31 Years of the Digest ... founded August 21, 1981
The Telecom Digest for March 7, 2013
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Date: Wed, 6 Mar 2013 06:05:05 -0800 From: "Harold Hallikainen" <firstname.lastname@example.org> To: email@example.com. Subject: Re: Smart Phones Message-ID: <firstname.lastname@example.org> >> (Another person on the forum) wrote: >> The costs of smart phones are ridiculous. > deletia... > Sometime last year a major news organization (I think it was ABC) > announced that the build cost of an iPhone is US$8, which if true > means the markup is over 98% of the inflated price. It appears the $8 quoted is the cost of manufacturing, but does not include the cost of parts (the Bill of Materials Cost). The cost of the iPhone 5 is shown at http://www.isuppli.com/Teardowns/News/pages/Many-iPhone-5-Components-Change-But-Most-Suppliers-Remain-the-Same-Teardown-Reveals.aspx A 64GB iPhone 5 has a BOM + Manufacturing cost of $238 with a no-contract sale price of $849. The margin probably pays for marketing, retailing, product development, and profit. Harold -- FCC Rules Updated Daily at http://www.hallikainen.com - Advertising opportunities available! Not sent from an iPhone.
Date: Wed, 06 Mar 2013 23:12:22 -0600 From: Frank Stearns <email@example.com> To: firstname.lastname@example.org. Subject: Re: Re: Smart Phones Message-ID: <_9qdnVz-ttYrvKXMnZ2dnUVZ_sSdnZ2d@posted.palinacquisition> >>> (Another person on the forum) wrote: >>> The costs of smart phones are ridiculous. >> >> Sometime last year a major news organization (I think it was ABC) >> announced that the build cost of an iPhone is US$8, which if true >> means the markup is over 98% of the inflated price. There is a far more important aspect than "mark up" on the price of raw materials -- are we going to allow legal free markets to flourish, with all their dynamism, or are we going to somehow dictate "fair" prices? It really doesn't matter whether the parts cost 80 dollars, 80 cents or even 8 cents. (And there are many, many more costs than just the parts.) What matters is whether the market will support the asking price. Of course, there are market distortions from government regulation, intellectual property issues, unlawful price fixing by producers, and many other items. There are also regulated monopolies for specific purposes. But on balance and all things considered, prices based on market perceptions (those prices often soon corrected by market realities) is far better than some central authority commanding a "fair" price. We've seen how well that has (not) worked in various places. Laws and enforcement protecting a free-as-practical market should be the focus, not the percentage mark-up on parts. Those figures truly mean nothing. Frank -- .
Date: Tue, 5 Mar 2013 23:58:08 -0500 From: tlvp <mPiOsUcB.EtLlLvEp@att.net> To: email@example.com. Subject: Re: White House: It's Time to Legalize Cellphone Unlocking Message-ID: <firstname.lastname@example.org> On Tue, 05 Mar 2013 17:10:21 -0500, Bill Horne wrote: > White House: It's Time to Legalize Cellphone Unlocking > > > http://allthingsd.com/20130304/white-house-its-time-to-legalize-cell-phone-unlocking/ > My own experience with carrier cooperation as regards cell-phone-unlocking: 1) T-Mobile -- has provided me all SIM-subsidy unlock information I ever required, without threat or duress, for each handset requested, provided only that said handset had been in service with T-Mobile for 90 days or more, and that at most two such requests were to be honored in any 30-day interval. Easy enough. At least 4-5 handsets thus unlocked. 2) AT&T -- has provided me SIM-subsidy unlock information for two of the three handsets I ever requested such for. All were Cingular-branded handsets found in cell-phone recycling bins, two fully operable, with data remaining identifying the phone number they had last been assigned, and one inoperable (a 3gs iPhone), hence without accessible last phone number data. For the first two, though I've never been on a Cingular/at&t wireless plan in my life, the wireless CS crew happily gave me the unlock information I needed; for the iPhone, however, they balked when I could not provide the last known phone number under which it had been active. [No matter, of course: as an inoperable unit, it'd have needed extensive and expensive repairs before I could ever have used it anywhere, anyway.] 3) Non-GSM cellular providers have no SIM-unlocking issue to begin with. And it's easy enough to get a Verizon MVNO like Page Plus to activate a Verizon handset whose IMEI is not on Verizon's stiffed-bill-pay black-list, and similarly (so I hear) for Sprint and Sprint MVNOs: so, non-issue here. As always, I'm happy to stand corrected if need be :-) . Cheers, -- tlvp -- Avant de repondre, jeter la poubelle, SVP.
Date: Thu, 7 Mar 2013 01:47:22 +0000 (UTC) From: email@example.com (Mike S.) To: firstname.lastname@example.org. Subject: Re: White House: It's Time to Legalize Cellphone Unlocking Message-ID: <email@example.com> In article <firstname.lastname@example.org>, tlvp <mPiOsUcB.EtLlLvEp@att.net> wrote: > >My own experience with carrier cooperation as regards cell-phone-unlocking: > [snip] > >3) Non-GSM cellular providers have no SIM-unlocking issue to begin with. >And it's easy enough to get a Verizon MVNO like Page Plus to activate a >Verizon handset whose IMEI is not on Verizon's stiffed-bill-pay black-list, >and similarly (so I hear) for Sprint and Sprint MVNOs: so, non-issue here. Verizon cheerfully gave me the SIM subsidy codes for the GSM side of two "world phone" Blackberry handsets that they sold to my wife.
Date: Tue, 05 Mar 2013 15:01:32 -0500 From: Rich Pieri <email@example.com> To: firstname.lastname@example.org. Subject: Re: Smart Phones Message-ID: <51365B6E.email@example.com> On Tue, 5 Mar 2013 10:34:55 -0800 "Rich Braun"<firstname.lastname@example.org> wrote: > Sometime last year a major news organization (I think it was ABC) > announced that the build cost of an iPhone is US$8, which if true [That report is] BS. The box and box contents (charger, headphones) are eight bucks. Total BOM and manufacture costs for iPhone 5 ranges from $207 to $238 according to iSuppli's analysis. iPhone 4s BOM+manufacture costs run from $196 to $253. This is just the hardware components. It does not include software, licensing, royalties, advertising, shipping, and so forth. Welcome to the modern "news reporting" where journalistic integrity and basic fact-checking take a back seat to hype and ratings. -- Rich P.
Date: Wed, 6 Mar 2013 08:34:53 -0500 From: "Bob Goudreau" <BobGoudreau@nc.rr.com> To: email@example.com. Subject: Re: Smart Phones Message-ID: <firstname.lastname@example.org> Rich Braun <email@example.com> wrote: > Sometime last year a major news organization (I think it was ABC) > announced that the build cost of an iPhone is US$8, which if true > means the markup is over 98% of the inflated price. Well, it's not true, so we can stop you right there. Only a modicum of common sense should be necessary to raise one's skepticism alarms at such a claim. It's true that Apple is very successful at negotiating great prices from their suppliers (in part due to the huge volume of parts they buy), but do you really believe that Qualcomm will sell them the radio DSP or that Samsung will part with an A6 CPU for only a couple of bucks? And then there's the cost of the RAM, the flash memory, the Gorilla Glass, the case, etc. I suspect you are referring to a story like http://gizmodo.com/5944446/the-iphone-5-costs-8-more-to-build-than-it-does-to-buy , which states: "Whereas last year's 4S cost $188 in parts, plus an $8 "manufacturing" (labor) fee, to bring to a total of $196 (for the 16GB model)-the iPhone 5 costs $199 in parts and $207 after the manufacturing fee." In other words, the $8 is what Apple pays to Foxconn, et. al. for assembling the device from its component parts, not to what Apple pays to its various suppliers for the parts themselves. > Welcome to the modern price-gouging economy. Profiteers are finding > ways to corner many markets and jack up prices by ensuring that > consumers pay for things indirectly, blunting the effects of > comparison-shopping. If you don't like the price, you don't have to buy. Thank goodness that in MOST of our economy, the government isn't holding a gun to anyone's head, forcing either a customer to buy something at a certain price or a business to sell something at a particular price. In parts of the world where governments do such things (often in the name of preventing "price gouging"), the result can get ugly. By dying yesterday, Hugo Chavez managed to escape having to deal with the consequences of the price controls his regime has dictated for items ranging from food to appliances -- empty shelves and an inflation rate rising almost as fast as the violent crime rate. As for comparison shopping for phones: have you been in a phone store in the last several years? The 2-year contract model with a subsidized upfront initial purchase cost is almost universal for post-paid service now, which makes it very easy to compare the carriers against each other. If you don't want the commitment of a contract, you can use a pay-as-go service (prepaid wireless) instead, but you have to be prepared to buy the device up front, without a carrier subsidy. This model is more popular in other countries than in the US, but there are some customers here who choose it too. To continue with the iPhone example, Straight Talk Wireless at Wal-Mart offers unlimited service for $45/month if you buy an iPhone 5 for its full $649 cost (the same price that an unlocked, contract-free iPhone 5 can be had for at a US Apple store). > If you want better/cheaper mobile phones and service, alas you have > to escape the boundaries of the USA to get beyond the reach of > profiteers. Are you implying that carriers in other countries aren't out to make a profit? And guess what, if you want to buy an iPhone 5 with no contract (and thus no carrier subsidy), you are not going to find it for much less than that $649 price anywhere in the world. You might pay substantially more; that same model costs &pount;529 (GB Pounds) at Apple stores in the UK, which works out to $801 at current exchange ates. In Germany, it would set you back 679 euros, or $882. Of course, there are plenty of competing smartphones out there to tempt you if you don't want to pay for an iPhone. Bob Goudreau Cary, NC ***** Moderator's Note ***** I'm thinking of changing the Digest's "official" character set to UTF-8, since ISO-8859-1 doesn't have a Euro sign. Opinions? Bill Horne Moderator
Date: Wed, 06 Mar 2013 09:10:29 -0500 From: Fred Goldstein <firstname.lastname@example.org> To: email@example.com. Subject: Re: Smart Phones Message-ID: <51374E55.firstname.lastname@example.org> Rich Braun wrote, > Sometime last year a major news organization (I think it was ABC) > announced that the build cost of an iPhone is US$8, which if true > means the markup is over 98% of the inflated price. Last week's Time > magazine devoted its entire news section to a single 24,000-word > piece about the so-called chargemaster, which is the computerized > price list used by hospitals to compute bills. The build cost of $8 that you refer to is simply the cost of assembling the parts at a Chinese factory. The itemized cost of the iPhone 5 is here: http://www.isuppli.com/Teardowns/News/pages/Many-iPhone-5-Components-Change-But-Most-Suppliers-Remain-the-Same-Teardown-Reveals.aspx (or http://goo.gl/GXxCH - bh) The 16GB model has a parts cost of $199, for a total cost of $207. List price, unsubsidized, is $649. So Apple makes a nice markup, but not 98%. Of course the 64GB model only costs $238 to build and sells for $849, so the markup on flash is outrageous. Competitors' phones, of course, have slots so you can add your own. -- Fred R. Goldstein fred "at" interisle.net Interisle Consulting Group +1 617 795 2701
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