The iPhone is a nightmare for carriers

[spork183]

It is just like the cable companies who raise their rates but give nothing in return. It is one thing to raise and say you are now going to get xyz. However to raise the rates and not give anything in return, not even better coverage or services. That is where people get upset.

What's funny (and don't get me wrong, I enjoy apple products) is that Apple is not in that position because they HAVE BLOODY HIGH PRICES TO BEGIN WITH! Apple has made a living out of building the price in, then building the value in, THEN lowering their price of admission. RDF Reality Distortion Field. I love those guys...

 

[BaldiMac]

Just using the same tactic you use here day in and day out. When someone posts something you don't like, you start your circle talk. And ask for a source. Otherwise it's just opinion and speculation. Your words, not mine.

So are you just being obtuse or do you actually want a source? I specifically asked what you would like a source for. I don't expect to have to produce a source for basic math.

 

[AppleScruff1]

I can see the greedy pig comments about ATT and Verizon. They are offering a service that hasn't changed yet they are charging more for it? You don't hear so much about sprint, because when they say unlimited it is unlimited, there are no caps etc. You have Verizon and ATT both saying unlimited but we will throttle you down if you use to much and we are going to raise our prices on all our subscribers. Yes I can see that as being greedy. You are no longer offering a service that has any benefits for the end user or added benefits to the end user yet you are going to raise the price on them.

And they don't have to invest billions to upgrade their networks to LTE? They don't have costs to recover? This only applies to Apple?

 

[LethalWolfe]

No, it's propaganda.

Not really. During the long, long dying days of the G4 when people argued over whether Macs had 1.5 or 2 percent of the market share and the least expensive Mac was an $1099 for an eMac (which was originally edu only but consumer demanded forced Apple to sell it to the general public) you certainly paid much more a computer w/an Apple badge on it than a similar computer with a Dell badge on it. The argument Apple users at time made, myself included, was that pure speed was over-rated and that usability was a more important part of the end user experience.

Things got a little better when IBM came in but that was short lived. It wasn't until Apple went to 'the darkside' w/intel that Macs have been able to stay more on par w/other computer makers in terms of speed (still very lacking in GPU parity though). Of course as I say this the current Mac Pro is around 18 months old and isn't nearly the value it was when it first came out.

On that note, I'm surprised no one talks about the Microsoft tax, because it exists. Microsoft's profit margins are higher than Apple's margins.

People do. Especially on a Mac-centric forum.

There are plenty of companies who provide a premium for services or products and are not lambasted over the coals. Some of the "higher" end cars and stereo equipment come to mind as being companies that charge a premium for products that can be had at a much more reasonable price to the average person.

This got me thinking, is Apple a premium company anymore? Apple pretty much had to cater to a higher-end market in the past because they couldn't compete w/the race-to-the-bottom that Dell started (and eventually caused a gutting of the PC industry). Even with the iPod it was more expensive and had less features than its competitors but people still gravitated towards it.

With the iPhone and the iPad (especially the iPad) I see Apple as going for the masses. The iPhone 3Gs can be had for free and the iPhone 4 is only $99. When the iPad was released everyone was surprised with how low the price was. Apple made it so low that they couldn't be undercut by other hardware makers and price used to be the biggest advantage Dell, HP, Sony, etc., had on Apple. If premium is brought to the masses is it still premium?

New York Times, February 8, 2012
http://www.nytimes.com/2012/02/09/technology/sprint-posts-net-loss-but-revenue-gain-on-iphone.html

Yes, higher cost up front, but they
- will make money in the long term
- gained subscribers

They *hope* to make money in the long term and gaining subscribers is only helpful if you are sufficiently profiting on each new subscriber. The soonest Sprint is supposed to see a positive return from acquiring the iPhone is 2015. That's a very long time in the tech world and a big risk which just shows the dire straights Sprint is in. It's a hail marry pass from their own 40yrd line with their final possession, IMO. I hope it results in a touch down though because I like Sprint as a carrier and I've got stock in the company.


Lethal

 

[BaldiMac]

Not really. During the long, long dying days of the G4 when people argued over whether Macs had 1.5 or 2 percent of the market share and the least expensive Mac was an $1099 for an eMac (which was originally edu only but consumer demanded forced Apple to sell it to the general public) you certainly paid much more a computer w/an Apple badge on it than a similar computer with a Dell badge on it. The argument Apple users at time made, myself included, was that pure speed was over-rated and that usability was a more important part of the end user experience.

Things got a little better when IBM came in but that was short lived. It wasn't until Apple went to 'the darkside' w/intel that Macs have been able to stay more on par w/other computer makers in terms of speed (still very lacking in GPU parity though). Of course as I say this the current Mac Pro is around 18 months old and isn't nearly the value it was when it first came out.

That has nothing to do with what we were discussing. Yes, some Apple product carry/have carried a price premium. The term "Apple tax" is meant to imply that the price premium is valueless. Extra money paid for nothing. It's used for its negative connotations. It's propaganda, negative marketing from Microsoft.

 

[rhett7660]

<snip>


This got me thinking, is Apple a premium company anymore? Apple pretty much had to cater to a higher-end market in the past because they couldn't compete w/the race-to-the-bottom that Dell started (and eventually caused a gutting of the PC industry). Even with the iPod it was more expensive and had less features than its competitors but people still gravitated towards it.

With the iPhone and the iPad (especially the iPad) I see Apple as going for the masses. The iPhone 3Gs can be had for free and the iPhone 4 is only $99. When the iPad was released everyone was surprised with how low the price was. Apple made it so low that they couldn't be undercut by other hardware makers and price used to be the biggest advantage Dell, HP, Sony, etc., had on Apple. If premium is brought to the masses is it still premium?

<snip>


Lethal

Exactly, the iPhone 4gs is a premium product, just based on unsubsidized price, however the 3gs and 4g are bargains now ($99) and I wouldn't be surprised if those two phones are selling like hot cakes. Makes me wonder what the carries are paying for these phones. Are they still having to pay full price or is there a huge discount now if you will so they might be making more money on the deal if this is the case. I don't know and I don't know if any info has come out on how much each phone is now costing the carriers.

 

[LethalWolfe]

That has nothing to do with what we were discussing. Yes, some Apple product carry/have carried a price premium. The term "Apple tax" is meant to imply that the price premium is valueless. Extra money paid for nothing. It's used for its negative connotations. It's propaganda, negative marketing from Microsoft.

Yes it's negative, yes it has been accurate before (and arguably could be applied to the current MPs), no it didn't originate from MS but from non-Apple fanboys. If you don't think it's applicable to this thread feel free to stop replying to this conversation fork.

Exactly, the iPhone 4gs is a premium product, just based on unsubsidized price, however the 3gs and 4g are bargains now ($99) and I wouldn't be surprised if those two phones are selling like hot cakes. Makes me wonder what the carries are paying for these phones. Are they still having to pay full price or is there a huge discount now if you will so they might be making more money on the deal if this is the case. I don't know and I don't know if any info has come out on how much each phone is now costing the carriers.

Years ago Jobs said that the PC-wars were over, MS won and Apple is looking for the next big thing. Mobile devices are the next big thing and I think Apple is going to pull out all the stops to not lose this generation like they lost the PC generation. What they need to be careful of is not repeating some of the same mistakes that MS did. Apple is a Goliath in this space and Goliaths are held to different rules than Davids.


Lethal

 

[BaldiMac]

Yes it's negative, yes it has been accurate before (and arguably could be applied to the current MPs),

It's never been accurate. A price premium is not a tax.

no it didn't originate from MS but from non-Apple fanboys.

I didn't say it originated with Microsoft, but it was a focus of one of their marketing campaigns.
http://www.macobserver.com/tmo/article/Examining_Microsofts_Apple_Tax_Comparison_Charts/

If you don't think it's applicable to this thread feel free to stop replying to this conversation fork.

I wasn't talking about whether it is applicable to the thread. You are arguing something different than I, and the person that you originally responded to, are talking about. We are arguing that calling a price premium a "tax" is inaccurate and propaganda. You responded by saying that there was a price premium which is something that was never brought into question.

 

[LethalWolfe]

We are arguing that calling a price premium a "tax" is inaccurate and propaganda.

Seriously? Again, it's called a figure of speech.

I notice you aren't 'correcting' vvswarup for using the term "Microsoft tax".




Lethal

 

[vvswarup]

Not really. During the long, long dying days of the G4 when people argued over whether Macs had 1.5 or 2 percent of the market share and the least expensive Mac was an $1099 for an eMac (which was originally edu only but consumer demanded forced Apple to sell it to the general public) you certainly paid much more a computer w/an Apple badge on it than a similar computer with a Dell badge on it. The argument Apple users at time made, myself included, was that pure speed was over-rated and that usability was a more important part of the end user experience.

Things got a little better when IBM came in but that was short lived. It wasn't until Apple went to 'the darkside' w/intel that Macs have been able to stay more on par w/other computer makers in terms of speed (still very lacking in GPU parity though). Of course as I say this the current Mac Pro is around 18 months old and isn't nearly the value it was when it first came out.


People do. Especially on a Mac-centric forum.


This got me thinking, is Apple a premium company anymore? Apple pretty much had to cater to a higher-end market in the past because they couldn't compete w/the race-to-the-bottom that Dell started (and eventually caused a gutting of the PC industry). Even with the iPod it was more expensive and had less features than its competitors but people still gravitated towards it.

With the iPhone and the iPad (especially the iPad) I see Apple as going for the masses. The iPhone 3Gs can be had for free and the iPhone 4 is only $99. When the iPad was released everyone was surprised with how low the price was. Apple made it so low that they couldn't be undercut by other hardware makers and price used to be the biggest advantage Dell, HP, Sony, etc., had on Apple. If premium is brought to the masses is it still premium?



They *hope* to make money in the long term and gaining subscribers is only helpful if you are sufficiently profiting on each new subscriber. The soonest Sprint is supposed to see a positive return from acquiring the iPhone is 2015. That's a very long time in the tech world and a big risk which just shows the dire straights Sprint is in. It's a hail marry pass from their own 40yrd line with their final possession, IMO. I hope it results in a touch down though because I like Sprint as a carrier and I've got stock in the company.


Lethal

What you say about iOS devices is true. An iPhone 3GS can be had for free. An iPad is among the cheapest in its class. So the notion of a "premium" for Apple products isn't really valid.

However, Apple still commands the highest margins in the smartphone industry. Apple has 40%+ margins and everybody else has single-digit or even negative margins. This has contributed to the notion of a premium for Apple products. There is a tendency for people to point to the fact that Apple's margins are massive while others' margins are thin to claim that other companies are "passing on savings" to consumers.

So the notion of an Apple premium is going to persist. Before, it used to be because of high prices. While Apple products are not that much more expensive than competitors' products, Apple still has massive margins. People feel that Apple could be charging less than what they charge for their products but they keep the prices high to pad their margins.

For the record, stuff about "passing on savings" to consumers is nothing more than garbage. Companies charge what the consumer is willing to pay. They don't settle for lower margins to "pass on savings" to consumers. I guarantee you that every company in the smartphone industry would turn the universe upside down to be in Apple's position.

 

[BaldiMac]

Seriously? Again, it's called a figure of speech.

Seriously. Again. If it was just a "figure of speech", we'd find people using it in to refer to the same thing in different situations all of the time. Strangely, the term "tax" seems to be primarily used to describe a price premium in relation to Apple.

I notice you aren't 'correcting' vvswarup for using the term "Microsoft tax".

Good notice, since he only used the term to refute your use of it.

 

[jsolares]

This could be very true..... however hasn't there always been issues with ATT network coverage and now that they have a phone or phones that are just blasting their network those issues have just been magnified exponentially? Even if they didn't have the iPhone they will still need to improve their network.

It is just like the cable companies who raise their rates but give nothing in return. It is one thing to raise and say you are now going to get xyz. However to raise the rates and not give anything in return, not even better coverage or services. That is where people get upset.

From what i've read, which granted isn't all that much is that AT&T HAS been spending a lot of money on infrastructure, you just don't see the benefits of it because they were adding customers at a very high rate. remember AT&T doesn't have the same profit margines Apple does, not even close last i saw.

What you say about iOS devices is true. An iPhone 3GS can be had for free. An iPad is among the cheapest in its class. So the notion of a "premium" for Apple products isn't really valid.

However, Apple still commands the highest margins in the smartphone industry. Apple has 40%+ margins and everybody else has single-digit or even negative margins. This has contributed to the notion of a premium for Apple products. There is a tendency for people to point to the fact that Apple's margins are massive while others' margins are thin to claim that other companies are "passing on savings" to consumers.

So the notion of an Apple premium is going to persist. Before, it used to be because of high prices. While Apple products are not that much more expensive than competitors' products, Apple still has massive margins. People feel that Apple could be charging less than what they charge for their products but they keep the prices high to pad their margins.

For the record, stuff about "passing on savings" to consumers is nothing more than garbage. Companies charge what the consumer is willing to pay. They don't settle for lower margins to "pass on savings" to consumers. I guarantee you that every company in the smartphone industry would turn the universe upside down to be in Apple's position.

The iPhones are premium products due to their price, it's just that the carriers are eating a big part of that premium and spreading it over the length of the contract, it'll still cost you around the same you just pay it monthly instead. they are much more expensive than the competitor, but the carriers don't pay as much of a subsidy on androids, which is why i think they offer them quite a lot to the customers and new ones usually fall for them as it seems.

I guess they rather you buy an android phone with the same monthly payment by you, but less of a subsidy by them.

And RE the apple tax, it has existed for some people, even today, some of what consumers of apple products see as value other people see as paying more for nothing. and it IS a figure of speech mostly as a derogatory term.

 

[rhett7660]

From what i've read, which granted isn't all that much is that AT&T HAS been spending a lot of money on infrastructure, you just don't see the benefits of it because they were adding customers at a very high rate. remember AT&T doesn't have the same profit margines Apple does, not even close last i saw.



The iPhones are premium products due to their price, it's just that the carriers are eating a big part of that premium and spreading it over the length of the contract, it'll still cost you around the same you just pay it monthly instead. they are much more expensive than the competitor, but the carriers don't pay as much of a subsidy on androids, which is why i think they offer them quite a lot to the customers and new ones usually fall for them as it seems.

I guess they rather you buy an android phone with the same monthly payment by you, but less of a subsidy by them.

And RE the apple tax, it has existed for some people, even today, some of what consumers of apple products see as value other people see as paying more for nothing. and it IS a figure of speech mostly as a derogatory term.

Oh I know they are, however they were pretty bad to begin with and now with the added load of more users, they are playing catch up...... I know they are not producing the type of profit margin's Apple is.

 

[LethalWolfe]

For the record, stuff about "passing on savings" to consumers is nothing more than garbage. Companies charge what the consumer is willing to pay. They don't settle for lower margins to "pass on savings" to consumers. I guarantee you that every company in the smartphone industry would turn the universe upside down to be in Apple's position.

I'm not going to disagree with that. Once a company gets your money they aren't going to give any of it back willingly.

Seriously. Again. If it was just a "figure of speech", we'd find people using it in to refer to the same thing in different situations all of the time. Strangely, the term "tax" seems to be primarily used to describe a price premium in relation to Apple.

I don't think you understand what a figure of speech is. From Wiki:

A figure of speech is the use of a word or words diverging from its usual meaning. It can also be a special repetition, arrangement or omission of words with literal meaning, or a phrase with a specialized meaning not based on the literal meaning of the words in it, as in idiom, metaphor, simile, hyperbole, or personification.

A figure of speech doesn't have to widely adopted to qualify as being a figure of speech. But if you really need other examples, 'idiot tax' is a pretty common reference to playing the lottery and 'sin tax' is a common reference to the higher taxes put things like tobacco and alcohol. And while the sin tax is actually a tax it is not actually taxing sin.


Lethal

 

[BaldiMac]

I don't think you understand what a figure of speech is. From Wiki:

A figure of speech doesn't have to widely adopted to qualify as being a figure of speech. But if you really need other examples, 'idiot tax' is a pretty common reference to playing the lottery and 'sin tax' is a common reference to the higher taxes put things like tobacco and alcohol. And while the sin tax is actually a tax it is not actually taxing sin.

You'll notice that the two things you posted are actually collected by government.

Like I said, it's not just a figure of speech. Any more than me constantly referring to the guy down the street as a %&*$&% is just a figure of speech. I hope we understand each others point of view by this point. Thanks.

 

[rhett7660]

And they don't have to invest billions to upgrade their networks to LTE? They don't have costs to recover? This only applies to Apple?

Sorry missed this one...

I never said they didn't have to invest in this, and they should be, but that is what they are providing. A service. Keep up good service make that money back plus more over the long haul.

Those costs are not recovered via the contracts, phone bills etc?

 

[AppleScruff1]

Sorry missed this one...

I never said they didn't have to invest in this, and they should be, but that is what they are providing. A service. Keep up good service make that money back plus more over the long haul.

Those costs are not recovered via the contracts, phone bills etc?

The costs are recovered from the contracts, etc. You said:

I can see the greedy pig comments about ATT and Verizon. They are offering a service that hasn't changed yet they are charging more for it? You don't hear so much about sprint, because when they say unlimited it is unlimited, there are no caps etc. You have Verizon and ATT both saying unlimited but we will throttle you down if you use to much and we are going to raise our prices on all our subscribers. Yes I can see that as being greedy. You are no longer offering a service that has any benefits for the end user or added benefits to the end user yet you are going to raise the price on them.

So you feel that the carriers are greedy for raising their rates, etc, but Apple is doing the consumer a service by making 50%+ profits on the iPhone? Wouldn't they be doing the consumer a favor by charging less? Wouldn't Apple be helping the consumer if they lowered their prices on all of their products? It's coming across to me as a double standard.

 

[JoeG4]

The problems phone companies are having are signs of THEIR BROKEN BUSINESS MODEL showing through. Not only is it messing them up, and giving customers a bad deal, but it's also destroying other smartphone/OS manufacturers.

Even Apple has bent over. We now have a Sprint iPhone, a Verizon Wireless iPhone, and an AT&T iPhone. Good luck using any of those on the other carrier (I know they are identical hardware wise, but the ESNs are tagged: VZW won't activate a sprint phone and sprint won't activate a VZW phone and neither will activate an AT&T phone).

Lovely.

 

[rhett7660]

The costs are recovered from the contracts, etc. You said:



So you feel that the carriers are greedy for raising their rates, etc, but Apple is doing the consumer a service by making 50%+ profits on the iPhone? Wouldn't they be doing the consumer a favor by charging less? Wouldn't Apple be helping the consumer if they lowered their prices on all of their products? It's coming across to me as a double standard.

Actually I said I could see the greedy comment about..... I didn't say they were being greedy. A tad bit different.

I then went on to say if you are going to raise rates but not offer anything different in your service that is what gets people up in arms. You can look at the commercials ATT and Verizon both boast about their coverage yet we know how bad it can be. Yet they raise the price and you can still get the same coverage and or service. That is what gets people upset.

Sure they could be doing the customer a favor and don't they have some models that are quite a bit less, the 3GS and 4G which can be had for hundred dollars or so.

 

[AppleScruff1]

Actually I said I could see the greedy comment about..... I didn't say they were being greedy. A tad bit different.

I then went on to say if you are going to raise rates but not offer anything different in your service that is what gets people up in arms. You can look at the commercials ATT and Verizon both boast about their coverage yet we know how bad it can be. Yet they raise the price and you can still get the same coverage and or service. That is what gets people upset.

Sure they could be doing the customer a favor and don't they have some models that are quite a bit less, the 3GS and 4G which can be had for hundred dollars or so.

Apple's end user phone prices are right on the money with everyone else. The only difference seems to be carrier cost. The other manufacturers give the carriers a better price while Apple gets full retail no matter where it is sold. Apple likes to get the volume discount from all of their suppliers and manufacturing partners but doesn't pass it on to those who actually make the phone usable. Isn't that being greedy too?

 

[rhett7660]

Apple's end user phone prices are right on the money with everyone else. The only difference seems to be carrier cost. The other manufacturers give the carriers a better price while Apple gets full retail no matter where it is sold. Apple likes to get the volume discount from all of their suppliers and manufacturing partners but doesn't pass it on to those who actually make the phone usable. Isn't that being greedy too?

Could be, but it could also be called great business sense depending on who you talk to. They have a product that everyone wants, they know how to leverage that and it seems to be working for both parties involved. Some are getting more then others.

 

[AppleScruff1]

Could be, but it could also be called great business sense depending on who you talk to. They have a product that everyone wants, they know how to leverage that and it seems to be working for both parties involved. Some are getting more then others.

It is great business sense, maybe the best there is. I'm not directing this at you, but I am always puzzled how most here are so proud of how much money Apple makes even though they are not shareholders yet criticize every other company that makes a dime and calls them thieves, etc. Many times it seems to me that it is a very biased viewpoint and that Apple has it's own set of rules.

 

[noisycats]

Apple's end user phone prices are right on the money with everyone else. The only difference seems to be carrier cost. The other manufacturers give the carriers a better price while Apple gets full retail no matter where it is sold. Apple likes to get the volume discount from all of their suppliers and manufacturing partners but doesn't pass it on to those who actually make the phone usable. Isn't that being greedy too?

Considering they aren't a philanthropic organization, no, I don't consider it greedy.

I voluntarily pay Apple (via ATT or direct) for all my Apple goods. Hell, I voluntarily pay nearly everyone for anything/everything I own/use, to include ATT.

This goes back to the crux of the argument...people want Apple products. Apple is not being greedy selling those products to us.

 

[BaldiMac]

It is great business sense, maybe the best there is. I'm not directing this at you, but I am always puzzled how most here are so proud of how much money Apple makes even though they are not shareholders yet criticize every other company that makes a dime and calls them thieves, etc.

It's kinda strange that you are puzzled by the strawmen that you invent yourself.

Many times it seems to me that it is a very biased viewpoint and that Apple has it's own set of rules.

As opposed to your own "very biased viewpoint" where Apple has it's own set of rules? Are you confused how some people are happy when the Giants when the Super Bowl and some people are angry and some people are sad?

 

[AppleScruff1]

It's kinda strange that you are puzzled by the strawmen that you invent yourself.



As opposed to your own "very biased viewpoint" where Apple has it's own set of rules? Are you confused how some people are happy when the Giants when the Super Bowl and some people are angry and some people are sad?

Try a new line. That one is getting old. I'm fine, you seem to be on the defensive most of the time. Why is that?