True Cost of iPhone 5S = $194, not $849

[Shadrack]

Wowee, wow wow wow.  With this information I can make MY VERY OWN IPHONE for $194!!!!  /s

 

These articles, and people who harp them, are full of fail.

[Shadrack]

We all know Apple and other cell phone manufacturers rape us on price. It is the only way for the cell phone companies to stay relevant and not become a dumb pipe. Put together a $200 device and sell for close to $1,000 simply because it has a cell phone radio that costs pennies to produce. The same device without phone capabilities always comes in a more reasonable price that is fair to the consumer and still generates a ton of profit for said manufacturer.

 

Those damn patents and licensing agreements!  Grrrr why can't Engineers and Scientist all work for free and donate their inventions to the betterment of society!!!!

[Shadrack]

Yes, Apple makes an insane amount of profits on each device they sell. Solution, don't buy it. I don't.

 

Right.  Every purchase you make is a real bargain.  I'm so sure.

[Lord Method Man]

Right.  Every purchase you make is a real bargain.  I'm so sure.

 

Yeah, no kidding.

 

Let me know when UNICEF gets into the smartphone business. I wouldn't want to purchase anything that might contribute to "insane" profits for anyone.

[Shadrack]

You can say what you like about Apple, but they've done a brilliant job at creating a solid brand.  They've practically reached the pinnacle of brand dominance, I think this showcases it perfectly:  http://news.cnet.com/8301-17852_3-20064577-71.html

 

In that case, they've only tested one person, but I watched a documentary on it around a year ago where they had a lot more test subjects and the results were the same.  People crazy for Apple had crazy brain activity patterns when shown Apple products - much the same as a devout Christian being shown religious imagery.

 

Apple is also the darling of the media which I think has a bigger marketing effect than anything else.  From my observations, the vast majority of laptops and smartphones showcased in television shows and movies are Apple products.  Most of the time, the Apple logo is covered, but everyone knows what it is when they see it and that adds to their brand name dominance.

 

As far as your study confirming the "cult of Apple", I'm sure that a lot of people react similarly to a lot of different things.  Maybe not in terms of the tech world, but car fanatics probably have similar brain activity when looking at their favorite sports car. 

 

People like to harp the iSheep, Cult of Apple, etc. as being the reason for Apple's success and I think those people are being short sighted.  They are ignoring what Apple brings beyond the product in terms of support.  I've dealt with A LOT of different companies support teams on a vast array of issues throughout my life and in all of that I'd rank Apple's customer care to be the absolute highest.  To me, an extra $100 or $150 for an iPhone is worth it to know that if I have any problems w/s/e I can get it taken care of immediately.  Also, their software update support is paramount and Apple keeps their older hardware more relevant than anyone else.  Both my iPhone 3GS and iPhone 4 are being used by family members right now and they love them.  What other smartphones from the iPhone 3GS era that people still use and love?  I mean, honestly?

[NeoandGeo]

Those damn patents and licensing agreements!  Grrrr why can't Engineers and Scientist all work for free and donate their inventions to the betterment of society!!!!

 

Cell phone company apologists are as ignorant as they come. Try again.

[Shadrack]

Cell phone company apologists are as ignorant as they come. Try again.

 

I was using hyperbole to make a point.  What was your point?  Name calling?

[NeoandGeo]

If you ask for it, I will deliver because I am not afraid to bow down to those who apologize for anti-consumer practices. I know you are used to people being scared to put you in your place. ;)

 

If you feel you can make a point, then make one instead of making ignorant statements knowing nothing about the subject at hand.

 

We all know about licensing and patent costs, but don't be so naive to believe that they make a $250-$300 device instantly become $800-$900. It's greed and "because we can" pure and simple.

[Shadrack]

It's true that most companies charge all they think their market will accept. It just amazes me that Apple makes these high profit margins year after year after year. I am not an Apple user and I just don't understand why people buy their products so faithfully.

 

 

Perhaps its because they were happy with their previous Apple product?  What other theory that makes folks so faithful in your opinion?  Do you think that Apple customers have to go through Apple loyalty training retreats to earn their iSheep badge of trust and loyalty?

 

Customer satisfaction = repeat customer.  Can you not accept that Apple customers are generally satisfied?

[Shadrack]

If you ask for it, I will deliver because I am not afraid to bow down to those who apologize for anti-consumer practices. I know you are used to people being scared to put you in your place. ;)

 

If you feel you can make a point, then make one instead of making ignorant statements knowing nothing about the subject at hand.

 

We all know about licensing and patent costs, but don't be so naive to believe that they make a $250-$300 device instantly become $800-$900. It's greed and "because we can" pure and simple.

 

What manufacturer is not participating this "greed because we can" theory?  Google sells their smartphones at a reasonable price, but only because they subsidize their OEMs.  For example, the Nexus 4 MSRP from LG was $499.  Google couldn't convince LG not to be greedy?

 

Are things over priced?  Yes, I agree with you on that part (mostly because cheaper prices would be best for ME).

 

But calling me ignorant exposes your own ignorance.  If a smartphone manufacturer can legitimately sell their product for substantially less, like you suggest, then they would and would most likely dominate the market.  The only OEM I can think of that is actually competing on price is Nokia.... how is their market dominance going?

[Shadrack]

You're not even remotely in the same argument as this discussion now. You agree then go on a rant how everyone does it so it doesn't matter. Ignorance is bliss and you are a blissful girl indeed. Enjoy it!

 

We're still taking about the true cost of an iPhone?  No?

 

I was quite enjoying the conversation we were having despite of all the name calling.  But if you don't want to discuss it further, I understand.

 

My point wasn't that "everyone else does it", its that if what you say is true then some OEM would corner the market with their low prices.  That just...isn't happening.  Back room deals, perhaps?  Maybe.  But if you want to drive on a toll road, you gotta pay the toll.

 

My only agreement with you was that I would like to see lower prices on smartphones.  Its a desire, but my desire doesn't determine the price.  Neither does yours.

[fusi0n]

You have to include all aspects.. not just the materials.. 

[Dick Montage]

Apple don't set the "because we can" price, the consumer does.

[Jason S. Global Moderator]

Guys - this thread needs to stay on topic.

[TMYW]

Here's a dirty little secret that Apple doesn't tell you. Every non-iPhone user on contract helps to subsidize every iPhone user on contract. Check out the subsidies for iPhones compared to any other device. It's sometimes more than a $100 difference in subsidies. Yet, everybody pays the same monthly rate, regardless of device. Early termination fees? Same, regardless of device.

[Shadrack]

Here's a dirty little secret that Apple doesn't tell you. Every non-iPhone user on contract helps to subsidize every iPhone user on contract. Check out the subsidies for iPhones compared to any other device. It's sometimes more than a $100 difference in subsidies. Yet, everybody pays the same monthly rate, regardless of device. Early termination fees? Same, regardless of device.

 

That has been my observation as well...  It is part of the reason why service provider shops (like Verizon's and AT&T's) try and direct you towards buying an Android phone if you come in the store asking to see their iPhones (or at least they were doing that a few years ago).

 

Apple does seem to "get its way" more with the service providers.  In terms of subsidiaries and also with software updates.

[Nick H. Supervisor]

Guys - this thread needs to stay on topic.

<Thread cleaned>

The last page turned towards insults. Stick to the subject, not one another. (Y)

[TMYW]

That has been my observation as well...  It is part of the reason why service provider shops (like Verizon's and AT&T's) try and direct you towards buying an Android phone if you come in the store asking to see their iPhones (or at least they were doing that a few years ago).

 

Apple does seem to "get its way" more with the service providers.  In terms of subsidiaries and also with software updates.

 

Yup. Apple has the carriers by the shorthairs, and the carriers are a bunch of poosays. It's far easier to bend over and get a$$raped by Apple and just pass on the costs to customers than it is to stand up to Apple. It seems the only major carrier in the world that's been able to say FU to Apple so far has been China Mobile, but now there's a rumor that China Mobile is taking pre-orders for the iPhone. This could mean that Apple worked out some sort of subsidy with the carrier.

[Shadrack]

Yup. Apple has the carriers by the shorthairs, and the carriers are a bunch of poosays. It's far easier to bend over and get a$$raped by Apple and just pass on the costs to customers than it is to stand up to Apple. It seems the only major carrier in the world that's been able to say FU to Apple so far has been China Mobile, but now there's a rumor that China Mobile is taking pre-orders for the iPhone. This could mean that Apple worked out some sort of subsidy with the carrier.

 

Not sure why Apple really has that position really.... they are not "top dog" and really haven't been for awhile.  Android has a strong loyal fanbase...enough so that I'm sure any carrier could drop their iPhone subsidies and be just fine.

 

My analysis of subsidies on an iPhone:

 

Compare the cost of pre-pay plans (for example, Net10 has $45/month 1.5GB LTE date, unlimited voice) to the "subsidized" cell plans (for example, AT&T when I was last using them cost me $78/month for 200MB data, 1000txt, and 400 voice minutes), then I can estimate that the monthly payment plan is about $20 (probably closer to $30, but AT&T has better support than Net10 so....).  Anyway if you pay $200 for an iPhone upfront (that normally costs $650), then you are paying the subsidy off in about 24 months (20*24 + 200 = $680).

 

So...the Apple user probably is paying off their subsidizes w/o the help of Android users.... but Android users are still (overall) getting less of a subsidy while making the same "monthly payment" in overpriced service.

[TMYW]

Not sure why Apple really has that position really.... they are not "top dog" and really haven't been for awhile.  Android has a strong loyal fanbase...enough so that I'm sure any carrier could drop their iPhone subsidies and be just fine.

The main reason Apple still has so much negotiating power in subsidy deals is because they still sell more phones than any other single OEM, and the iPhone 5S certainly sells more units than any single model Android device. As know-nothing consumer, why wouldn't you buy the iPhone 5S when it has a retail price of $650 and is "discounted" to $200, while a phone made by brand X retails for $550 and is discounted to $200. By buying an iPhone, you're getting a better deal!!!

 

Carriers definitely want customers to purchase phones that carry smaller subsidies, but they can't just drop the iPhone. They'd lose too many subscribers all at once, and as publicly-traded companies, they have the next quarterly earnings report to worry about. Granted, in the long-term, it would be far healthier for them to remove Apple's yoke and then compete to win back customers with lower rate plans, but that ain't going to happen in current business climate.

 

The only way anything's going to change is for people wake up and realize there are a lot more excellent devices out there than the iPhone (and even the Galaxy S).

 

My analysis of subsidies on an iPhone:

 

Compare the cost of pre-pay plans (for example, Net10 has $45/month 1.5GB LTE date, unlimited voice) to the "subsidized" cell plans (for example, AT&T when I was last using them cost me $78/month for 200MB data, 1000txt, and 400 voice minutes), then I can estimate that the monthly payment plan is about $20 (probably closer to $30, but AT&T has better support than Net10 so....).  Anyway if you pay $200 for an iPhone upfront (that normally costs $650), then you are paying the subsidy off in about 24 months (20*24 + 200 = $680).

 

So...the Apple user probably is paying off their subsidizes w/o the help of Android users.... but Android users are still (overall) getting less of a subsidy while making the same "monthly payment" in overpriced service.

 

As a subscriber, you don't really "pay down" your subsidy. The second you sign the contract, you're only on the hook for the early termination fee, which is currently $325 for AT&T. Again, it's regardless of device. (If eBay fees weren't so high, you could purchase an iPhone on contract for $200, cancel your plan, pay the $325 ETF, sell your phone for a little less than full retail price, and still come out ahead. That's how out of whack things are when it comes to the iPhone. Most smartphones have about a $350 subsidy, which jibes with the $325 ETF.)

 

It's the carriers that have to RECOUP the subsidy paid to Apple through the monthly plan fees.

[Coagulated]

Apple is also the darling of the media which I think has a bigger marketing effect than anything else.  From my observations, the vast majority of laptops and smartphones showcased in television shows and movies are Apple products.  Most of the time, the Apple logo is covered, but everyone knows what it is when they see it and that adds to their brand name dominance.

 

As far as your study confirming the "cult of Apple", I'm sure that a lot of people react similarly to a lot of different things.  Maybe not in terms of the tech world, but car fanatics probably have similar brain activity when looking at their favorite sports car. 

 

People like to harp the iSheep, Cult of Apple, etc. as being the reason for Apple's success and I think those people are being short sighted.  They are ignoring what Apple brings beyond the product in terms of support.  I've dealt with A LOT of different companies support teams on a vast array of issues throughout my life and in all of that I'd rank Apple's customer care to be the absolute highest.  To me, an extra $100 or $150 for an iPhone is worth it to know that if I have any problems w/s/e I can get it taken care of immediately.  Also, their software update support is paramount and Apple keeps their older hardware more relevant than anyone else.  Both my iPhone 3GS and iPhone 4 are being used by family members right now and they love them.  What other smartphones from the iPhone 3GS era that people still use and love?  I mean, honestly?

 

 

I do like how you ignored the rest of my post and pounced on the link, but whatever.

 

How do you think Apple became media darlings?  Marketing.

 

Those people may be short-sighted to an extent, but it completely summarises what Apple has achieved.  I am not saying that they have brainwashed people with little to no substance, that would be ridiculous, but they have created a viciously loyal following, just look at how you are defending them to my post? I don't mean this in a negative way, but you are great example of an Apple Fan Boy - if your brand has fan boys, you are doing something right. Of course people react similarly to products and brands that they adore, but as you've just said "maybe not in terms of the tech world" - that's exactly where it matters because that's the world in which Apple operate.  Primarily, they strive to make technology look cool and they do a good job of it.

 

You must get the impression that I am anti-Apple, I'm not. I don't particularly like them, but then again I don't particularly like a lot of companies, I judge them on a product by product basis. I actually own a couple of Apple products, and whilst my iPod is still going reasonably strong given it's age, my iPhone 4 is beyond useless, even with a fresh install and a clean slate it runs offensively bad, but that's besides the point.  I don't have any brand bias at all, in fact I work for a company that is practically a Microsoft Partner in everything but name (still baffles me why they haven't applied to become a Partner, but whatever, not my call), however I am not a staunch Microsoft supporter.

 

To be fair, as good a phone as the 3GS was, there wasn't really much decent competition at the time in terms of touchscreen smartphones, Blackberry was the name in the majority of pockets and we all know what happened there.

[Shadrack]

I do like how you ignored the rest of my post and pounced on the link, but whatever.

 

How do you think Apple became media darlings?  Marketing.

 

Those people may be short-sighted to an extent, but it completely summarises what Apple has achieved.  I am not saying that they have brainwashed people with little to no substance, that would be ridiculous, but they have created a viciously loyal following, just look at how you are defending them to my post? I don't mean this in a negative way, but you are great example of an Apple Fan Boy - if your brand has fan boys, you are doing something right. Of course people react similarly to products and brands that they adore, but as you've just said "maybe not in terms of the tech world" - that's exactly where it matters because that's the world in which Apple operate.  Primarily, they strive to make technology look cool and they do a good job of it.

 

You must get the impression that I am anti-Apple, I'm not. I don't particularly like them, but then again I don't particularly like a lot of companies, I judge them on a product by product basis. I actually own a couple of Apple products, and whilst my iPod is still going reasonably strong given it's age, my iPhone 4 is beyond useless, even with a fresh install and a clean slate it runs offensively bad, but that's besides the point.  I don't have any brand bias at all, in fact I work for a company that is practically a Microsoft Partner in everything but name (still baffles me why they haven't applied to become a Partner, but whatever, not my call), however I am not a staunch Microsoft supporter.

 

To be fair, as good a phone as the 3GS was, there wasn't really much decent competition at the time in terms of touchscreen smartphones, Blackberry was the name in the majority of pockets and we all know what happened there.

 

 

I wasn't ignoring the rest of you post, just my response was towards that study you referred to and how one-sided I think it is.  I mean, it seems to me like the researches set out to show that Apple users respond to Apple devices the same way religious people respond to religious things.... where was the control?

 

 

 

You must get the impression that I am anti-Apple, I'm not.

 

I honestly did not get that impression at all.

 

but you are great example of an Apple Fan Boy

 

I've never denied that nor have I ever considered it derogatory. 

[Shadrack]

The main reason Apple still has so much negotiating power in subsidy deals is because they still sell more phones than any other single OEM, and the iPhone 5S certainly sells more units than any single model Android device.

 

I think you are correct at the moment about the iPhone 5S.  But I'm pretty sure that Samsung (as an OEM) is way ahead of Apple at this point.

 

http://www.latinospost.com/articles/31641/20131115/samsung-vs-apple-sales-figures-2013-keeps-31-2-percent.htm

 

The rest of your points are well taken.  ETF do seem a bit messed up, but it is probably better on the customer service end to target an "average" ETF that covers the carriers cost of the subsidize rather than having a different ETF for each handset.

 

For folks not concerned about ETFs, they are really getting a bad deal if they continue with their overpriced service plan beyond the 24 month period and do not need (or even want) to upgrade.

[nukenorman]

Apple should charge 999 off contract with sales this strong you know apple fan boys will pay this price it w ould be a good move for the company and for its share holders. Plus the next iPhone with its 5 inch screen they will all buy it .

[Shadrack]

Apple should charge 999 USD off contract with sales this strong you know apple fan boys will pay this price it w ould be a good move for the company and for its share holders. Plus the next iPhone with its 5 inch screen they will all buy it .

 

Why stop at 999 USD then?  Why not 1,000,000 USD?