Smartphones Invade the Prepaid Market 173
jfruh writes "When tech geeks debate the state of the smartphone world, they usually focus on the iPhone and its high-end Android rivals from the major carriers. But Android is rapidly entering the lower-end world of contractless prepaid phones that you can buy at 7-11 or Wal-Mart. 63 percent of prepaid phones sold in 2011 were smartphones, and while they might not offer cutting-edge hardware or easy customization, they do provide a smartphone experience without an onerous contract."
Re:I have an unlocked device. (Score:5, Insightful)
I wish all phones were sold unlocked, and I wish all carrier subsidies were illegal.
The price of phones rises to absorb all the subsidy they can extract from the carriers.
The iPhone was a huge siphon, emptying AT&Ts pockets into Apples, making Apple the
richest company in sight on a phone that really does not cost that much to produce.
Now Apple are doing the same thing [cnn.com] to the other carriers [latimes.com].
If people had to buy their own phones the net effect would be lower prices, or they would be buying other phones. Greece, like India doesn't allow subsidies. Apple isn't selling well [investorplace.com] there. If Apple cut its profit margin in half, they would open up vast new markets.
Some of the lower-to-mid level Android phones do well in those same markets.
Why sacrifice your phone? (Score:4, Insightful)
The article implies that if you go pre-paid, you have to put-up with a low-end phone. Why? Can't you get a top-end unlocked Samsung Galaxy S2 to use with your pre-paid? Sure, it will cost you 600 dollar. But you will not have to pay 80 dollar/month on your plan. And the best: if they screw you, you can just dump them and switch provider while keeping your phone.
The ability to change carriers easily is great for competition. Look at how it worked in Europe: you can get a line at zero cost per month. Add 4 euros per month and you have unlimited calls within your network. 10 euros/month for data plan. And some give you at the same time an airbag for a maximum of 40 euros/month, so you never pay more than that no matter what. If people moved out of the big carriers, same thing will happen in the US.
Americans are forced in contracts? (Score:5, Insightful)
In actually free parts of the world, we can buy any smartphone without any contracts. Obviously, initial cost is higher but usually worth in the long run.
Re:I have an unlocked device. (Score:5, Insightful)
The problem in US is that if you bring your own phone, your contract is not really any cheaper than if you got one from them with a contract - in other words, you're always paying the "subsidized" price, regardless of whether there's a phone to subsidize or not. That smacks of forced bundling to me, and given that all carriers do that, with the exception of T-Mo, it may well be regarded as cartel collusion to squeeze the customers.
Re:I have an unlocked device. (Score:2, Insightful)
The government should support market transparency, to allow the market economy to do its work. When products and services are made so convoluted that most people can't compare any two products in a meaningful way anymore, then this hinders competition. One of the theoretical prerequisites of the free market theory is an informed customer. One of the tools that are most frequently used by companies which don't want to compete fairly is information asymmetry.
The cellphone business is not and can not be an unregulated market with sufficient competition, due to the scarcity of usable frequencies. It would therefore be advisable to forbid tie-ins into that market by businesses which would otherwise see much more competition.