I think the real issue is that US customers (at least) have been conditioned to think of a smart phone as something that costs between $0 and $300 due to the common use of contracts and subsidies. Even if a carrier offers a non-contract plan, they are often not that much better as far as price (with some exceptions like TMobile and some MVNOs), so they balk at paying $650-850 for a handset.
That was one of the things I liked most about the Nexus 5 when it came out. Even unlocked you were getting a current gen phone, unlocked, worked with three major carriers and many MVNOs, and only cost $350. At that point, it's not as tough to make the jump and ditch the contract. Without the contract, you can just leave if a competitor offers a better deal or if your carrier screws you over.
Even with this new SIM, I imagine you're still either gonna pay full price or you're gonna get it subsidized with a contract and then have the option of flipping over to some secondary plan when needed. Might be good for smaller carriers with good rates but less coverage. Phone works great at home but drops off when you go to another town? Just flip to a prepaid SIM from a cheap prepaid carrier with service in the area.
shrug Just paid $750 for an iPhone 6, unlocked. The alternative was renting it from my carrier for a similar amount, divided into 24 months, and being handcuffed to them for unlocks and the like. By using BYOD pricing on my ATT plan, I pay less every month than I would on a subsidy.
Yeah, I'm not everyone, but arguing that "most people" won't do what I did is kind of missing the point-- they already DO pay that much, just not all at once. It's kind of crazier when you realize what people are paying without knowing it.
The subsidies are going away -- ATT and Verizon in the US are forcing people into their monthly payment plans -- which is kind of nice, because people actually see what they're paying instead of just seeing it "bundled".
You have to realize that it really wasn't until recently that you could do BYOD on the networks. They wouldn't give you a discount at all for owning the device outright, even at the end of the 2 year contract. There was no benefit to having paid $750 for a phone, except if you really really wanted that particular phone. The best math then was to upgrade to a new phone as soon as your contract ended. Otherwise, you were paying the built-in $10/mo or whatever for old tech. Far better to shell out $0-$200 for a new phone on contract and lock-in for another 2 years.
even when i was on the old unlimited-only-in-name from att which was the same price with a subsided device or not, having my own device still allowed me to:
- avoid crazy fees out of nowhere for canceling (wife had one refurbished $99 note ii. when canceling had to pay almost $200 on top of the values in the contract)
- be able to use own device overseas.
- not have sleazy device protection insurance BS added every month and you having to call in to cancel
One thing I learned is that there are things in life you shouldn't be cheap about, and one of them is most definitely a smartphone. You're buying a device you'll be using every day, likely pulling it up for few seconds every little while. You definitely don't want to have a smartphone that looks like crap, hangs up all the time and in the end won't let you do half of the things it was supposed to do. This would be introducing an incredibly big source of frustrations into your daily routine. I wouldn't be surprised if additional psychiatrist bill would be bigger than money saved on the phone.
I was stuck for three years with a crapphone (LG P150) that was too weak to lift its own operating system (Android). After those three years of torture (and using it only for calls and text messages, as turning on Internet would max out the processing power and memory and would require taking out the battery) I can say such phones should not be allowed on the market. Especially not pushed by telecoms on contracts. It's especially sad to look at people who get burned by this when buying their first smartphones. It's basically a story of shattered dreams. It's just evil.
So folks, either buy a dumbphone (if all you need is text and calls), or shell out for some decent tech. Buy that Nexus or S4. It's worth the money.
My SO switched to the same thing about 4 or 5 months ago. She was paying $40/mo with AT&T and had a crappy alcatel lucent phone. She has absolutely loved the Moto G. It is very, very similar to the Galaxy Nexus with a few updates. Definitely a good deal!
I completely agree with you. My point is that, in 2014, $750 is way more than twice as much as it costs to get a phone that exhibits exactly zero of the problems you describe. In fact, that has been true since at least 2012, when I bought the Nexus 4 that I'm still using.
So I agree, shell out for some decent tech, it's totally worth the money, but be excited that it only costs a couple hundred bucks to do so!
I agree. I'm used to european prices and also haven't consider that Nexus phones are actually quite cheap. I bought my current phone (S4) over a year ago for around $650.
I'm going to stick to buying high-end phones now and yes, I'm excited to learn it's not as expensive as I thought anymore :).
This reminds me of a comment from cockeyed.com's article about the price of an XBox One from the rent-to-own shop Aaron's [1]. The concept is the same, large payment up front is much cheaper than renting, if you can do it.
> $2,082 for a game console? Have you lost your mind?
> This is a ridiculous retail proposition. What fool would sign up for this?
> Not me, but I couldn't help noticing that Aaron's Xbox price ($79/month for 24 months) is the exact price and duration of my AT&T wireless contract which I signed to take delivery of my fancy new Galaxy Note smartphone.
I was quite surprised at how many people were surprised I bought my N5 outright last year, but I now pay nearly a third for a SIM only plan than others are paying for their smartphone plans.
Have converted a few people to that mindset - but (let's ignore the point about if you don't have much cash, locking yourself into a long term phone contract isn't smart, people will do it anyway), it is easier for people who live month to month to have it bundled like that, it's a bit like buying a sofa from DFS on credit...
Help me understand the math. With contract I pay $200. Without I pay $750. Difference = $550. Divided by 24 months = $23. Do I pay more than that to ATT each month? Assumption is that I get a new phone every 2 yrs which I have been for the past many cycles.
With a prepaid provider, I pay $50/month for unlimited internet, calling, and texting. There are no extra taxes or "recovery charges".
$750 + ($50 * 24) = $1950
Last I checked, AT&T was about $100/month. It also charges a $36 "upgrade fee".
$36 + $200 + ($100 * 24) = $2636
That also assumes you upgrade immediately after paying your 24th month of service. Otherwise, tack on $50 overpayment for every month you wait to upgrade.
May be I am missing something (I am not in the US). But, do you have to pay rent for the device if you go for the subsidised option? If so, then its not a subsidy. If it is a subsidy, then you are clearly gaining the subsidised amount. The only thing that you are losing is the ability to switch carriers for the contract period. Also, are you not allowed to choose a plan of your choice if you go for a subsidised phone?
The "subsidies" are not truly subsidies, they are built into the contract prices. At least in the EU every operator offers SIM-only contracts (though they may or may not advertise them), because not doing so would be a clear and blatant violation of EU anti-tying regulations, and they are always cheaper.
To the extent you are getting a real subsidy, it will be if the carrier decides to forgo margins on the device.
This isn't always true, though it's typically only not true when operators are throwing ridiculous offers at people who are trying to leave them. Similarly, I got phone a few years back at a ridiculous student-only deal. Both cases ended up with me paying about £200 more over the whole contract than I would've with SIM-only contracts, and both got me phones that retail for more than double that.
For any bundle they are offering they should have a non-zero cost in acquiring the phone, in which case they'd have a very hard time to justify not letting you sign up to an unbundled agreement where at the very least the cost of the phone is removed. They'd almost certainly be breaking the law if they do (of course that doesn't necessary mean they aren't doing it though)
Same here. I'm on AT&T, but bought an unlocked Verizon iPhone 6. I may not end up switching carriers in the next two years, but it's nice to have the extra flexibility for the same price I'd end up paying if I went with subsidized or Next plans.
Yeah, they sell off-contract Verizon phones at the fruit store. They're unlocked GSM global phones, pretty sweet. I got one because they were all my store had and immediately popped in my T-Mo SIM.
I paid ~$350 for a used S4 that I got activated on PagePlus. Why would I pay $80 a month to a big named carrier who keeps charging me rent on the phone after its paid off? (My plan is $39 for unlimited voice/text+1GB data, I used to do 500mb+1.2k min+3k texts for $29/mo).
Page Plus is truly amazing, especially now that they support 4G (but 3.5 Mbps throttle) as of a couple weeks ago. I just set someone up with a gently used S3 for ~$140, which if you compare specs to the S4, isn't much of a step down.
The carriers should be required to tell the customer the total price, including the contract. Perhaps then the consumers would know what they are signing up to. And the contract length should be limited, given how volatile and fast moving the market is.
Verizon told me the full price of my 6 and how that was broken down based on two different plans I could choose.
In the end since I had completed and past the end of my contract on the 4s the 6 was free. Pay 200 to get it and get 200 back for returning the 4s.
There are some good deals out there but most people don't look for them or worse ignore them. There are people won't do the 4s or such trade in because "its a hassle". Yeah, they mail you mailer and you send it back in postage paid. Oh, fill out a form on the site to start the process.
There are people who don't care what the true price is just as there are people who don't want to know; they aren't the same people
Actually, you aren't aware of the full price of your contract either. The second you get the opportunity to upgrade you should take it and seek to maximize the value of the discount you get.
Phone upgrades are like a call option you get every two years but since you had a 4S you let some time slide in between excercing. If you didn't like the 5s the better move would have been to upgrade anyway and immediately sell the phone, possibly saving the money to buy one later or spend it on something else.
The longer you wait to upgrade, once you have the ability, the less your upgrade is worth to you as the carrier has already made the discount back (and then some) through your payments.
The optimal strategy is to hit it as soon as you get it.
This is why I don't like this model. I don't need or want to spend money on a new phone every two years, but if I don't exercise the option, I'm leaving money on the table.
I think the optimal strategy is to avoid "buying" the option to begin with, get a cheap unsubsidized plan, get an inexpensive phone, and keep it for three to five years.
The full details of the contract are available right there on the contract. Not sure what more you think it would be reasonable to expect.
The length of the contract is usually limited to two years. Do you think we should have laws forbidding contracts of this duration? Why? Both parties are free to reject contracts they think are too long (or too short).
With the Nexus phones (previous versions at least) you could get them at a reasonable price direct from Google. Most of my friends bought direct from Google. I understand Apple let's you buy a phone direct as well, though they're prices aren't/weren't as reasonable.
Hopefully this helps to set the precedent that you can have your cake and eat it too (Have a reasonable phone at a reasonable price).
That was one of the things I liked most about the Nexus 5 when it came out. Even unlocked you were getting a current gen phone, unlocked, worked with three major carriers and many MVNOs, and only cost $350. At that point, it's not as tough to make the jump and ditch the contract. Without the contract, you can just leave if a competitor offers a better deal or if your carrier screws you over.
Even with this new SIM, I imagine you're still either gonna pay full price or you're gonna get it subsidized with a contract and then have the option of flipping over to some secondary plan when needed. Might be good for smaller carriers with good rates but less coverage. Phone works great at home but drops off when you go to another town? Just flip to a prepaid SIM from a cheap prepaid carrier with service in the area.