[njbourne23]

I saw this article on the yahoo front page. I thought it was, imo, a little against BB for some reason at times but over all a nice read.

why-all-smartphones-are-same-price: Personal Finance News from Yahoo! Finance


NJB

[Reed McLay]

On AT&T's network, $199 will buy an iPhone 4, the best-selling smartphone of all time. But you'll need to fork over the same amount for a BlackBerry Bold 9700, a nine-month-old phone that lacks a touch screen.

It will also cost you $199 to get an HTC Tilt 2, which runs Windows Mobile 6.5 -- an operating system so out of date that Microsoft (Nasdaq: MSFT - News) is set to completely abandon it in the next few months.

So what's so special about $199?

"The obvious answer is that $199 is a magic price point for smartphone volume," said George Appling, partner at consulting firm Booz & Co. "The not-so-obvious reason is that carriers are not charging customers what they pay."

In other words, wireless carriers pay significantly more for smartphones than you do. In exchange for your signature on an expensive two-year contract, they'll offer you the smartphone for less than it costs them but as much as they think you'll pay for it
...
"There will always be a next big phone coming out in two months that will justify the $199 price," Ganguly said. "Manufacturers are innovating faster than the willingness of carriers to compete on price."

Each carrier is free to set their own price point for the range of models they support. In all cases, that price, with a contract, will be subsidized up to 100% for the low end models and the BOGO specials.

You can verify that from the carriers annual report. In the case of Rogers, my carrier, the revenue from all phone sales is roughly 50% of their cost of sales.

When we buy a subsidized phone, that means the carrier is looking to make $500-199=301 in data revenue over the 24 month contract, about $12.50 per month out of the average $30 data contract.

Does that mean you can bring your own and get a $12.50 monthly discount?

As if...

[the_sandman_454]

I saw this article on the yahoo front page. I thought it was, imo, a little against BB for some reason at times but over all a nice read.

why-all-smartphones-are-same-price: Personal Finance News from Yahoo! Finance


NJB

I don't see what they said that wasn't true or was against BB. They spoke the truth about the 9700, but forgot to mention that it was merely a small/incremental update over the previous device, just like RIM has done for a long time...

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