4 ms·

I wonder if this is also why providers can price the Lumia 920 so aggressively at $149 with a 2 year contract (iPhone and the Galaxy III are both $199 at the le

by aik 14y ago

I wonder if this is also why providers can price the Lumia 920 so aggressively at $149 with a 2 year contract (iPhone and the Galaxy III are both $199 at the least). I'm curious what price point they can buy the phones at...

cletus 14y ago
See now this is an example of how US cell phone consumers have been successfully brainwashed. A $50 difference on the subsidized cost of a handset is not "aggressive" discounting; it's inconsequential. Chances are you'll be paying $60-100/month for 24 months when you take out any smartphone service (or less if you go with T-Mobile or Sprint). Assuming $80 that's: $199 + 24 * $80 = $2119 vs $149 + 24 * $80 = $2069 which is less than a 3% discount. Now the service obviously costs something and you may not have it for 24 months (which probably means you're paying an ETF anyway) but that should definitely be how the consumer looks at it: would you rather pay $2119 for an iPhone and service or $2069 for a Lumia and service? Even worse, I see people who will pay $2119 for the iPhone 5 and $2019 for the iPhone 4. It makes no sense. Here's another way of looking at it: that $199 iPhone 5 costs ~$650 unsubsidized. Your ETF is (IIRC) $350 (-$10/month on the contract). If you terminate immediately you've paid $200 + $350 + probably $80 so basically full price anyway. If you do so after a year you pay $200 + $230 + whatever you've spent on service. $430 from $650 means they've discounted the phone $220 for you but you've also spent $960 on service. To compare: when I got my iPhone 4 in Australia the 64G model was A$1000 at the time (the exchange rate was at the time a lot worse than it is now). Also, that includes tax (10% GST). Instead I bought the phone on a Telstra Business 24 month contract which was $50/month and $299 for the phone with a $100 store voucher (from JB Hifi), so $199 + $50 * 24 = $1399 - $1000 retail cost means I really only paid $400 for 2 years of service or alternatively the phone was discounted $800. Either way that is "aggressive" discounting. Seriously, cell phones are an utter ripoff in the US. It still astounds me how expensive it is. Oh and in the US you pay to receive calls. Not true in Australia and most of Europe that I'm aware of (certainly not the UK, Germany or Switzerland).
- PeterisP 14y ago
  The most common cellphone plan here in eastern europe is $10 per month with unlimited voice/sms and 0.5gb of data. If you want an included iPhone and more data, then it's like $40 since the phone is expensive, but how can you get up to $80 is quite a mystery that only monopolist lobbying could explain.
- beagle3 14y ago
  You are absolutely correct about everything. Two additional points: 1. While the brainwashing is there, and is very effective, the major carriers (AT&T, Verizon) will make you pay the same monthly charge whether you bought a "subsidized" phone from them or not. So instead of subsidized phone vs. unsubsidized phone (the way you have it in most of the world), what you have in the US is sucker-with-a-lower-price-tag ($200), vs. sucker-with-a-higher-price-tag (e.g. $650 if bought from Apple) - your service cost will be the same (with the exception that if you brought your own phone, you won't pay an ETF if you leave early). 2. Yes, it is exclusively in the US that you pay for incoming - and that's for historical reasons. Unlike essentially everywhere else, there is no special area code for mobile, so you can't tell if you're calling a mobile phone, so -- back in the days when calls to mobile cost more everywhere -- there was no other way to handle this. But the US public has gotten used to it, so no company is thinking of changing that - people here think its normal to pay for a received text message (SMS) as well... Mobile phone service in the US is a ripoff, but it will not change because the public is not aware that is the case, and congress is bought and paid for.
  - jacalata 14y ago
    I'm pretty sure that the 'no special code for mobile' and 'recipient pays' concepts were part of the same plan - companies worried that nobody would call a mobile if they knew it was different or more expensive, so they made it look exactly the same to call one, and make the assumed 'high powered exec' cover the cost difference in order to receive calls. I'm not sure why this only happened in the US - was it the first country to have consumer mobile phones?
    - beagle3 14y ago
gambiting 14y ago
Sorry to say,but $149 for a phone is not aggressive pricing. That's typical of carriers in the US. Lumia 920 is offered for free on pretty much every 2-year contract in UK/Germany/France. You can get S3 for free on a 2-year, $50/month contract, and that already includes unlimited internet(with tethering allowed and no fair-use policy) and unlimited text, and 2000 minutes.
mtgx 14y ago
Only because they know their phones don't offer as much "value" (nothing to do with component costs) as their competitors, so they have to cut into their profits to compete. This is funny, because I remember the old Nokia executives saying they would have to do this if they would use Android, because it would "commoditize" them. And yet they are being commoditized much faster by WP8, since all phones look alike (software wise) and their ecosystem of apps is much smaller, so they have to account for that in the price. The Galaxy S3 has been selling for $99, too, but only for short periods of time. But as others have said, those prices are pretty irrelevant on a contract.

by aik 14y ago

cletus 14y ago

See now this is an example of how US cell phone consumers have been successfully brainwashed. A $50 difference on the subsidized cost of a handset is not "aggressive" discounting; it's inconsequential. Chances are you'll be paying $60-100/month for 24 months when you take out any smartphone service (or less if you go with T-Mobile or Sprint). Assuming $80 that's: $199 + 24 * $80 = $2119 vs $149 + 24 * $80 = $2069 which is less than a 3% discount. Now the service obviously costs something and you may not have it for 24 months (which probably means you're paying an ETF anyway) but that should definitely be how the consumer looks at it: would you rather pay $2119 for an iPhone and service or $2069 for a Lumia and service? Even worse, I see people who will pay $2119 for the iPhone 5 and $2019 for the iPhone 4. It makes no sense. Here's another way of looking at it: that $199 iPhone 5 costs ~$650 unsubsidized. Your ETF is (IIRC) $350 (-$10/month on the contract). If you terminate immediately you've paid $200 + $350 + probably $80 so basically full price anyway. If you do so after a year you pay $200 + $230 + whatever you've spent on service. $430 from $650 means they've discounted the phone $220 for you but you've also spent $960 on service. To compare: when I got my iPhone 4 in Australia the 64G model was A$1000 at the time (the exchange rate was at the time a lot worse than it is now). Also, that includes tax (10% GST). Instead I bought the phone on a Telstra Business 24 month contract which was $50/month and $299 for the phone with a $100 store voucher (from JB Hifi), so $199 + $50 * 24 = $1399 - $1000 retail cost means I really only paid $400 for 2 years of service or alternatively the phone was discounted $800. Either way that is "aggressive" discounting. Seriously, cell phones are an utter ripoff in the US. It still astounds me how expensive it is. Oh and in the US you pay to receive calls. Not true in Australia and most of Europe that I'm aware of (certainly not the UK, Germany or Switzerland).

PeterisP 14y ago
The most common cellphone plan here in eastern europe is $10 per month with unlimited voice/sms and 0.5gb of data. If you want an included iPhone and more data, then it's like $40 since the phone is expensive, but how can you get up to $80 is quite a mystery that only monopolist lobbying could explain.
beagle3 14y ago
You are absolutely correct about everything. Two additional points: 1. While the brainwashing is there, and is very effective, the major carriers (AT&T, Verizon) will make you pay the same monthly charge whether you bought a "subsidized" phone from them or not. So instead of subsidized phone vs. unsubsidized phone (the way you have it in most of the world), what you have in the US is sucker-with-a-lower-price-tag ($200), vs. sucker-with-a-higher-price-tag (e.g. $650 if bought from Apple) - your service cost will be the same (with the exception that if you brought your own phone, you won't pay an ETF if you leave early). 2. Yes, it is exclusively in the US that you pay for incoming - and that's for historical reasons. Unlike essentially everywhere else, there is no special area code for mobile, so you can't tell if you're calling a mobile phone, so -- back in the days when calls to mobile cost more everywhere -- there was no other way to handle this. But the US public has gotten used to it, so no company is thinking of changing that - people here think its normal to pay for a received text message (SMS) as well... Mobile phone service in the US is a ripoff, but it will not change because the public is not aware that is the case, and congress is bought and paid for.
- jacalata 14y ago
  I'm pretty sure that the 'no special code for mobile' and 'recipient pays' concepts were part of the same plan - companies worried that nobody would call a mobile if they knew it was different or more expensive, so they made it look exactly the same to call one, and make the assumed 'high powered exec' cover the cost difference in order to receive calls. I'm not sure why this only happened in the US - was it the first country to have consumer mobile phones?
  - beagle3 14y ago

gambiting 14y ago

Sorry to say,but $149 for a phone is not aggressive pricing. That's typical of carriers in the US. Lumia 920 is offered for free on pretty much every 2-year contract in UK/Germany/France. You can get S3 for free on a 2-year, $50/month contract, and that already includes unlimited internet(with tethering allowed and no fair-use policy) and unlimited text, and 2000 minutes.

mtgx 14y ago

Only because they know their phones don't offer as much "value" (nothing to do with component costs) as their competitors, so they have to cut into their profits to compete. This is funny, because I remember the old Nokia executives saying they would have to do this if they would use Android, because it would "commoditize" them. And yet they are being commoditized much faster by WP8, since all phones look alike (software wise) and their ecosystem of apps is much smaller, so they have to account for that in the price. The Galaxy S3 has been selling for $99, too, but only for short periods of time. But as others have said, those prices are pretty irrelevant on a contract.