4 ms·

This is going to continue and get worse. Margins are going to be under pressure even for Apple and Samsung. The technology in phones is leveling off. Chinese ma

This is going to continue and get worse. Margins are going to be under pressure even for Apple and Samsung. The technology in phones is leveling off. Chinese manufacturers that for a long time were making everyone else's phones are now making their own. This is a repeat of HDTVs march towards very low margins as technology converged, and Chinese brands took over. Android provides an ecosystem for free*. Lately phone enhancements have been things like 0.2 ghz faster processor, larger screen, fingerprint reader. Reminds me a lot when HDTVs were offering higher refresh rates, gimmicks like 3D TV. Consumers decided they were not going to scrap their $2000 TV for another $2000 TV. Now those $2000 TVs are < $500. So are consumers going to keep shelling out $600+ for a new phone every year or 2? Now in the USA they are more exposed to the price of the phone due to the elimination of contracts with phone subsidies. I suppose the fact that most phones are fragile causes them to break more and be replaced, but phones are commoditized now, and will continue to decrease in price and margin.

maxerickson 11y ago
I think slipping margins are behind the move to the lease a phone model. The price point for a satisfactory phone is headed below $200, where most people are going to buy outright, or at least pay for it in 1 year. Lease a phone keeps them from thinking about the option to not have a phone payment.
ZeroGravitas 11y ago
And when you say "get worse" you mean "get better"? Like, capitalism working vaguely like it's promised to and companies competing to provide maximum value at mininum price?
- jimbokun 11y ago
  I think it's pretty clearly referring to the position of phone manufacturers. But yes, it's working out well for all us consumers.
  - ZeroGravitas 11y ago
    I dunno, I see a lot of weird comments that seems to suggest low profits is some kind of problem, rather than what the free market it supposed to ensure. I can't take it for granted that someone saying that profits falling due to competition will get "worse" actually thinks that's a good thing for consumers. I regularly see the phrase "race to the bottom" used without understanding of the fact that theoretically it's a good thing when corporations race to the bottom (modulo lawbreaking and market externalities) for example.
    - maxerickson 11y ago
      I would use race to the bottom to describe a lot of items that Walmart sells. I don't feel like I benefit from the sacrifices to quality they make in seeking their prices. Of course their success with this strategy tells me something about the market, but I think it is still a sensible, pejorative use of the phrase.
    - pionar 11y ago
      >I regularly see the phrase "race to the bottom" used without understanding of the fact that theoretically it's a good thing when corporations race to the bottom It's not always though. Typically, that race to the bottom means lower quality. Everyone loses there.
      - vilmosi 11y ago
        But the lower quality during the race to the bottom is way better than high quality before. Objectively, it is better because everything (including high quality components) gets cheaper.

maxerickson 11y ago

I think slipping margins are behind the move to the lease a phone model. The price point for a satisfactory phone is headed below $200, where most people are going to buy outright, or at least pay for it in 1 year. Lease a phone keeps them from thinking about the option to not have a phone payment.

ZeroGravitas 11y ago

And when you say "get worse" you mean "get better"? Like, capitalism working vaguely like it's promised to and companies competing to provide maximum value at mininum price?

jimbokun 11y ago
I think it's pretty clearly referring to the position of phone manufacturers. But yes, it's working out well for all us consumers.
- ZeroGravitas 11y ago
  I dunno, I see a lot of weird comments that seems to suggest low profits is some kind of problem, rather than what the free market it supposed to ensure. I can't take it for granted that someone saying that profits falling due to competition will get "worse" actually thinks that's a good thing for consumers. I regularly see the phrase "race to the bottom" used without understanding of the fact that theoretically it's a good thing when corporations race to the bottom (modulo lawbreaking and market externalities) for example.
  - maxerickson 11y ago
    I would use race to the bottom to describe a lot of items that Walmart sells. I don't feel like I benefit from the sacrifices to quality they make in seeking their prices. Of course their success with this strategy tells me something about the market, but I think it is still a sensible, pejorative use of the phrase.
  - pionar 11y ago
    >I regularly see the phrase "race to the bottom" used without understanding of the fact that theoretically it's a good thing when corporations race to the bottom It's not always though. Typically, that race to the bottom means lower quality. Everyone loses there.
    - vilmosi 11y ago
      But the lower quality during the race to the bottom is way better than high quality before. Objectively, it is better because everything (including high quality components) gets cheaper.