struggled for a long time with user experience and visual quality, but Android 5 and Material Design has been a huge win for them and I'm pretty sure that trajectory will continue.