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April 23rd 2014 10:28 am

Will we ever see cheaper phones?

OnePlus finally took the covers off their One phone (I don't get the name either) and it's pretty impressive. It has the specs to stand against some of the top flagships out there and comes in at $300, which is about half the price of major flagships. The two potential downsides are the battery is not removable, and it only has 16GB of storage with no microSD slot. However for only $50 more you can get 64GB of storage instead.

The phone will be available stateside, as well as Europe and Asia, which begs the question: Can it disrupt the current pricing model of cellphones?

Google has been trying to do this, to some extent, with the Nexus line up. Motorola also tried this with the Moto G, as well as other cheaper manufacturers like BLU. The problem though is these devices are rarely sold through carriers. T-Mobile carries the Nexus 5, but it's also $50 more than buying it through Google's Play Store.

I think there is also a trust issue here with these companies. Does anyone want to, or know, of companies like BLU? What about OnePlus?

If cheaper flagship phones are to come to the market, what do you think needs to happen? Do we just need a greater influx of devices from Chinese manufacturers like ZTE, OnePlus and Huawei? Do you think we'd ever see a $300-350 Galaxy S5 or HTC One M8?

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The carriers in the US are still a strong-hold, meaning that not many phones are popular unless they are sold through a national US carrier (Nexus 5 being an exception although Google never tells us hard numbers regarding how much were sold). Chinese phone manufacturers will try to strike deals with these carriers but I think the big bucks from the likes of Samsung, Apple, and even LG and HTC, will prevent them from entering the US market in a big way.

Another issue could be that those big phone manufacturers I just mentioned above could lobby for the US to start "investigating" and filing baseless claims that China is out to spy in the US through these Chinese phone manufacturers which will slow the progress they are trying to achieve.
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This is something I find ridiculously crazy. You can buy a tablet, which pretty much uses the exact same components that our cell phones use, but they are hundreds of dollars cheaper and have no subsidies associated with them. You can't tell me that the cellular radio chip is that expensive.

(The Qualcomm’s MDM6600, which was the radio chip used in the iPhone 4S apparently costs $32: www.aliexpress.com­/qualcomm­-mdm6600­_price.html).

And even when they use the same components (e.g., 4G iPads and Nexus tablets), they are still cheaper than a phone with equivalent specs. It's downright crazy. There's definitely some weird sort of artificial price inflation that's happening here.
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Don't they have to pay a per-device licensing fee in addition to the cost of the hardware to use those radios? Plus, don't forget that the marketing budget for the device is rolled into the per-unit cost. Not to mention the cost of paying a whole department of salaries for people to do the certification process for each carrier. I would wager that the incidentals contribute way more to the cost than the actual hardware.
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It doesn't change the fact that tablets which see just as much money spent on exposure cost HALF the price of phones. I can understand the One or Lumia 1020 being more expensive due to the camera tech involved, so the R&D costs may be higher.
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To the majority of people looking to buy a smartphone they can get an iPhone 5S for $200 from their carrier. Then they see an unsubsidized phone for $300 and think that is expensive because they are not aware of the retail price of their phone. Just this past weekend I showed a coworker the "real" price of the iPhone he wanted and he was shocked that it was $700 instead of $200. This is the battle that will need to be won do get phone prices down; the subsidized market of phones purchased through US carriers.
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I think that the value of mobile phones has been artificially inflated and held up. The easy money has been made, stock has soared, now it's time for commoditization and market reality to establish a more rational price structure. $300 is the new $600.
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The top phones in the market definitely have a thing or two on my Nexus 5, but nothing that would squeeze more than another $100 out of me. $500 phones are examples of conspicuous consumption.
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