Smartphone prices are determined by market forces.
Nokia's high end N series phones were routinely $700 and no one complained.
People thought the 2007 original iPhone at $499/599 was a "steal" and when apple reduced the price to $399 it was a bargain.
Actually the BEST example of pure greed I can think of is text messaging: Back when the carriers were trying to promote text messaging, and inter-carrier messaging wasn't quite perfected, they were more than happy to include unlimited messages in that $14.99 (hell I held onto that data plan until I left Qwest) or $5 for unlimited messages without a data plan. Then Sprint gave it to me even better: $10 for unlimited data and Unlimited "Shortmail" which turned into Unlimited SMS around 2004 and stayed that way. Once the kids jumped on texting, and it became a "Mom I **HAVE** to have it!!!" item, the carriers started capping the number of messages and it became a premium item when the 200/500/1000 and per-message plans started getting crazy, and Verizon using it as a marketing tool with their "IN network". It costs NEXT TO NOTHING for the carriers to provide text messaging and should be nothing more than a value-add to the data plan. I'm starting to see it swing this way again--but not because it is cheap and a value-add: more because they have successfully positioned it as a "premium item", and can jack up the prices of their data plans by including it. $40 for 4 gigs of data and unlimited messages, or $20 for just the messages?
As to Larry's point about "high end" phone technology being cheaper, I tend to think about it the way he does... I remember most "popular" high-end devices available at the time (that the carriers provided) being in the $200 range, and being able to buy the phones at the discounted price any time as long as I "extended my contract" (no "upgrade eligibility" junk). Comparing the "popular, high end devices sold by carriers" (which were high-end dumbphones) they most definitely were cheaper. ...and for the few that weren't, there weren't all these insanely expensive tack-ons that were tied to the device. The fact that you bought the phone entitled you to the service!
Great example: I wanted a Nokia 8890 **BAD** Had I spent the $400 with a new contract on the brand new Cingular network in Seattle with crappy coverage circa ~2000, I could have had it--on the same plan as someone with a StarTac or a Nokia 5185. I couldn't justify the crappy GSM coverage then, but I got my hands on a device in 2001 that, for about 6 months, had as much status as holding an Iphone in the first six months it was out: One of the first blue Motorola V60's the second Qwest Wireless got their first shipment. I got more complements from that thing than ANY phone I have ever had since.... and it didn't require a new plan, tack-ons, or anything else--but it cost me $400 which I thought was a LOT.
As previously mentioned, there were high end devices in the $800+ range available that were marketed to businesses or rich people back then, just as there are today. The difference is that the early smartphones were in the "specialty business" category where expensive Symbol devices are today--average consumers don't buy those... businesses do. Now smartphones are popular, and are becoming just "the phone". Maybe in 2004 you could segment the market when a Treo could fetch $600 and do a TON more than every other device... but in 2012, if the smartphone has 80% of the market, and continues to grow (the whole "dumbphone" category will probably be gone in 5 years anyway), the whole category becomes just "the phone" and the prices technically should drop considerably--and Larry's point becomes completely valid (the popularly available high-end "phone" in 1999 was cheaper than a high-end "phone" today)--You can't compare a smartphone in 1999-2002 to a smartphone in 2012: They weren't mass consumer items, and weren't highly marketed by carriers (Sprint was one of the first, and was one of the reasons I moved to them way back when).
Last edited by larryt510; 05-19-2012 at 02:30 AM.
Lo and behold, it's even on sale for only $69.99 online.
I also noticed the Samsung Vitality for $199.99, on sale for $99.99 online.
Granted, it's Cricket--and I'm not sure if this is because Cricket is just damn desperate or what -- but it proves exactly what we are talking about: A basic smartphone can be made and sold for a reasonable price without a contract.
SO, if Cricket can do this with a crappy ZTE device (and presumably make their money back)--and even a device from *Samsung*, the major carriers with their relationships and market scale should be able to do the exact same thing -- and offer their better service (and charge the higher prices that goes along with it) while offering basic, medium and high-end smartphones at reasonable prices (12 years ago I seem to remember the low end sitting right around that $69.99 point--which would mean that ZTE or Samsung today, with the high end around $299 which would mean Galaxy Nexus/HTC One today), from the mainstream manufacturers, without the "upgrade eligibility" garbage and tack-ons--just like they did 10 years ago.
I think the problem started with the combination of "added value" and "free"--two things we love in America. The whole upgrade thing started when they started giving you that option of kicking any entry point under $150 down to $0 if you signed a contract--BUT then they added the eligibility: "I like FREE--so why get it for FREE again in 2 years?"
...works fine if you want a basic phone... but then they segmented the market with "smart phones"--you get added value of a phone AND a PDA--so it won't be FREE--but if you wait the 2 years, we'll still give you $150 off. Since it became a new segment, they were free to set the prices as high as they wanted.
Only problem is that it is really no longer a segment--and basically they successfully pushed up the price of "phones" since that is what "smartphones" are seen as now--but we'll see how long it lasts.
I think what Cricket is doing is a good thing--now they just need to get a stock of 3G-only Samsung Galaxy (first gen) devices and put a reasonable price on them. They are going on 2 years old, but much like the Epic I use every day, more than capable--and I bet that would really shake things up
Last edited by NGeorge; 05-19-2012 at 11:54 PM.
The $299 range was the Vader's for sure, the ultra-thin Sanyo that Sprint had (the model escapes me but it was THIN for the time), as well as devices in the class of the Mitsubishi T250: The HUGE screen TDMA phone that AT&T Blue had that used a weird data technology called CDPD that had VERY limited coverage and was supposed to bring data to TDMA (they forgot about the HORRIBLE voice quality and handoff situation)
I'm generally pretty loyal when it comes to companies that show decent customer service--and probably would have stayed with Qwest til the end (probably would have ended up on Verizon by now) -- except when I was 17 I took a job in Shelton, WA that was *just* a few miles outside of their native coverage area (they actually had an app in to the FCC to put a tower right where I needed it but it died on the vine), and they just never could get to a point of offering any sort of a break on roaming or a regional/national plan that was anything less than a total joke. I was set to go to AT&T's brand spanking new GSM network with a Siemens S46 that could was supposed to get both GSM and TDMA (paid a $400 deposit and everything) except they flat-out lied on the coverage (getting "emergency only" on Voicestream really ticked me off, and the thing would never connect to US Cellular's TDMA network that was right there as well) so I went to the carrier that provided 5 bars on roaming on my Qwest phone--and that's how I've been at Sprint ever since.
Actually looking back on how everything has turned out, it's been pretty good. I've ended up on SERO Premium, and have pretty much avoided all the BS that the old AT&T Blue people went through and the whole myriad of plan increases we have been discussing. Plus about 2 years later they merged in most of the Qwest network which filled in a bunch of coverage--then added in Nextel synergy sites which expanded the highway coverage quite a bit up here.
I also remember the Motorola Timeport that Sprint had--it was basically a StarTac with a color screen, and I wanted it *bad* for my first phone--that was up in the $299 range too, and I'd have probably went with Sprint right off for that if they would have let me sign up as a kid.
The only drawback I had with Sprint back then was I remember they were very Motorola-unfriendly at a time when Moto had some really great phones (Qwest OTOH was VERY Moto friendly). Sprint had an old version of the Vader and the bar phone (v120?) and then that was it--and by that point the Vader was a downgrade from the V60 I already had. ...then we didn't see a Moto for a LONG time. I waited for another V60... and waited... and waited... Sprint was the absolute last carrier to get it over 2 years after Qwest, their version didn't have data, and IIRC I was already 2 phones in by that point. Then they pulled the same thing with the Razr (no, the Samsung A900 was NOT a Razr lol).
IIRC it was only around 2008-09 when they started getting friendly with Motorola again.