I think the real question is how long will carriers keep subsidizing the iPhone to the current level? They must be saying to Apple "The iPhone is costing us $100 more than high end Android phones; we want to reduce your subsidy."
Do you think Verizon isn't aware of how much it's paying in subsidies?
Do you think Verizon is too stupid to make such simple business decisions?
If Android had worked out for Verizon in 2010, it wouldn't even be selling the iPhone, let alone ready and willing to pay $100 extra PER PHONE SOLD to Apple over an Android phone.
Verizon knows which is worth more to it. It's not being pushed to sell iPhones at a different price due to some monopoly position by Apple, as Apple only has a 28% share of the US smartphone market. Verizon has options and is choosing to spend more to get Apple customers.
(albeit saddled with a 2.3 version of Android that is now a year old and lacking upgrade potential; the iPhone 4 runs Apple's latest iOS 5)
They advertise the Android like it's cutting edge yet they don't update the OS... so if you want to have any new functionality you have to buy another new phone!!!
I feel like this article is just trying to push the "Android sucks, iPhone rules" view. But all I see from this is Verizon is greedy... screwing everyone it can, in any way it can.
In other words, what's new?
Stop feeling, start thinking. Then you'll spend less time lying on your back pretending to be hurt.
Nothing in the article--or the headline "Verizon soaking high end Android buyers to make up for iPhone subsidies" suggests Android is to blame. It pretty clearly indicates Verizon is socking it to Android buyers because it can.
It was already mentioned but you have to remember the $299.99 price for the Galaxy Nexus includes 32GB. So really it isn't overpriced at all.
Also while the MSRP price for those phones is higher, they actually get discounted. The DRIOD RAZR was a penny on Amazon the week of Black Friday. You can get the Galaxy Nexus on Amazon for $150 (for new customers) or $250 (for upgrades), and the DRIOD RAZR is going for $169.99 right now. So they price them that high but they are discounted pretty heavily. I take it how clothing stores put high prices on the price tags to make it seem like the clothes is always a great deal, when in reality it's rare to find them for full price and your paying what people normally do.
It was already mentioned but you have to remember the $299.99 price for the Galaxy Nexus includes 32GB. So really it isn't overpriced at all.
Also while the MSRP price for those phones is higher, they actually get discounted. The DRIOD RAZR was a penny on Amazon the week of Black Friday. You can get the Galaxy Nexus on Amazon for $150 (for new customers) or $250 (for upgrades), and the DRIOD RAZR is going for $169.99 right now. So they price them that high but they are discounted pretty heavily. I take it how clothing stores put high prices on the price tags to make it seem like the clothes is always a great deal, when in reality it's rare to find them for full price and your paying what people normally do.
Actually, it is, when you compared the retail price of the device to the iPhone. You're paying $299 for a device that retails for $649 which means you are only getting a $350 subsidized from Verizon when sign that two year contract. On top of that, if you want to sell that phone in a year or two for the next model you're going to be getting a lot less for it than other phones on the market because it won't retain its value for various reasons. That makes the TCO quite high. Compare that to an iPhone where you're only paying $299 up front for a device retailing for $749 and with a high resale value that can easily mean you can get a brand new iPhone YoY without having to pay a single penny out of pocket YoY. TCO is an important factor to consider when talking about price.
I goes nobody on this thread understands business. For Verizon these two sentences sum it all up from a business point of view "Additionally, unlike new iPhone models that appear every year, Android licensees pop out new models every three to six months. This has created an upgrade cycle that forces down prices, something that is not in carrier's interests. "
Verizon's cost of support for so many models is that much higher than Apples for 2 models (4S & 4 at Verizon, 3GS is ATT only) THe training, stocking etc is so much higher for Android that they need to charge more. Plus Apple accessories are good for 2 years (3G & 3GS) (4G & 4S) so they can stock them and keep them longer. Plus the average Apple user stays as a subscriber longer. Price of the phone & subsidy are only pieces of the overall model.
$1-200 difference per phone goes quickly if you are stuck with excess models that are sold at a lower price, you can't stock the accesses as much for most android phones, because they change so frequently, and you keep your customer longer, .
If an Apple user lasts and average 3 months longer than an Android user who is flipping phones frequently, those three months are worth the $100 difference. Do the math.
Not knowing any actual figures but if the life of the contract is an average 3 months longer, they sell more accessories for the iPhone (regularly reported that that is the case) and the carrier gets stuck with less inventory, Apple is making a much, much bigger profit per phone than Android given the pricing in the Appleinsider article.
The raw economic fact is Apple phones make more per unit than do Android phones for carriers. If you work deals in a carrier you already know this, hence the differences in prices to the end users.
It was already mentioned but you have to remember the $299.99 price for the Galaxy Nexus includes 32GB. So really it isn't overpriced at all.
The full retail price of a 32GB iPhone4S is $749.99. The Galaxy Nexus (32GB) is $649.99. Both are $299.99 on Verizon so Apple is still getting a larger subsidy from Verizon.
Quote:
Originally Posted by Corrections
Do you think Verizon isn't aware of how much it's paying in subsidies?
Do you think Verizon is too stupid to make such simple business decisions?
You don't think Apple just rolled over for Verizon? Apple negotiated a very good deal, much better than companies like Samsung managed to get. I just wonder how long Apple can keep receiving higher subsidies than rival firms. The more Android grows the harder future negotiations are going to be for Apple.
The full retail price of a 32GB iPhone4S is $749.99. The Galaxy Nexus (32GB) is $649.99. Both are $299.99 on Verizon so Apple is still getting a larger subsidy from Verizon.
You don't think Apple just rolled over for Verizon? Apple negotiated a very good deal, much better than companies like Samsung managed to get. I just wonder how long Apple can keep receiving higher subsidies than rival firms. The more Android grows the harder future negotiations are going to be for Apple.
Maybe I'm confused on how subsidies work...
I thought Verizon bought a 32GB iPhone from Apple at full retail price... $749.
Then Verizon sells that phone to me for $299... taking a loss of $450.
BUT... Verizon will charge me $90 a month for the next 24 months... bringing them $2,160.
Which, in the end, earns Verizon $1,710 from me.
Apple makes money on the phone... Verizon makes money on the contract. Isn't that how it works?
I wasn't aware Apple was giving "deals" to the carriers. In fact... I would be shocked if Apple was getting anything less than the retail price of their phones.
Who ushered in multitouch smart phones? Gyroscopes? Artificial intelligence? Video chat? App stores as we know them today? iTunes on a phone? AirPlay? Retina displays? Antenna deisigns never before tried? iTunes match? iCloud? Photo streaming to my computer? Visual voicemail? 1 click purchasing? I can buy a brand new Mac on my phone, walk into an Apple store and have my order brought to me without ever approaching a salesman. I can send text messages to my mom's iPad or my wife's iPod touch right from my phone. I can buy a new phone today, put in my iCloud credentials and pick right up where I left off on my old phone - including app data and same in-game location etc. I can tell my phone to remind me to pick up supper when I leave work, it sets up a geo-fence around my location, and reminds me the minute I leave the area. I can take a picture on my phone and it will wirelessly sync to my computer, iPad etc. I just asked my iPhone will I need an umbrella tomorrow... It actually answered me back.
And somehow you think adding a faster processor or a bigger screen is taking us to new heights.
Good list but you credit apple with way too much.
Then again that's to be expected here. Where everyone feels Apple exists in a void.
Then again that's to be expected here. Where everyone feels Apple exists in a void.
That's right, if Apple didn't invent in a bubble, perfect it, AND make it a market success then then they get no credit altering the wayne interact with the world. By your reasoning Newton was just some hack that happen to notice gravity. I bet that would have been apparent to you.
I thought Verizon bought a 32GB iPhone from Apple at full retail price... $749.
Then Verizon sells that phone to me for $299... taking a loss of $450.
BUT... Verizon will charge me $90 a month for the next 24 months... bringing them $2,160.
Which, in the end, earns Verizon $1,710 from me.
Apple makes money on the phone... Verizon makes money on the contract. Isn't that how it works?
I wasn't aware Apple was giving "deals" to the carriers. In fact... I would be shocked if Apple was getting anything less than the retail price of their phones.
The only flaw in that is the phone both go 24 months. As I understand it Android phones get traded in well befor Apple phones. In other words the number of new phones seduces the Android person to trade phones more frequently. If the average Android contract is 21months, and the Apple is 24 the subsidy could actually be larger on he android phone that the Apple one. I know the churn is greater in android phones, but I am not sure of the average number of months between them.
But to illustrate, if a carrier is willing to pay $25 a month in subsidy, the if Apple phones last an average of 3 months more between trade in's the carrier can subsidize apple $75 more than an Android, and still get the same money.
IPhones do churn less, but how many more months iPhones are kept over Android and you will have how much more The iPhone is worth.
That is all Apple seems to talk about. The number one reason Apple hates Android so much. No matter what Apple does, Android keeps pulling away. I give it 5 years and the iPhone will be the Mac, very niche very little market share. Android will be everywhere and Google will be laughing.
And Apple will still be making 70 to 90 percent of the profit generated from the entire smartphone market.
The only flaw in that is the phone both go 24 months. As I understand it Android phones get traded in well befor Apple phones. In other words the number of new phones seduces the Android person to trade phones more frequently. If the average Android contract is 21months, and the Apple is 24 the subsidy could actually be larger on he android phone that the Apple one. I know the churn is greater in android phones, but I am not sure of the average number of months between them.
But to illustrate, if a carrier is willing to pay $25 a month in subsidy, the if Apple phones last an average of 3 months more between trade in's the carrier can subsidize apple $75 more than an Android, and still get the same money.
IPhones do churn less, but how many more months iPhones are kept over Android and you will have how much more The iPhone is worth.
But I'm still confused on what the subsidy has to do with Apple...
Is Verizon paying the full retail price for each iPhone to Apple? If so... Apple's involvement ends there.
Then it's up to Verizon to make money from the customer with plans and contracts.
Verizon charges more for the new phones and somehow Android cost more? Wouldn't it be that Verizon cost more? Looking at other carriers, i haven't seen many Android phones above 200$ for a new contract (except for the Sky Rocket on ATT).
If you also wish to try and convince someone that Android costs more than Apple, you should really run down the multitudes of android phones purchased for 0-100$ with a contract.
The big difference, whether you are apple or android fans, is that Android manufactures (with carriers in tow) charge more for the brand new product, then drop the price once it has been in the market (see Droid Bionic for 150$). Meanwhile Apple stays the same until they release their next product line. One could make the argument that Android follows supply & demand, while Apple controls the price despite supply or demand (not trying to convince you one is better).
Talking about price for product outside of the 4s, look at the 4. Pay 100$ for a product that is 18months old or 100$ for various other phones that have come out as early as a month or two ago for free to 100$ that can do everything it can do except 'better' (excluding battery life on standby without iCloud turned on).
But I'm still confused on what the subsidy has to do with Apple...
Is Verizon paying the full retail price for each iPhone to Apple? If so... Apple's involvement ends there.
Then it's up to Verizon to make money from the customer with plans and contracts.
Verizon is providing this subsidy... not Apple.
Apple still gets $649-$849 per iPhone.
Cell phone prices are dictated by the wholesale company (Verizon/Target/Apple). This is why you can find Target running specials for 25$ off a 4s right now or the Stratosphere being 100$ cheaper at Best Buy. To analyze the actual profit of each product would probably require a decent look at the contract between manufacture, carrier and wholesaler. Of course i'm sure each manufacture has some sort of protection in their contracts with everyone concerning holding the price at specific levels for specific time and perhaps these either expire eventually or are adjustable at a later date.
Verizon charges more for the new phones and somehow Android cost more? Wouldn't it be that Verizon cost more? Looking at other carriers, i haven't seen many Android phones above 200$ for a new contract (except for the Sky Rocket on ATT).
If you also wish to try and convince someone that Android costs more than Apple, you should really run down the multitudes of android phones purchased for 0-100$ with a contract.
The big difference, whether you are apple or android fans, is that Android manufactures (with carriers in tow) charge more for the brand new product, then drop the price once it has been in the market (see Droid Bionic for 150$). Meanwhile Apple stays the same until they release their next product line. One could make the argument that Android follows supply & demand, while Apple controls the price despite supply or demand (not trying to convince you one is better).
Talking about price for product outside of the 4s, look at the 4. Pay 100$ for a product that is 18months old or 100$ for various other phones that have come out as early as a month or two ago for free to 100$ that can do everything it can do except 'better' (excluding battery life on standby without iCloud turned on).
It means that the TCO for the customer is significantly higher if you wish to own an Android-based device compared to a similar iPhone. There are several take aways here.
1) Verizon will have to invest in Android updates which they may or may not do well or at all if they don't get enough sales, which Apple's limited options have guaranteed you get updates on a timely basis and for several years.
2) You end up paying more for less, which is pretty much the worst thing you can do in a sale yet for some reason people get all mixed up by these subsidizes. Take the Galaxy Nexus for instance. You get a 1.2GHz CPU with 1GB RAM compared to the 800MHz with 512MB RAM of the iPhone 4S yet AnandTech's JS engine tests aren't showing a 50% gain, they are showing them right on par. What happened to Google's JS dominance?
3) Buyers should consider the TCO. If you pay a lot of money for something it's good to know that it holds value if you want to sell it later. I take this into consideration with a house, car, and many other items. I want my TCO to be as low as possible by maximizing my enjoyment. You just aren't going to get with 500 Android-based devices released per year.
I goes nobody on this thread understands business. For Verizon these two sentences sum it all up from a business point of view "Additionally, unlike new iPhone models that appear every year, Android licensees pop out new models every three to six months. This has created an upgrade cycle that forces down prices, something that is not in carrier's interests. "
Verizon's cost of support for so many models is that much higher than Apples for 2 models (4S & 4 at Verizon, 3GS is ATT only) THe training, stocking etc is so much higher for Android that they need to charge more. Plus Apple accessories are good for 2 years (3G & 3GS) (4G & 4S) so they can stock them and keep them longer. Plus the average Apple user stays as a subscriber longer. Price of the phone & subsidy are only pieces of the overall model.
$1-200 difference per phone goes quickly if you are stuck with excess models that are sold at a lower price, you can't stock the accesses as much for most android phones, because they change so frequently, and you keep your customer longer, .
If an Apple user lasts and average 3 months longer than an Android user who is flipping phones frequently, those three months are worth the $100 difference. Do the math.
Not knowing any actual figures but if the life of the contract is an average 3 months longer, they sell more accessories for the iPhone (regularly reported that that is the case) and the carrier gets stuck with less inventory, Apple is making a much, much bigger profit per phone than Android given the pricing in the Appleinsider article.
The raw economic fact is Apple phones make more per unit than do Android phones for carriers. If you work deals in a carrier you already know this, hence the differences in prices to the end users.
You are all analyzing profit based on items that wouldn't give you actual profitability for each party involved.
To explain as briefly as possible:You do not know how much each phone costs you make. You are going off MSRP which is in fact an inflated price tag to prevent outright purchases, if you don't believe me, here's an example, HTC Wildfire (100-200$ for prepaid or 400$ on t-mobile). You do not know how much each phone is costing the carrier. As previously stated, the carriers make money off monthly income (duh..), accessories and add-ons, not the sale of the phone.
Given that you don't know the actual manufactures cost or the price tag given to the carriers, you are completely guessing that each phone is sold at a specific profit to each manufacture. you could possibly go off maybe employee discounts or price of the phone to the wholesaler, but you still wouldn't comprehend manufacturing cost because each manufacture could sell at a loss to push a product.
In the end, all you know right now, is that it's really expensive to buy a phone outright, and need to go through a carrier! Which is exactly why competition is good, to drive the prices down between carriers.
It means that the TCO for the customer is significantly higher if you wish to own an Android-based device compared to a similar iPhone. There are several take aways here.
1) Verizon will have to invest in Android updates which they may or may not do well or at all if they don't get enough sales, which Apple's limited options have guaranteed you get updates on a timely basis and for several years.
2) You end up paying more for less, which is pretty much the worst thing you can do in a sale yet for some reason people get all mixed up by these subsidizes. Take the Galaxy Nexus for instance. You get a 1.2GHz CPU with 1GB RAM compared to the 800MHz with 512MB RAM of the iPhone 4S yet AnandTech's JS engine tests aren't showing a 50% gain, they are showing them right on par. What happened to Google's JS dominance?
3) Buyers should consider the TCO. If you pay a lot of money for something it's good to know that it holds value if you want to sell it later. I take this into consideration with a house, car, and many other items. I want my TCO to be as low as possible by maximizing my enjoyment. You just aren't going to get with 500 Android-based devices released per year.
Understanding computers, you wouldn't expect the actual test to be 150% better than the iphone in that scenario. The downfall to comparing specs in phones is that it really won't matter if you are already so similar, dual core 800mhz vs 1.2Ghz as a prime example.
Value for you phone also doesn't hold much weight in consumers eyes, otherwise Honda's would probably be the only car people drove around :P Whether this matters or not, I'd agree you can sell an apple product further down the road for more than its average competitor. However, that doesn't make it a better product necessarily.
I agree as well that Verizon has to invest in more chances or risks with the android platform (which is probably why they still control the damn droid name as they do). Without an actual understanding of each phone cost directly it would be hard to prove that they are taking more risk with android vs apple. Consider how Sprint bought into iPhone finally, and haven't seen a drastic sales in their phones or subscription service (same for Verizon). I could make a strong case that the risk involved in a company purchasing rights and products for apple is drastically higher than that of an android device, just as easily as the other way around.
Cell phone prices are dictated by the wholesale company (Verizon/Target/Apple). This is why you can find Target running specials for 25$ off a 4s right now or the Stratosphere being 100$ cheaper at Best Buy. To analyze the actual profit of each product would probably require a decent look at the contract between manufacture, carrier and wholesaler. Of course i'm sure each manufacture has some sort of protection in their contracts with everyone concerning holding the price at specific levels for specific time and perhaps these either expire eventually or are adjustable at a later date.
If Verizon and Target want to offer a $25 discount to entice someone to sign a contract... I understand that. They'll both eat a little bit of their profit to get people in the door.
But I can't imagine Apple providing a discount to Verizon and Target.
The only thing Apple makes money on is the hardware sale... why would they reduce their price?
Who ushered in multitouch smart phones? Gyroscopes? Artificial intelligence? Video chat? App stores as we know them today? iTunes on a phone? AirPlay? Retina displays? Antenna deisigns never before tried? iTunes match? iCloud? Photo streaming to my computer? Visual voicemail? 1 click purchasing? I can buy a brand new Mac on my phone, walk into an Apple store and have my order brought to me without ever approaching a salesman. I can send text messages to my mom's iPad or my wife's iPod touch right from my phone. I can buy a new phone today, put in my iCloud credentials and pick right up where I left off on my old phone - including app data and same in-game location etc. I can tell my phone to remind me to pick up supper when I leave work, it sets up a geo-fence around my location, and reminds me the minute I leave the area. I can take a picture on my phone and it will wirelessly sync to my computer, iPad etc. I just asked my iPhone will I need an umbrella tomorrow... It actually answered me back.
And somehow you think adding a faster processor or a bigger screen is taking us to new heights.
The idea behind the Android OS and phone lines can be dated back to 2003 while the iPhone (until other knowledge is made public) can be dated back to 2005 (at best).
Not one thing you said your iPhone can do that an Android device (or Windows Device) can't do or hasn't been doing for much longer than an iPhone. Innovation of the actual technology hasn't been where Apple has succeed, rather they have succeeded in the Marketing of their product (this they are innovators to the max).
Example is the packaging of the iTouch, the ease of understanding the touch screen technology that had been around for decades, the list can go on. Appealing to the lowest common denominator isn't a technological innovation, but a success in Marketing.
PS: I just easily accessed every song in my library on my mp3 player, smart phone, tablet and computer seamlessly all by logging into Google Music without purchasing or downloading a single song or program and have been doing so for quite a few months.
Realize that you're product is not necessarily better than the other, and you will walk away a smarter person. There are improvements to all 5 major smart phone OS's that can benefit from each other through direct competition. Purchase the one that relates best to your use, and then urge your US Carrier to stop being corporate nazi's and allow for more competition, leading to more advancements.
Comments
I think the real question is how long will carriers keep subsidizing the iPhone to the current level? They must be saying to Apple "The iPhone is costing us $100 more than high end Android phones; we want to reduce your subsidy."
Do you think Verizon isn't aware of how much it's paying in subsidies?
Do you think Verizon is too stupid to make such simple business decisions?
If Android had worked out for Verizon in 2010, it wouldn't even be selling the iPhone, let alone ready and willing to pay $100 extra PER PHONE SOLD to Apple over an Android phone.
Verizon knows which is worth more to it. It's not being pushed to sell iPhones at a different price due to some monopoly position by Apple, as Apple only has a 28% share of the US smartphone market. Verizon has options and is choosing to spend more to get Apple customers.
They advertise the Android like it's cutting edge yet they don't update the OS... so if you want to have any new functionality you have to buy another new phone!!!
I feel like this article is just trying to push the "Android sucks, iPhone rules" view. But all I see from this is Verizon is greedy... screwing everyone it can, in any way it can.
In other words, what's new?
Stop feeling, start thinking. Then you'll spend less time lying on your back pretending to be hurt.
Nothing in the article--or the headline "Verizon soaking high end Android buyers to make up for iPhone subsidies" suggests Android is to blame. It pretty clearly indicates Verizon is socking it to Android buyers because it can.
Also while the MSRP price for those phones is higher, they actually get discounted. The DRIOD RAZR was a penny on Amazon the week of Black Friday. You can get the Galaxy Nexus on Amazon for $150 (for new customers) or $250 (for upgrades), and the DRIOD RAZR is going for $169.99 right now. So they price them that high but they are discounted pretty heavily. I take it how clothing stores put high prices on the price tags to make it seem like the clothes is always a great deal, when in reality it's rare to find them for full price and your paying what people normally do.
It was already mentioned but you have to remember the $299.99 price for the Galaxy Nexus includes 32GB. So really it isn't overpriced at all.
Also while the MSRP price for those phones is higher, they actually get discounted. The DRIOD RAZR was a penny on Amazon the week of Black Friday. You can get the Galaxy Nexus on Amazon for $150 (for new customers) or $250 (for upgrades), and the DRIOD RAZR is going for $169.99 right now. So they price them that high but they are discounted pretty heavily. I take it how clothing stores put high prices on the price tags to make it seem like the clothes is always a great deal, when in reality it's rare to find them for full price and your paying what people normally do.
Actually, it is, when you compared the retail price of the device to the iPhone. You're paying $299 for a device that retails for $649 which means you are only getting a $350 subsidized from Verizon when sign that two year contract. On top of that, if you want to sell that phone in a year or two for the next model you're going to be getting a lot less for it than other phones on the market because it won't retain its value for various reasons. That makes the TCO quite high. Compare that to an iPhone where you're only paying $299 up front for a device retailing for $749 and with a high resale value that can easily mean you can get a brand new iPhone YoY without having to pay a single penny out of pocket YoY. TCO is an important factor to consider when talking about price.
Verizon's cost of support for so many models is that much higher than Apples for 2 models (4S & 4 at Verizon, 3GS is ATT only) THe training, stocking etc is so much higher for Android that they need to charge more. Plus Apple accessories are good for 2 years (3G & 3GS) (4G & 4S) so they can stock them and keep them longer. Plus the average Apple user stays as a subscriber longer. Price of the phone & subsidy are only pieces of the overall model.
$1-200 difference per phone goes quickly if you are stuck with excess models that are sold at a lower price, you can't stock the accesses as much for most android phones, because they change so frequently, and you keep your customer longer, .
If an Apple user lasts and average 3 months longer than an Android user who is flipping phones frequently, those three months are worth the $100 difference. Do the math.
Not knowing any actual figures but if the life of the contract is an average 3 months longer, they sell more accessories for the iPhone (regularly reported that that is the case) and the carrier gets stuck with less inventory, Apple is making a much, much bigger profit per phone than Android given the pricing in the Appleinsider article.
The raw economic fact is Apple phones make more per unit than do Android phones for carriers. If you work deals in a carrier you already know this, hence the differences in prices to the end users.
It was already mentioned but you have to remember the $299.99 price for the Galaxy Nexus includes 32GB. So really it isn't overpriced at all.
The full retail price of a 32GB iPhone4S is $749.99. The Galaxy Nexus (32GB) is $649.99. Both are $299.99 on Verizon so Apple is still getting a larger subsidy from Verizon.
Do you think Verizon isn't aware of how much it's paying in subsidies?
Do you think Verizon is too stupid to make such simple business decisions?
You don't think Apple just rolled over for Verizon? Apple negotiated a very good deal, much better than companies like Samsung managed to get. I just wonder how long Apple can keep receiving higher subsidies than rival firms. The more Android grows the harder future negotiations are going to be for Apple.
The full retail price of a 32GB iPhone4S is $749.99. The Galaxy Nexus (32GB) is $649.99. Both are $299.99 on Verizon so Apple is still getting a larger subsidy from Verizon.
You don't think Apple just rolled over for Verizon? Apple negotiated a very good deal, much better than companies like Samsung managed to get. I just wonder how long Apple can keep receiving higher subsidies than rival firms. The more Android grows the harder future negotiations are going to be for Apple.
Maybe I'm confused on how subsidies work...
I thought Verizon bought a 32GB iPhone from Apple at full retail price... $749.
Then Verizon sells that phone to me for $299... taking a loss of $450.
BUT... Verizon will charge me $90 a month for the next 24 months... bringing them $2,160.
Which, in the end, earns Verizon $1,710 from me.
Apple makes money on the phone... Verizon makes money on the contract. Isn't that how it works?
I wasn't aware Apple was giving "deals" to the carriers. In fact... I would be shocked if Apple was getting anything less than the retail price of their phones.
Who ushered in multitouch smart phones? Gyroscopes? Artificial intelligence? Video chat? App stores as we know them today? iTunes on a phone? AirPlay? Retina displays? Antenna deisigns never before tried? iTunes match? iCloud? Photo streaming to my computer? Visual voicemail? 1 click purchasing? I can buy a brand new Mac on my phone, walk into an Apple store and have my order brought to me without ever approaching a salesman. I can send text messages to my mom's iPad or my wife's iPod touch right from my phone. I can buy a new phone today, put in my iCloud credentials and pick right up where I left off on my old phone - including app data and same in-game location etc. I can tell my phone to remind me to pick up supper when I leave work, it sets up a geo-fence around my location, and reminds me the minute I leave the area. I can take a picture on my phone and it will wirelessly sync to my computer, iPad etc. I just asked my iPhone will I need an umbrella tomorrow... It actually answered me back.
And somehow you think adding a faster processor or a bigger screen is taking us to new heights.
Good list but you credit apple with way too much.
Then again that's to be expected here. Where everyone feels Apple exists in a void.
Good list but you credit apple with way too much.
Then again that's to be expected here. Where everyone feels Apple exists in a void.
That's right, if Apple didn't invent in a bubble, perfect it, AND make it a market success then then they get no credit altering the wayne interact with the world. By your reasoning Newton was just some hack that happen to notice gravity. I bet that would have been apparent to you.
Maybe I'm confused on how subsidies work...
I thought Verizon bought a 32GB iPhone from Apple at full retail price... $749.
Then Verizon sells that phone to me for $299... taking a loss of $450.
BUT... Verizon will charge me $90 a month for the next 24 months... bringing them $2,160.
Which, in the end, earns Verizon $1,710 from me.
Apple makes money on the phone... Verizon makes money on the contract. Isn't that how it works?
I wasn't aware Apple was giving "deals" to the carriers. In fact... I would be shocked if Apple was getting anything less than the retail price of their phones.
The only flaw in that is the phone both go 24 months. As I understand it Android phones get traded in well befor Apple phones. In other words the number of new phones seduces the Android person to trade phones more frequently. If the average Android contract is 21months, and the Apple is 24 the subsidy could actually be larger on he android phone that the Apple one. I know the churn is greater in android phones, but I am not sure of the average number of months between them.
But to illustrate, if a carrier is willing to pay $25 a month in subsidy, the if Apple phones last an average of 3 months more between trade in's the carrier can subsidize apple $75 more than an Android, and still get the same money.
IPhones do churn less, but how many more months iPhones are kept over Android and you will have how much more The iPhone is worth.
That is all Apple seems to talk about. The number one reason Apple hates Android so much. No matter what Apple does, Android keeps pulling away. I give it 5 years and the iPhone will be the Mac, very niche very little market share. Android will be everywhere and Google will be laughing.
And Apple will still be making 70 to 90 percent of the profit generated from the entire smartphone market.
The only flaw in that is the phone both go 24 months. As I understand it Android phones get traded in well befor Apple phones. In other words the number of new phones seduces the Android person to trade phones more frequently. If the average Android contract is 21months, and the Apple is 24 the subsidy could actually be larger on he android phone that the Apple one. I know the churn is greater in android phones, but I am not sure of the average number of months between them.
But to illustrate, if a carrier is willing to pay $25 a month in subsidy, the if Apple phones last an average of 3 months more between trade in's the carrier can subsidize apple $75 more than an Android, and still get the same money.
IPhones do churn less, but how many more months iPhones are kept over Android and you will have how much more The iPhone is worth.
But I'm still confused on what the subsidy has to do with Apple...
Is Verizon paying the full retail price for each iPhone to Apple? If so... Apple's involvement ends there.
Then it's up to Verizon to make money from the customer with plans and contracts.
Verizon is providing this subsidy... not Apple.
Apple still gets $649-$849 per iPhone.
If you also wish to try and convince someone that Android costs more than Apple, you should really run down the multitudes of android phones purchased for 0-100$ with a contract.
The big difference, whether you are apple or android fans, is that Android manufactures (with carriers in tow) charge more for the brand new product, then drop the price once it has been in the market (see Droid Bionic for 150$). Meanwhile Apple stays the same until they release their next product line. One could make the argument that Android follows supply & demand, while Apple controls the price despite supply or demand (not trying to convince you one is better).
Talking about price for product outside of the 4s, look at the 4. Pay 100$ for a product that is 18months old or 100$ for various other phones that have come out as early as a month or two ago for free to 100$ that can do everything it can do except 'better' (excluding battery life on standby without iCloud turned on).
But I'm still confused on what the subsidy has to do with Apple...
Is Verizon paying the full retail price for each iPhone to Apple? If so... Apple's involvement ends there.
Then it's up to Verizon to make money from the customer with plans and contracts.
Verizon is providing this subsidy... not Apple.
Apple still gets $649-$849 per iPhone.
Cell phone prices are dictated by the wholesale company (Verizon/Target/Apple). This is why you can find Target running specials for 25$ off a 4s right now or the Stratosphere being 100$ cheaper at Best Buy. To analyze the actual profit of each product would probably require a decent look at the contract between manufacture, carrier and wholesaler. Of course i'm sure each manufacture has some sort of protection in their contracts with everyone concerning holding the price at specific levels for specific time and perhaps these either expire eventually or are adjustable at a later date.
Verizon charges more for the new phones and somehow Android cost more? Wouldn't it be that Verizon cost more? Looking at other carriers, i haven't seen many Android phones above 200$ for a new contract (except for the Sky Rocket on ATT).
If you also wish to try and convince someone that Android costs more than Apple, you should really run down the multitudes of android phones purchased for 0-100$ with a contract.
The big difference, whether you are apple or android fans, is that Android manufactures (with carriers in tow) charge more for the brand new product, then drop the price once it has been in the market (see Droid Bionic for 150$). Meanwhile Apple stays the same until they release their next product line. One could make the argument that Android follows supply & demand, while Apple controls the price despite supply or demand (not trying to convince you one is better).
Talking about price for product outside of the 4s, look at the 4. Pay 100$ for a product that is 18months old or 100$ for various other phones that have come out as early as a month or two ago for free to 100$ that can do everything it can do except 'better' (excluding battery life on standby without iCloud turned on).
It means that the TCO for the customer is significantly higher if you wish to own an Android-based device compared to a similar iPhone. There are several take aways here.
1) Verizon will have to invest in Android updates which they may or may not do well or at all if they don't get enough sales, which Apple's limited options have guaranteed you get updates on a timely basis and for several years.
2) You end up paying more for less, which is pretty much the worst thing you can do in a sale yet for some reason people get all mixed up by these subsidizes. Take the Galaxy Nexus for instance. You get a 1.2GHz CPU with 1GB RAM compared to the 800MHz with 512MB RAM of the iPhone 4S yet AnandTech's JS engine tests aren't showing a 50% gain, they are showing them right on par. What happened to Google's JS dominance?
3) Buyers should consider the TCO. If you pay a lot of money for something it's good to know that it holds value if you want to sell it later. I take this into consideration with a house, car, and many other items. I want my TCO to be as low as possible by maximizing my enjoyment. You just aren't going to get with 500 Android-based devices released per year.
I goes nobody on this thread understands business. For Verizon these two sentences sum it all up from a business point of view "Additionally, unlike new iPhone models that appear every year, Android licensees pop out new models every three to six months. This has created an upgrade cycle that forces down prices, something that is not in carrier's interests. "
Verizon's cost of support for so many models is that much higher than Apples for 2 models (4S & 4 at Verizon, 3GS is ATT only) THe training, stocking etc is so much higher for Android that they need to charge more. Plus Apple accessories are good for 2 years (3G & 3GS) (4G & 4S) so they can stock them and keep them longer. Plus the average Apple user stays as a subscriber longer. Price of the phone & subsidy are only pieces of the overall model.
$1-200 difference per phone goes quickly if you are stuck with excess models that are sold at a lower price, you can't stock the accesses as much for most android phones, because they change so frequently, and you keep your customer longer, .
If an Apple user lasts and average 3 months longer than an Android user who is flipping phones frequently, those three months are worth the $100 difference. Do the math.
Not knowing any actual figures but if the life of the contract is an average 3 months longer, they sell more accessories for the iPhone (regularly reported that that is the case) and the carrier gets stuck with less inventory, Apple is making a much, much bigger profit per phone than Android given the pricing in the Appleinsider article.
The raw economic fact is Apple phones make more per unit than do Android phones for carriers. If you work deals in a carrier you already know this, hence the differences in prices to the end users.
You are all analyzing profit based on items that wouldn't give you actual profitability for each party involved.
To explain as briefly as possible:You do not know how much each phone costs you make. You are going off MSRP which is in fact an inflated price tag to prevent outright purchases, if you don't believe me, here's an example, HTC Wildfire (100-200$ for prepaid or 400$ on t-mobile). You do not know how much each phone is costing the carrier. As previously stated, the carriers make money off monthly income (duh..), accessories and add-ons, not the sale of the phone.
Given that you don't know the actual manufactures cost or the price tag given to the carriers, you are completely guessing that each phone is sold at a specific profit to each manufacture. you could possibly go off maybe employee discounts or price of the phone to the wholesaler, but you still wouldn't comprehend manufacturing cost because each manufacture could sell at a loss to push a product.
In the end, all you know right now, is that it's really expensive to buy a phone outright, and need to go through a carrier! Which is exactly why competition is good, to drive the prices down between carriers.
It means that the TCO for the customer is significantly higher if you wish to own an Android-based device compared to a similar iPhone. There are several take aways here.
1) Verizon will have to invest in Android updates which they may or may not do well or at all if they don't get enough sales, which Apple's limited options have guaranteed you get updates on a timely basis and for several years.
2) You end up paying more for less, which is pretty much the worst thing you can do in a sale yet for some reason people get all mixed up by these subsidizes. Take the Galaxy Nexus for instance. You get a 1.2GHz CPU with 1GB RAM compared to the 800MHz with 512MB RAM of the iPhone 4S yet AnandTech's JS engine tests aren't showing a 50% gain, they are showing them right on par. What happened to Google's JS dominance?
3) Buyers should consider the TCO. If you pay a lot of money for something it's good to know that it holds value if you want to sell it later. I take this into consideration with a house, car, and many other items. I want my TCO to be as low as possible by maximizing my enjoyment. You just aren't going to get with 500 Android-based devices released per year.
Understanding computers, you wouldn't expect the actual test to be 150% better than the iphone in that scenario. The downfall to comparing specs in phones is that it really won't matter if you are already so similar, dual core 800mhz vs 1.2Ghz as a prime example.
Value for you phone also doesn't hold much weight in consumers eyes, otherwise Honda's would probably be the only car people drove around :P Whether this matters or not, I'd agree you can sell an apple product further down the road for more than its average competitor. However, that doesn't make it a better product necessarily.
I agree as well that Verizon has to invest in more chances or risks with the android platform (which is probably why they still control the damn droid name as they do). Without an actual understanding of each phone cost directly it would be hard to prove that they are taking more risk with android vs apple. Consider how Sprint bought into iPhone finally, and haven't seen a drastic sales in their phones or subscription service (same for Verizon). I could make a strong case that the risk involved in a company purchasing rights and products for apple is drastically higher than that of an android device, just as easily as the other way around.
Cell phone prices are dictated by the wholesale company (Verizon/Target/Apple). This is why you can find Target running specials for 25$ off a 4s right now or the Stratosphere being 100$ cheaper at Best Buy. To analyze the actual profit of each product would probably require a decent look at the contract between manufacture, carrier and wholesaler. Of course i'm sure each manufacture has some sort of protection in their contracts with everyone concerning holding the price at specific levels for specific time and perhaps these either expire eventually or are adjustable at a later date.
If Verizon and Target want to offer a $25 discount to entice someone to sign a contract... I understand that. They'll both eat a little bit of their profit to get people in the door.
But I can't imagine Apple providing a discount to Verizon and Target.
The only thing Apple makes money on is the hardware sale... why would they reduce their price?
Who ushered in multitouch smart phones? Gyroscopes? Artificial intelligence? Video chat? App stores as we know them today? iTunes on a phone? AirPlay? Retina displays? Antenna deisigns never before tried? iTunes match? iCloud? Photo streaming to my computer? Visual voicemail? 1 click purchasing? I can buy a brand new Mac on my phone, walk into an Apple store and have my order brought to me without ever approaching a salesman. I can send text messages to my mom's iPad or my wife's iPod touch right from my phone. I can buy a new phone today, put in my iCloud credentials and pick right up where I left off on my old phone - including app data and same in-game location etc. I can tell my phone to remind me to pick up supper when I leave work, it sets up a geo-fence around my location, and reminds me the minute I leave the area. I can take a picture on my phone and it will wirelessly sync to my computer, iPad etc. I just asked my iPhone will I need an umbrella tomorrow... It actually answered me back.
And somehow you think adding a faster processor or a bigger screen is taking us to new heights.
The idea behind the Android OS and phone lines can be dated back to 2003 while the iPhone (until other knowledge is made public) can be dated back to 2005 (at best).
Not one thing you said your iPhone can do that an Android device (or Windows Device) can't do or hasn't been doing for much longer than an iPhone. Innovation of the actual technology hasn't been where Apple has succeed, rather they have succeeded in the Marketing of their product (this they are innovators to the max).
Example is the packaging of the iTouch, the ease of understanding the touch screen technology that had been around for decades, the list can go on. Appealing to the lowest common denominator isn't a technological innovation, but a success in Marketing.
PS: I just easily accessed every song in my library on my mp3 player, smart phone, tablet and computer seamlessly all by logging into Google Music without purchasing or downloading a single song or program and have been doing so for quite a few months.
Realize that you're product is not necessarily better than the other, and you will walk away a smarter person. There are improvements to all 5 major smart phone OS's that can benefit from each other through direct competition. Purchase the one that relates best to your use, and then urge your US Carrier to stop being corporate nazi's and allow for more competition, leading to more advancements.