Social Enterprise

Podcast: Will the $99 smartphone trigger a price war?

See why RIM and Google Android could start a smartphone price war and why Palm could be an acquisition target in this episode of The Big Question.

Podcast

It appears that $99 could the new sweet spot for smartphones. In this podcast, hear why Research in Motion might be ready to start a price war, why Google Android could help drive down the price of smartphones in 2010, and why Palm could be a first big target as the smartphone market consolidates.

This is the first episode of "The Big Question," a joint production from ZDNet and TechRepublic. I co-host this weekly podcast with ZDNet Editor in Chief Larry Dignan. This week's guest expert is Bill Detwiler, Head Technology Editor of TechRepublic.

You can play this 21-minute episode from the Flash-based player at the top of the page, or:

Stories discussed in this episode:

About

Jason Hiner is Editor in Chief of TechRepublic and Long Form Editor of ZDNet. He writes about the people, products, and ideas changing how we live and work in the 21st century. He's co-author of the upcoming book, Follow the Geeks (bit.ly/ftgeeks).

64 comments
JonathanPDX
JonathanPDX

Need to get rid of the "minutes" scam they continue to foist onto the public. It's just another way for them to make a quick buck. I have a 500 minute a month plan and never use over 300 minutes. Since it's the lowest plan, I'm paying them for 200 minutes a month that I never use and will never get back. If I were paying $50 a month for the service, it would be like tossing $20 out the car window on the freeway. And instead of selling phones that don't make decent phone calls, they sell you phones that do everything but...I suppose keeping the masses entertained makes them forget they have lousy service, hidden fees, poor quality, etc.

darpoke
darpoke

...how would you prefer to pay for your calls? Would you rather be billed for the exact minutes you use, or simply want more pigeonholes in the bulk pacakages than 500 minutes minimum? Genuinely curious not trying to pick holes :-)

michael.brodock
michael.brodock

I thought you guys were going to have transcripts?

jasonhiner
jasonhiner

We put transcripts on TechRepublic's video shows but not on podcasts. The simple reason is that our videos have scripts so it's fairly easy to do the transcripts. However, podcasts are unscripted so we'd have to do the transcripts after the fact and that would take extra resources and delay the publishing of the podcasts.

vucliriel
vucliriel

... That Techrepublic is geared toward high bandwidth users? In other words, saying things in a 20MB video that could have been said just as easily and clearly in a 20KB text file ;)

CharlieSpencer
CharlieSpencer

The hardware is a one-time cost. It's the service contracts where consumers need to see reduced prices. Even if you pay full retail of $300-$400 for a phone, that still only about 10% of the cost of some providers' two-year service contracts. I don't care if they're giving the hardware away; the service contracts are still too expensive.

raoullux
raoullux

this will be the first step. Once the consumer buys the hardware separately they can take a subsciption without length commitment and can thus switch the provider with a few days notice. This will trigger the real price war between providers. The subsidized hardware with 2 year contrat prevented this. (The "free" hardware was paid for by the expensive contract) There was no need to reduce the cost since you were bound by your lengthy contract.

teksmith
teksmith

A phone for $50 one time and $100 per month for 2 years! Makes the hardware about 2% of the cost and I have the documentation to back this up.

darpoke
darpoke

Let's allow 100 bucks per month (which sounds a little high to me, but still). 100 x 24 is just shy of two and a half grand. 50/2400 is indeed just over 2%. And yet. Your claim as to the proportion of cost this represents is where the error creeps in. 50 dollars is 2% of the cost YOU PAY toward the entire 2 year commitment. You think because 50 dollars get you the phone that's what it's worth? Please. Games consoles nailed this a decade before the mobile market took off. You lose money on the hardware making it back on the service you sell - be it games for the machine or network coverage/calls/SMS. That phone you only paid 50 bucks for probably retails at ten times that amount. Yes the telco makes a profit on the arrangement - or they'd never have rolled out the wireless infrastructure in the first place - but before they can they need to get back the *true* cost of the phone, as well as the cost they incurred letting you make calls, send texts, and absorb large quantities of data bandwidth. I'm not a massive fan of huge monolithic corporations and telcos are one of the best examples of these. But I'm playing devil's advocate in this thread because I dislike the logic being used to imply that the latest technological products should be provided at little or no cost. If there's no money to be made in developing these products they will *not* be developed. That's not good for our industry (as techies) or getting our geek on with the latest toys. Am I really alone in how I feel? [edit: corrected overenthusiastic slang]

darpoke
darpoke

you've got me there. No, wait - a $100 radio you say? With HSDPA, EDGE, Wi-fi andBluetooth rather than simple FM/AM/DAB reception? As well as transmission on all the above wavelengths/protocols? Along with a 3 megapixel camera, 16GB of flash HDD space, 256MB RAM, and a 600MHz ARM CPU? Not to mention a 3.5", 16M colour, Multi-Touch capable display? Proximity and ambient light sensors? An accelerometer? On top of all that, an OS that supports phone calls, SMS, email, and web browsing? That can handle various audio and video file formats? I get it, you were exaggerating. I do it all the time myself. What's important is not to lose sight of the facts. It's one of the most highly advanced products on the market, years after it was first developed, and it's all thanks to continued investment. Apple have a history of pricing their products highly, largely because they can. They still sell. The iPod revolutionised digital music and the iPhone has singlehandedly revolutionised the PDA/smartphone market. Are they expensive? Yes. It put me off buying one until I could afford it, at the very start of this year. Are they worth it? Ask the market. Over 5 million sales in the second quarter of this year. As for what we pay? The handset manufacturers sell their phones to cellphone companies. They include this cost in the total amount they charge, balanced between one-off payment and monthly billing. This is how all service-based industries operate. So why is everyone leaping on cellphones? What about those lousy insurance companies? Or energy, for that matter? At least you can see where investment goes in the cellphone industry.

darpoke
darpoke

with a disclosure statement. I have stated previously that I am playing Devil's advocate in this thread as I dislike many of the arguments being put forth in attack of phone pricing. Just to make it crystal clear, I do not work for a telco or any related company. There are less than 20 people in the small tv production company where I work, and not one of us has anything to gain from high cellphone prices. I would also like to defend the statements I made in my reply to your original post: I specifically agreed with you that 50 dollars out of 2400 were 2%, not needing to be any more precise than that. Where I take issue though is with the claim you make that this represents how much you pay for the phone and how much for the service contract. What you pay is nothing to do with the relative worth of those two products: as the hardware and service provider the phone company can charge you however they please. This does not imply that the phone is worth 50 bucks or that the network coverage runs to 2.4 grand. Think of phone companies as OEMs - they buy pretty much fully assembled hardware, but they still preconfigure it for operation with their cellular coverage and sell it on. Given the high rate of promiscuity in the cellphone market, also as previously commented in this thread by another poster, this company can only reasonably count upon your loyalty for the duration of the contract. This means in those two years, they need to make back the cost of the handset - which is more than 50 dollars no matter how much you think you pay for it - as well as the cost to them of maintaining their network coverage and routing your data. Like other companies it's reasonable to assume they also need to cover budgets for marketing and promotions, not to mention the investment in further infrastructure needed to keep up with their competitors. Finally the comment that the technology is 'there now and has been for years' completely belies the fact that the handsets being used today are NOT the handsets that were made years ago, however far back you imagine this infrastructure was developed. If you are still using a monochrome Nokia 3210, then you perhaps have a legitimate claim to lower charges as the cost of provisioning that phone has long been met by network providers. Today's hardware however is capable of transmitting and receiving more data than at any time in the past and the scale of bandwidth and coverage needed to maintain that continues to rise.

teksmith
teksmith

Ok the actual percentage is 2.0833333%! That looks like "about" 2% to me. Which is what was stated in the original post. I did not mention the astronomical charges if I use more air time than on the plan. The technology there now and has been for years even though the prices keep going up. I use the phone for business and and use wireless satellite acces for a notebook computer which is way more any than a telephone technology. DO you work for the cell phone industry?

vucliriel
vucliriel

Come on, there is no more technology in a $500 cell phone than in a $100 5 watt GMRS radio and certainly less than in a $300 netbook!!! The true reason the prices are so high in some countries is NOT the COST OF TECHNOLOGY, but rather, pure and simple MARKETING. Why? Simply because of TRADITION. Cell phone used to be high-end BUSINESS tools that a company would pay for NO QUESTONS ASKED. As long as this 'business model' is applied to 'smart phones', market penetration in the general population will remain minimal.

darpoke
darpoke

in an earlier post that network coverage in the UK was in the high nineties for most providers (but deleted it as my posts have all been overlengthy and it was slightly OT). I think it might be part of the reason why prices are so high Stateside. Here I pay 45 quid for uncapped data - my SMS and minutes allowance are less important as a result of having alternate channels of communication. Even with the exchange rate (which is nearly 1:1 now the pound's in the toilet) that's well under a hundred bucks. But it's always been my understanding that coverage on your side of the pond is far poorer - after all, that's where the term 'cellphone' comes from. Here we call them mobiles because you can use them anywhere, at least anywhere you might want to, whereas in the US service was restricted to 'cells' of coverage centered over highly populated areas. To account for increased traffic and usage away from urban areas perhaps the rate of investment in cell towers and the like is higher where you are? That might account for the higher charges. Of course differing regulatory practice and an entrenched culture of predatory business practices might also account for it - I'm playing Devil's advocate but I'm not a complete fool! ;-)

CharlieSpencer
CharlieSpencer

A recent PC World article showed the total costs of a smart phone and two-year contract in the US varied between $2500 and $3500, depending on the carrier. Most of them skew more to the high side of that range, so $100 monthly may be a low estimate. I don't expect the technology to be provided free. That's why I'm not using this technology; I don't consider the benefits to be worth the cost. If the cost of the service comes down, then I may consider purchasing a smart phone. Right now it provides nothing I want, and I'm willing to let everyone else who has to have it subsidize the infrastructure to the point where I'll consider it worthwhile. But for now I'm not putting my money where my mouth isn't, and I suggest others who complain about the costs do the same.

mdk2go
mdk2go

paid $300. for a REAL Nokia E71. Now drive it with a $10. unlimited family Data plan. Now, that's the ticket, without the carrier's bloatware.

Ed Woychowsky
Ed Woychowsky

That's why I have a cheap phone, $20 US, and pay by the minute. With some phone contracts it's quite possible that breaking the contract because of death has a penality. I can walk away and only be out $20.

JohnBitner
JohnBitner

Ed, I totally agree that a pre-paid deal is a great option for the occasional call only user but for me and other smartphone users we would be lost with a $20 flip phone. No email, internet, apps, stocks, news, etc... Smartphones and data services plans need to come down in price. No doubt. But, can it actually happen when the telecoms are trying to expand to support more users. I don't think so. catch 22...

hedpig
hedpig

Hope it does, then some of us w/o the budget but with the NEED could have a useful phone and afford it too! It is a priority but not when ins/mtg/kids needs etc come before the big price to BUY a cell phone.

enquiries
enquiries

Smartphones sure need to come down in price, but i don't want to see a price war which will only result in shoddy after sales service and crappy components. Learn the lesson from history. In the late 1990's thousands of 'cheap beige box' PC hardware companies sprung up and made junk which was a hassle for everyone concerned. I fear that smartphones will repeat that.

CharlieSpencer
CharlieSpencer

The $99 price is subsidized by the mandatory two-year service contract. If you were to buy the phone without a contract, it would probably cost $250 to $350. Still, basing an assumption of quality on price is a questionable criteria.

iwizzard
iwizzard

The toal cost of ownership is important I did an comparison between 2 fairly equal Iphone subscription plans in US and Sweden 24 mounts Sweden : $1 640 (including phone. Price for the phone varies from $0 - $500 depending on operator and subscription plan) 24 mounts US: $1 776 + phone $199 total $1 975 An "$99" phone is not that cheap if you end up paying $355 more than other people do.

jneilson
jneilson

The cost to make these phones is almost nothing. They should be included in the service contract.

darpoke
darpoke

Finally something I can respond to without an essay. Your strategy would see all existing handsets given away. It's probably true they could be made cheap enough to make this feasible. Better stock up when you're at the store, though - under those market conditions, they'll be the last new models you see developed.

jneilson
jneilson

I used to design cell phones. The component cost per phone is a few dollars each. Assembly cost are very low in third world countries, shipping is the highest cost. The designs themselves are pretty much standardized now.

darpoke
darpoke

but I have a feeling that the reason phones cost *something* on top of the monthly rate is to do with the perception of value - if you walk out of the store without paying anything then you may find it harder to associate value with the handset. They could probably build the true cost (which I maintain is substantial) into the price plan for a few pounds a month more. There's got to be a reason they don't - these companies tend to have specific reasons for most of their methods and all companies approach this problem in the same way, which lends strength to my hypothesis. As stated I still maintain that the cost of product development is high and that these handsets genuinely cost many hundreds of pounds. Just try buying one outside of a contract if you don't believe this. I recall when I got the first walkman phone (the Sony Ericsson w800i) that I saw it retailing at roughly a thousand pounds by itself. The value of these products is tremendous: they are some of the most specialised, precision-engineered devices on the market. Name one other device that is treated quite as commonly and casually as a cellphone - dropped, sat on, left in a bag with keys and pens... valued for their lack of size and/or weight. Forget netbooks. They have it easy.

jneilson
jneilson

Not given away, just included in the contract. The cost to produce these phones is very small, development cost are fairly low also.

vucliriel
vucliriel

... the whining of the cellcos nothwithstanding... Here in the Great White North, we pay up to $200 for a cheap phone with no contract. In the US you can find the same at Walmart with 300 nationwide minutes for $30!!! Truth is, cell phone pricing, just as SMS charges, is pretty much artificial. It's basically a legal way to print money to pay for the infrastrucure.

charleswdavis6670
charleswdavis6670

A price war could cause stronger companies to buy up weaker ones. This will lessen competition to where the remaining industrial oligarchy will charge what they want. Possibly even freezing out the individuals that only want and use a "phone!"

vikram.chinmulgund
vikram.chinmulgund

Various reports and company announcements have shown smartphone sales growth is slowing if not on a downard slope. Personally, I feel that if one considers not-so-well-off countries around the world, then smartphones need to drop to US$ 200 for the hardware for smartphones to get over 40% of the mobile phone market within the next year. Here are some Gartner surveys on mobile phone market share. http://www.gartner.com/it/page.jsp?id=910112 http://www.gartner.com/it/page.jsp?id=985912 http://www.gartner.com/it/page.jsp?id=754112 In some countries, pricing is exploitative, monopolistic and prohibitive. For example, in India, BlackBerry? Curve? 8900 costs around US$540 plus around US$ 25 per month for data. Voice, sms and other common subscription facilities are, of course, extra . The iPhone is even more costly. There is no concept of a bundled, subsidised handset cost along with a subscription. you pay full price for subscription and full price for the handset available (locked) only from your mobile service provider. This kind of pricing is above the national average income in some countries. RIM and Apple are hurting themselves with this policy. I know that if handset pricing was below US$ 200 I would have replaced my handset with a new handset at least once in the last year. At US$ 99 I would be happy to upgrade to a newer handset every 6 months. Regards,

vikram.chinmulgund
vikram.chinmulgund

Of course, with the usual voice and sms subscription the monthly minimum bill for an "average" user works out to approx. US$ 50. We don't have unlimited plans here - after a low free usage limit it's pay as you use.

Al_nyc
Al_nyc

As any smart person knows, the cost of the phone is minimal compared to the cost of the service. I rather pay a bit more for the phone and not be forced to pay for services I don't need or want. If I want to buy a smartphone with wifi capability, it's really stupid to expect me to pay for internet service too. The only reason I want the phone with wifi is so that I don't have to pay ridiculous fees to get internet service from the phone company. I guess that is to be expected when dealing with greedy corporations.

l_creech
l_creech

I love my phone. Not the fanciest one by any stretch, it's a Samsung Ace (Blackjack 1.5?). I have Sprint Simply Everything Unlimited on it which gives me just that. My top 4 reasons: 1 - I average 3500-4000 minutes a month on the phone with family, doctors, and customers. This alone justifies my $122.98 a month bill (including tax and insurance). 2 - I can tether without being dinged for extra services, makes connecting my laptop in remote areas simpler and more secure than many public networks. 3 - I can read and respond to e-mails without always carrying a computer around with me. 4 - The bill is the same every month, unless I call over seas. I have Vonage for that though.

darpoke
darpoke

by the 'tariffs are too expensive' line, sorry. You get what you pay for. If anyone's waiting for telcos to start laying out infrastructure for free then good luck but don't hold your breath. Anyone who's not impressed by the contracts available but wants a smartphone is welcome to buy a handset and unlock it for use with another provider, or the same provider but with a minimal contract. Of course, anyone who wants to actually *use* that smartphone would be best off considering those really expensive contracts. The whole point of smartphones is that they offer functionality that exceeds their so-called 'dumb' cousins. You need a phone that can browse the web, send emails, stream internet radio, access torrents etc? Those use bandwidth. That's what you're paying for. The handset is the smaller part of the deal to the telcos as well as to you. They have to provide you with wireless coverage for the next 18 months, and the rise in 3G phones means they have to scale up network coverage to provide for the rise in network traffic that is a direct consequence. Just like they have to make money to recoup the investment they all made in rolling out broadband infrastructure, starting a few years back and continuing throughout the developed world today. I'd expect the mumbled complaints from nontechnically minded folk (what I'd call 'civilians', at least in contrast to the good folk I interact with here ;-) ) who lack the insight or analytical skills to see what their money buys - but you guys? Come on. I pay ?45 a month here in the UK, for an o2 contract (the only ones who bent over for the conditions Apple demanded, though rumours abound that Orange is soon to be carrying the iPhone). I get unlimited network traffic for my troubles, subject of course to the normal fair usage policies which I'd have to practically mate with my phone to encounter. I don't consider it a rip-off. I know where my money's going, and unlike the artificially high SMS and mobile call charges, I understand that new infrastructure has had to be rolled out to provide for what I receive. Not fifteen years ago. Last year. This year. Next year. Companies have invested in infrastructure to handle the traffic volumes and those companies are getting their return from those who use that bandwidth. If they weren't, we wouldn't have any of the handsets we have today. R&D into smartphones would never have taken off if there was no bandwidth to use. No common user would wait ten minutes for a webpage to load over EDGE. And none of those services that have no tolerance for latency (video and internet radio streaming, VOIP) would be usable. We're all grateful for these enhanced services. We should be grateful enough to pay for them. That's how investment works. If we demonstrate there's no market, there will be no investment in future infrastructure. Who wants that?

henry.l.wong
henry.l.wong

Your comments are accurate. I only wish more folks would/could understand latency and bandwith. Even so-called experts touting things like thin-clients and cloud computing fail to take this into account. What the general public doesn't comprehend is that the firms putting in the infrastructure are looking for their ROI, these agents are the means to derive that return.

Andrew.Hall
Andrew.Hall

The response by darpoke just owned all of you. Naturally, as technology improves, it gets cheaper.

hedpig
hedpig

some of us 'civilians' as you term us.. do not care about all the stuff companies go thru to get us our service.. when you buy something in a grocery store do you think about the cost of ONE giant tire a trucker pays or the fees he pays to deliver that pack of cheese you buy? LOL come on-- to us 'civilians' it is the COST of something that matters to US.. if we can afford it or not...if it is worth the cost or can we get it for less, maybe not the same quality but to serve our needs we will- some of us do not care about streaming-music-thousands of apps..but do like a GOOD product that meets our needs.. not a lecture on how dumb we are or unappreciative of those making these available to us..Bottom line always has been, always is and always will be price consumers can and will pay.. and because i am a measly 'civilian' i do not have the geek terms to use but you did hit a nerve...not nice to talk 'down' to us 'civilians' lol...we ARE grateful to have whatever money we have and in these times..the high prices to buy one of these phones-$200-$500..is just not the priority..

darpoke
darpoke

I go any further, let me address the issue I seem to have caused with the word 'civilian' (I realise I dug this hole for myself). The word was meant only as a distinction between the nontechnically minded who see computers and cellphones as black boxes they know how to use but have no concept or interest in the workings of, and those who dare to 'look inside the box'. Essentially I was drawing a line between the people I interact with every day - my friends, family and coworkers - and the few folk I know, some of whom are those I interact with here in TR, who understand technology. It was meant in no way as a pejorative. I am perfectly aware that everyone has their own area of skill in which they excel above many of their contemporaries. It just so happens that on this site, most of the readers and posters are those who have a skill or interest in technological products and issues. That is the audience to whom I was speaking. At least so I presumed. Forgive my bluntness but I meant no offence to anyone. I myself don't make a king's ransom, in fact I clear less than five thousand a year more right now than I did working in the supermarket after college before I went to university. Also, due to the nature of the industry I work in and the small size of the company, I have a 'rolling contract' - three months only but renewed indefinitely. I have been here for four years but the contract I hold still does not allow me to qualify for a bank loan. As a result all my borrowing (which has been necessary given what I earn) has been on credit card. A 0% card is a good way to postpone debt but the transfer fee means it can take you a few payments just to cover the cost of having transferred your debt. Suffice it to say I know what the cost of living is: I don't own a car and would be ineligible for buying property of any kind. I take all your points about the behaviour of governments and big business - I also gather from your references that you are speaking from the US - and share your concerns. There is something fundamentally wrong with a political process that sees people running for president reliant on a tenth of a billion dollars in their 'war chest' - the implicit result being that they are indebted to the businesses that backed their campaign either publicly or clandestinely. The same conditions appear to apply to people running for senate or other offices, the inherent potential for corruption trickling right down the administrative hierarchy. I don't know how much of the recent expenses scandals made it over in the news there but here in the UK we have similar problems with our ministers. The cliche about absolute power is as eternally true as all cliches tend to be. As you imply, it's a fantastically complex issue and one that I suspect everyone has their own take on. I'd be tempted to suspect that changes such as really cheap, if nutritionally poor, food are some of the factors that have allowed big business to rake back their wages while gouging their prices. The workforce can afford to pay more for your products if they are spending less on food. The trouble with this is that, as with all shell games, you don't get something for nothing. The food hasn't just gotten cheaper. It's gotten poorer. Just because you can eat for a dollar a day doesn't imply that your nutritional needs are being met. Witness the rise of obesity in the US and here in the UK. One of the many factors in this is quite simply the poor diet of a large part of the workforce. This has many consequences for society, not least of which is the increase in the cost of healthcare. Here in the UK where public healthcare is deeply entrenched this has a highly negative impact on public spending. [edit: typo]

robhuck
robhuck

Let's take a look at some facts as to what business and government have done over the last few decades. I live in a country where those 2 entities have turned their backs on those who made them filthly rich. During the first 2 decades of my father's working history (he was a 'civilian')his income went up by well over 200% as did that of most 'civilians'. Mine, on the other hand, went up less than 15%!! During the 60's and 70's when those rewards were being given to the workers making the few ultra rich, corporations such as GM, Ford, and others became financial giants. The people manufacturing the products could afford to buy them even with the annual price increases. Now, let's look at my history with the less than 15% increase over the same 20 years of working. When I first started working, I could afford a new car and a house in the suburbs. I watched prices climb (supposedly my house value doubled in 10 years). What this really meant is I could only afford half the house! Which meant people working next to me that were 20 years younger had to live in the 'hood' because of the price to income change. The same thing happened with cars. I have also watched the same thing happen with food. Companies in developed countries found they could stagnate wages and continue to raise prices for a while and people could still afford to live. Then that wasn't enough. The greed driving this had upper management take the labor to 3rd world countries where wages were less than pennies on the dollar. Now we have a world economy that is in terrible shape and those companies are finally seeing the results of their actions. People tried to tell them for years that if you keep cutting the throats of those buying your products, eventually no one will be able to buy them. How can anyone expect someone else to buy the same product with a 200 to 300% increase in price with only a 10 to 15% increase in pay? Pretty much every company in the world has done this. I used to be able to afford a new car when they cost 10 to 12 grand on my income. The current ecomony may make it a little better, but let's go back only 2 years before this crash, and the same quality car cost well over 20 grand! The same products that used to cost me less than a half year's wages now cost me over whole year or more! Buying a house was even worse. Because of this, many of us would starve without the cheap, import food. Yeah, it's a catch 22 because it's usually grown with harmful pesticides and other unhealthy practices, but I have a very real choice (as does pretty much EVERYONE else I know) to poison myself or go hungry. This is not because I DEMAND cheap food, this is because the necessities of life now take 200 to 300% more of my paycheck than they used to. All because of the business model of pretty much every company in the world that only makes the rich richer and the poor poorer. How can a business say it's about families and family values when they constantly raise prices, but refuse to raise the compensation anywhere near the same amount for those making the products. They know this will force all other prices up but are too greedy to care. I understand that if business don't profit, there will not be any businesses. I also understand that when you take it to the extreme of turning your back on your customer base by taking away thier ability to buy your product, you are causing the problem because of your financial short sightedness. We can only prosper (I mean businesses and 'civillians') business does not turn it's back on those buying it's products and services by getting things from other countries. I can only buy from who I can afford to. This may be off topic, but as I read throgh this blog, I could not help but see the underlying issue.

darpoke
darpoke

and perhaps I should have. That's me though - I'm very good at seeing both sides of any argument... until I'm personally involved. Then it's almost impossible to sway me from the camp I've chosen. It's a personal failing... I was caught up in the state of affairs in this country and that was the focus of my tirade. Of course on a larger scale it's good for the world as a whole if a little prosperity is leached from an incumbent nation of prosperity and makes its way toward an area that's historically been oppressed or at least suffered relative poverty. I think what I was saying was only half of a much more complicated picture - if you can believe it, I'm really saying that small novella of a forum post should have been far larger ;\ - and as a result it was always going to be misrepresentative and limited in scope. What I was trying to convey is the feeling I have that society in general is suffering from market forces. At least in this country. Our purchasing choices may be making life more bearable in other parts of the world but I can only speak from what I know, I'm afraid. Those of you in other countries, please add to this if you have any reaction to my limited viewpoint. This feeling springs from the observation that the tendency of market forces - again, with the proviso that I'm talking about the UK - is to reduce purchases to the cheapest possible option. There are many reasons I think this is bad but they all boil down to the same general paradigm: money saved in the short term is rarely a cost-effective or even convenient strategy in the long term. I'd like to add that I do support products from poorer countries, but I prefer to buy Fair Trade when possible as it offers some minimal guarantee that the farmers/producers haven't been completely exploited. The only problem is that it tends to be limited to coffee, tea, chocolate and bananas - all of which are likely the biggest exports for the countries that produce them and thus receive the most attention (and have the most documentaries made about the dangers faced by the workers). Other than pineapples I've seen fairly few products covered by this agreement although that number is rising daily. Thanks for calling me out, though - you nailed the flaw with my central argument (that international trade is bad for society), and have made me reconsider my stance (that international trade is mostly bad for my society). Boy did I go OT with this one. I'd be happy to relocate to another thread if anyone else has anything to add, outside of the remit of smartphones and their price structure.

darpoke
darpoke

and while I was a little distracted by my extended ramble, I was trying in part to speak more generally, too. I take your point about who's making money as the truth is everyone else really is on the losing end. What a polarising topic!

vucliriel
vucliriel

... The market forces are the only way inequities in the world will end. Guess what all that money we are sending overseas does... Yes, you got it: make the Chinese (and the Bolivians, etc) more prosper, so they're able to buy OUR products. Just think of it: is your position really morally superior when looking at the big picture?

thegreenwizard1
thegreenwizard1

Good rhetoric. When did you get for the last time a device made in UK? All the hardware for electronic was moved out of Europe, because you who I would put in the category of "civilian" too, though that PC made in EU were too expensive. Where are made those smart phones? EU? UK? US? no. all in China or Korea. So what wrong to look for the cheapest since anyway the only one earning a good salary are the CEO of those telecommunication company.

darpoke
darpoke

hedpig, as I feel rather strongly about this and don't want to cause offence. I'm sure you are a decent, intelligent, upright human being and none of what I'm about to say is directed at you specifically. That said, there is a culture, at least here in the UK, that believes that if it can be had cheaper then it should be had cheaper. Essentially this reflects a complete faith in market forces. So we have a situation where you can buy meat for next to nothing, and fruit and vegetables too, in supermarkets nationwide. Fair enough, you might say. Good on those enterprising folk who managed to source cheaper wholesale, and earned themselves more customers. Pat on the back for them. The problem is... where did they find these cheaper products? No mystery. Overseas. Our apples are imported from South Africa. Our cabbages from South America. Our meat comes from European countries that can produce it more cheaply because they don't have all these silly animal welfare laws in place to prevent the inhumane treatment of livestock. Thank goodness we don't have to pay over ten pounds a kilo for pork, though eh? And over time that has engendered a culture that expects cheap food. This culture has led to a destruction of British farming. Our farmers can't afford to stay in business because they can't compete with Bolivian peasants who will work for a pittance. So with one contract a supermarket chain can spit on both domestic and foreign workers. Three cheers for free enterprise. Now we have government grants to support our farming industry. We raised the standards of production in this country and the result was that people won't pay for food produced to them. So farmers are being paid to leave fields fallow for a year, or to leave them undeveloped to protect rare species of flora or fauna. They're putting up wind turbines on their land to make money from green energy production and facing opposition from villagers down the road who presume to think they can tell a hardworking man what he can and can't do with his land. So he can't afford to make food and isn't allowed to pursue alternatives. The rate of suicide among farmowners in this country has risen steeply, and foot & mouth isn't the only cause. So while 'civilians' as I will call them, with all respect to you, are welcome to shop around, the fact that they willingly remain ignorant of the consequences of the market force they represent does NOT imply that there are no consequences. Nor does it excuse them fully. The blame rests equally with government and big business but the damage was done by all involved. Now we've got fashionable food marketing try to sell 'good British food' and 'local produce' based on carbon footprint. Essentially they're trying every tactic they can to get people to buy local without actually saying that it's the right thing to do. Even though it is. Forgive my polemic and the fact that it's largely off-topic, but my point was that wanton ignorance never made anything better, especially not trade. Suppliers depend on us but we depend on them equally. So it's in the interests of all involved to keep things fair - but fair means fair for both sides of the deal.

TexasJetter
TexasJetter

I understand that smart phones use bandwidth, but here I pay $50/mo for enterprise unlimited data (work phone). My initial reaction is as you state, it uses more bandwidth than "normal" phones, so that's ok. But when you stop to look at the overall cost, 15 phones at $50/mo is $300/mo for cell data. My office Cable data (3Mb up/16Mb down) is less than that. So I can provide really high speed data for the entire office, 40+ desktops for less than cell data on 15 phones. Hmm, I wonder which uses more data . . . something is starting to look expensive here. It gets worse when considering a family cell plan. Here AT&T has a family plan where I can share voice minutes. They even have a shared data plan that is reasonable. But you cannot have a family data plan if you use "PDA" style phones (any Windows Mobile, Blackberry, iPhone). They require the $30/mo personal data plans for each phone. So if I want both my wife and daughter to both have an iPhone I would get charged $60/mo just for data. That's twice my home DSL bill for my entire home. Which do you think uses more bandwidth? A smart phone downloading email headers and light browsing or 4 desktop computers downloading service packs, social networking and everything else on the web? It starts to make the cell data plan look high. From a business perspective having those 15 people the ability to respond to their email on the go is invaluable, so we bite the bullet and pay it. From a home perspective I won't do it, it is just not worth $30/mo per person. So I'll continue to mumble complaints about it - and don't' get me started on the obscene cost of MMS/SSM plans . . .

anne.powel
anne.powel

I don't follow your math. 15 users at $50/mo=$300?? In my math class, it would have been $750

darpoke
darpoke

but I think it's a case of best fit for the job. If wired infrastructure can be installed the bandwidth it supports can be much higher. The energy costs are also lower. The location generally determines the optimal approach. Here in the UK, the two biggest (well, only) subscription TV companies are Sky and Virgin. The former rolls out satellite dishes, the latter cable. Their prices are comparable. They each have associated pros and cons. The Sky service can be picked up by anyone with a TV, a mains outlet and a wall to hang a dish on. They need to have a BT landline to obtain broadband through Sky, however - and pay line rental to British Telecom for the privilege. Virgin users need to have cable run to their property, which can be more expensive (though unlike satellite you're more likely to have it pre-existing if you move into a property). The benefit is you don't need BT unless you want a landline: with a cable modem one line provides both tv and broadband - and supports much higher speeds than the copper DSL infrastructure.

vucliriel
vucliriel

... And in many countries it is actually much cheaper to send the data through the air than tearing the streets to install cable or tearing propeties to install poles! In other words, what we ought to look at is the cost of cellular broadband versus cable or DSL...

vucliriel
vucliriel

... And I see I'm not alone!!! As long as cellcos' 'business model' will consider cell phone data primarily as a 'business' service they will continue to charge through the nose for it, on the premises that it's not the user who's paying for it, but the 'company'. So we are in a dilemma of high cost because too few people use it and too few people using it because if the high cost... Hmmm... Sounds just like Apple's business model, doesn't it? As for having broadband at 16MBits down and 3MBits up, count your blessings, here in the Great White North I get 3MBits down and .6MBits up for that kind of money and unless I'd be in a major city, I would never be able to get more than 7 and 1...

hedpig
hedpig

that is what i always wondered.. why so much more.. but it all comes down to convienence.. but they ARE coming down as are desktops... but then the air cards are outrageous! could use them but simply not in the budget, so i try to be where i can get on..

hedpig
hedpig

those workers only use phone for business? if not..they could pay half..and not grumble because using it for personal emails/data would still cost them less...than their home plan ??i would love that....bet many would..

darpoke
darpoke

still stands I'm afraid. You're comparing apples and oranges and complaining about price. The fallacy with this argument is that all network bandwidth is not the same. The paradigms for provision of broadband and wireless coverage are radically different. Ironically the confusion comes from the fact that the terms of service are pretty much exactly the same. The telco has a responsibility to maintain their network provision to you. The difference is that with wireless bandwidth, that network provision reaches from their switching stations to your handset. With physical lines that provision ends at the DSL/T1 port in your office. The rest of the network is technically provisioned by you. You only have to pay for broadband access to your office - a physical line is wired to your property and signal maintained along it to provide broadband network transmission. All of the machines in your office share this line. The point of broadband is that it has sufficient bandwidth to permit this mode of operation. Thus each machine uses a few kilobits of bandwidth out of the 16Mbps you receive - but you only pay for one connection. With the cellular phones, the service provision is to each handset. That means the telco has to maintain coverage to each phone. That is 15 separate lines, each with their own terms of service. Of course it costs more. You're receiving more. If you only wanted to use them in the office, you could sever the contracts and just use the phones on wi-fi, provisioned by a wireless switch hooked up to the broadband you already pay for. If you want these handsets to be used in the field, then I'm afraid you will end up paying for the privilege. You're now contracting wireless service from the telco to each handset - that's 15 different commitments from the switching station to the phone. You're getting 15 times the service your one broadband connection provides you. The greater question is not what service uses more bandwidth but which costs more to provide. It's that simple if you ask me. Consider the price difference between laptops and desktops - laptops cost more, generally, yet offer less performance for your money. How is this allowed to continue? Laptops are portable. It is more expensive to produce components that are optimised for size and weight. Yet if you benchmarked one against the other and based the cost on that you'd conclude they were far overpriced. They would be - if you used them in identical ways.

HaXsAw
HaXsAw

the cell networks are taking advantage of the 'hipness' of smart phones and charging outrageous data rates ... they simply don't have enough realistic competition

CharlieSpencer
CharlieSpencer

Not all of us. And until the price comes down (and for technology, the price always comes down), I won't be paying for them. "We should be grateful enough to pay for them." You're grateful to have someone else accept your money? I'm never going to be grateful to pay someone for a good or service. The cellular providers are in business to make money, not to have grateful customers. It's the providers should be grateful enough customers are willing to pay the rates to support their profit margins.

vucliriel
vucliriel

... Usually have images turned off in my browser so that I can browse a bit faster on my 'high speed' 3Mbit connection ;)

CharlieSpencer
CharlieSpencer

my avatar waves with palmetto fronds, not maple leaves.

vucliriel
vucliriel

... That would explain your position VERY WELL! Foreigners simply have NO IDEA how expensive in real dollars and as a proportion of our disposable income cell phone service is in Canada, and how little real competition there is in this country. http://dilbert.com/strips/comic/2009-09-19/ We have made big strides in the past few years, but stories such as "I went online to check some documents while on the road for an hour and a half and I git billed $250" are all too common here in the Great White North... A true disgrace considering this is the country where the telephone was actually invented!!!

kdavis
kdavis

Back in the old days of cell service (early 90s) you never had more than two or three choices of phones, and if you were lucky, two carriers to choose from. We actually paid MORE for the phones AND service and got so much less. Not only was the service poor, you got charged by the minute on top of your monthly rate. Having a $100 cell bill in 1992 was not odd at all, even with a basic old motorola flip phone with no texting, no voice mail, no nada. As competition revved up and more phones were being introduced with more services to boot, we started being pickier about the quality of service and it was pretty easy to get new phones just by threatening to change carriers. Now we have a situation where the phones are a status symbol instead of a tool. Some are worth the money, some are just 'bling'. A smart phone price war will drive down prices between carriers for those who are more interested in 'bling' than utility. However, if the phones don't hold up or are on carriers that don't provide good service, they will be relegated to the disposable piles of pay-as-you-go phones. Any panache they'd have would be destroyed.

hedpig
hedpig

i soo agree with you...wow. well said. i worked with a cell company and they NEED the sales to stay in biz... people do not change cell providers for the monthly COST..usually.. they change providers for the PHONES. over 10 million people paid cancellation fees to switch to AT&T for the IPHONE..it was the phone.. so many phones get discontinued fast and newwer ones come out.. it is in the SALE of phones they get you..the HYPE.the 2 year contract and high fee to cancel is so YOU stay with THEM..they know U will leave for a diff phone..lol thus the new phones...metro etc do not need contract cause there monthly COST is low in turn you do not get all the high dollar new phones altho they do have a good choice..and that other guy...lol the cell companies are RAKING IN THE BUCKS!! So are the investors yes they should be GRATEFUL we buy their phones and use their service.. but they should be paying us..LOL to KEEP their phones..and services...not charge us for leaving them!!

darpoke
darpoke

I'm always grateful to pay for goods and services as it beats the alternative, just as I'm sure the person accepting payment feels the same. Without market economies we're all left growing our own food and pumping our own water. I agree to abide by the laws handed down by government in exchange for participating in the state and enjoying the benefits thereof. But that's just me; to each their own. I'm not out to convert anyone :-) In that vein I think that providers and customers are a similar case of symobiosis. Yes, profits are often high and I continually hope that the relevant organisations and monopoly commissions do their jobs to keep these companies in check. But I want to see them stay in business and continue to make money as this money is what pays for R&D and the continual infrastructural development upon which the pace of western society depends. As I said before, the government doesn't provide these facilities as it does with other public services. It's left to big business to step in and drive the pace of change in technology of all kinds. If they weren't about to make a profit from it they wouldn't step up in the first place and that's far worse than a fair return on investment. And everyone advocating sitting on their hands until the technology becomes affordable would do well to bear in mind that the cost of production normally only falls when (a) demand drives production on a scale orders of magnitude higher or (b) the technology is superseded. The former doesn't happen if everybody stands around waiting. The latter happens with time, as all things, but by then will you still care about the product?

RookieTech
RookieTech

i dont like smartphones cuz yea they look cheap but the plans you have to get is where they get u i looked at a black berry was really cheap but the 40 dollars a month for services is where i said "im gonna get a regular LG phone" :P

Editor's Picks