From a price perspective, I've often wondered why people still pay $199 for a smart phone with a carrier and lock into a 2 year contract when you can buy pretty good unlocked smartphones in the $300 - $400 price range. After researching the pro's and con's of doing that last year, I discovered that the ONLY con to buying an unlocked phone was the price, and that the pro's were significant. And listing price as a con is even misleading because the difference in price is made up in the first year in my case, based on the apps that come free and usable with the UNLOCKED phone which the carriers lock out/remove from the carrier subsidized phones and for which the carriers then charge monthly usage fees for.
The one thing that I can't figure out is how some smart phone producers come up with the prices for their phones. For example, the iPhone 4. I see that you can buy it through the carriers with no contract (or if you have to replace a lost or destroyed one) for $699. Apple and the carriers will tell you that it's the cost of the components that drive the price up so much. But I can buy a laptop that arguably has more components, and can certainly do more, for the same price or less. So, I'm not sure I buy Apples and AT&T's explanation of the $699 price tag.
Smartphone makers are pushing prices higher and it’s going to be really interesting to watch what consumers do amid a weakening economy.
$299.99 at T-Mobile: Really?!?
Consider the following:
- T-Mobile is offering the BlackBerry Bold 9900 for $299.99 after a $50 rebate. Verizon and Sprint are offering a similar version of this Bold for $249.99. CNET’s Roger Cheng calls these prices crazy.
- Droid Life reported that the Motorola Droid Bionic will run $299.99 at Verizon, which already sells the Samsung Droid Charge for the same price.
- Verizon is still selling the HTC Thunderbolt for $249.99.
The common thread is that these devices are 4G (or allegedly so). But there are a few realities here to ponder.
Reality 1: 4G is a letdown. My Verizon LTE Mi-Fi can’t handle the train and 4G cuts out repeatedly. The problem with that is the hand off to 3G is brutal. As someone who looked forward to 4G, I’m now bordering on disillusioned and frankly would have no problem buying a 3G phone.
Reality 2: $199.99 is the price point that matters. Why? Apple’s iPhone is $199.99 in most cases for a 16GB version. I’m not going to spend $249 or more for a phone that has an operating system that will continue to run apps in the background no matter what (Android) and another one that’s going to be outdated in a year (BlackBerry OS 7).
Reality 3: These prices fall. Today’s premium $249.99 device is tomorrow’s $199 buy one get one offer. Call it the early adopter tax.
Toss in the fact that component costs aren’t exactly surging and this price increase looks bogus. Some of the prices increases may be justified. The Charge on Verizon packs 32 GB. Then again the latest BlackBerry Bold on Verizon only has 8GB. In either case, consumers may start treating these smartphone vendors like airlines, which try to raise prices and get rebuffed repeatedly.
It may be time for some consumer pushback to this smartphone price creep.
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