[Q] Tablet Prices - General Questions and Answers

Is it me or are the standard tablet prices way too high?
Just checked the pricing for Sony Tablet S (Wi-Fi only) £399/$499 (16GB) and £499/$599 (32GB) with the 3G version roughly 100 more.
Not blaming Sony for this as all companies seem to be inflated.
If all companies were to take a look at the recent HP Touchpad saga, can they not see the potential if the prices were lower? (Maybe not to that extent, but you catch my drift hopefully).
As consumers, if we were to all agree worldwide that we were not going to pay these prices for something we believe should be at least a couple of £/$100 cheaper. Wouldn't companies have to eventually reduce prices due the poor sales?
P.s. TO MODS - If this belongs in Q & A apologies.

I think that the tablet market is still preadolescence. I believe that this will be the case for at least one or two more years then we can expect the tablet market to become more competitive on high quality tablets.

Hell yeah. But these companies have to make a profit or at least break even on the hardware.
I got a Streak 7 for $150. Loved it. I'm looking to find a Xoom or Transformer now.
Its all about searching for deals I guess.

@MeInGatineau - The Touchpad industry being young in it's life cycle is true, but as it stands there is enough competition to drive prices down. Companies will only do this if we refuse to buy at the inflated prices.
@vetvito - The companies do not "need to" make profit/break even on hardware so early, they "want to". The combination of software sales, economies of scale and cheaper components etc. in the long run should make them more than enough profit.

Have a Nook cost 200 bucks
A Asus EE tablet 380.00
A Samsung 10.1 paid 480.00
and a 32 gig Touchpad Paid 230.00 for it.
Cost is driven more by hype and perception than by academic business models.
All the above are 100-300.00 more in the stores if you buy "off the shelf"retail.
Always NEVER do that unless you are rich.
Typically the way electronics work is : They R/D a design and get it to manufacture , once there, they figure the baseline amount needed to be sold @ a given price in order to break even (recoup all costs for the project) Then , after they pass that mark costs begin to decline.... unless it is a hot seller then they exploit the hype of the market for the extra profit benefit it brings for as long as it lasts.
Apple is better at keeping the hype up than most other people in the market today, which explains why they have a following, you get less and pay more for it, and think it is a deal. NOW! that's great marketing !!!
If you really want to know more on this and markets and how they work just look at the Intel chip market.

Yes tablets are expensive at the moment but I don't think this immediately points to greedy manufacturers with big profit margins. Developing the tablets are quite costly and they are probably just covering their costs. Once they gain experience and pick up, I'm sure scales of economy kick and and products will become cheaper. Exactly how the laptop market has gone.
Competition will always drive prices down but no manufacturer is going to sell the tablet at a loss unless they are able to re-coop that money from elsewhere. E.g. Amazon sell the Kindle at a loss as they make money on the ebooks. Carriers sell mobile phones at a loss as they make money on the tariffs and carrier services used.
HP were selling the TouchPad for a loss. They could do this because the alternative was probably a greater loss.

Just Me said:
@vetvito - The companies do not "need to" make profit/break even on hardware so early, they "want to". The combination of software sales, economies of scale and cheaper components etc. in the long run should make them more than enough profit.
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I don't see how software sales would make profit for a tablet manufacturer? Most tablet manufacturers opportunities for profit are with the tablet sales and official accessories for that tablet.
I would argue that manufacturers do need to make profit/break even as quickly as possible. Manufacturers cannot afford to have long drawn out periods for products to break even. They do not know how they will sell, what competition will do or any of the other million factors that affect economy.
This isn't to say pricing them high will get them to break even as quickly as possible. Because if they are too high then they will not get enough sales.

@oka1 - That is my partly my point. There are deals to be had if you shop around, but why are the prices not discounted in the first place. The person/company that you bought from, would have bought from 1-2 people before you and it is likely that they all made money from each item.
I also have a Touchpad but the 16GB version, which I paid £127. Above the insane price of £89, but now that I have it, I realise I might have paid £200, but the £350+ price tag was ridiculous imo.
Also, I get your R&D point to an extent, but then why bring out a newer model with only slightly better features in 6 to 12 months and price it at the same price, as the original. Surely the the R&D cost wouldn't have increased significantly for the new product
@Techno79 - I'm not in the industry, but I can't really see the development cost being high enough to justify such a high selling price. I know it's not as straight forward as this but, tablets are generally just big smart phones, some with less features (e.g. Wi-Fi only).
In comparison the laptops that you mention are probably more costly to build, but are cheaper and have a lot more functions.
My point is, I don't believe they have to sell them for as much as they do and if, as a society, simplified, we all turned around and said drop the price by a couple of 100 and we'll all buy one, they would.
My software sales point was more at certain companies that get a % of sales revenue for apps sold, but true it's probably not the case for all.
Don't get me wrong, I'm not saying that companies don't need to survive, I'm just saying, they should give a little back to the consumer that buy their products and help them make the vast amounts of profit they do.
In reality, as long as people are giving up their money as easy as they do, companies will sell at a premium.

hi
hi. this is just a test message

Yeah, it's too bad that companies want to make a profit.
Sent from my Galaxy Tab using Tapatalk

hp tablets
i just heard they were getting rid of these for like $99 bucks for 16gb
not a bad deal, can anyone confirm?

dutchman22 said:
i just heard they were getting rid of these for like $99 bucks for 16gb
not a bad deal, can anyone confirm?
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They sold millions in 2 days for that price and now they are sold out. I got mine off some guy who bought one and marked up 75 bucks

Just Me said:
@oka1
@Techno79 - I'm not in the industry, but I can't really see the development cost being high enough to justify such a high selling price. I know it's not as straight forward as this but, tablets are generally just big smart phones, some with less features (e.g. Wi-Fi only).
In comparison the laptops that you mention are probably more costly to build, but are cheaper and have a lot more functions.
My point is, I don't believe they have to sell them for as much as they do and if, as a society, simplified, we all turned around and said drop the price by a couple of 100 and we'll all buy one, they would.
My software sales point was more at certain companies that get a % of sales revenue for apps sold, but true it's probably not the case for all.
Don't get me wrong, I'm not saying that companies don't need to survive, I'm just saying, they should give a little back to the consumer that buy their products and help them make the vast amounts of profit they do.
In reality, as long as people are giving up their money as easy as they do, companies will sell at a premium.
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If you breakdown the different parts of a tablet's cost then you'll have something like this:
Hardware costs
Retail mark up
Taxes
Manufacturing/production costs
Manufacturer's Profit
Manufacturer's profit first has to cover the huge costs of R&D, marketing and service/maintenance. These combined costs run up in the millions and will take a lot of sales before they break even. I would guess that they'd need to sell 100s of thousands before they get to break even point. So, until they reach those sales figures, I do believe they are justified in selling a high selling price. Obviously, I'm not saying I like high costs but I do think the current Android tablet price points are somewhat justified.
Tablets may be larger versions of mobile phones, but like I said before, mobile phones can be sold at a loss as they offset the loss against consumers signing up to 12/18/24 month carrier plans and using additional cost services with that carrier. Take a look at SIM free mobile phone costs if you really want to compare like for like. Top end mobile phones can cost nearly £500.
Also, some of R&D can be reused from previous generation of devices. Manufacturers are probably on their 100th generation of laptops where as Android tablets are at the most on their 3rd or 4th generation and thus still very new. I think for this reason, laptops are probably cheaper to produce.
Competition also drives prices down a lot and there is obviously more competition with laptops than there is with tablets. When laptops were fairly new, they would cost well over £1000 for a decent model which is far more than the tablets at the moment. It's only in the last few years that laptops have been fairly cheap. I'm sure tablets will get to that point a lot quicker but I doubt we'll see that before end of 2011.
Also, not all tablets will be a super seller. Some tablets will flop and never cover their R&D and marketing costs. It's down to profits from other tablets that cover these costs.
I'm all for lower tablet costs but from manufacturers perspective, I don't see anything wrong with the current price points of Android tablets given how new Android tablets are and the level of competition in the market. It's guaranteed that costs will eventually come down.

Very valid points. I fully understand that everything you said is pretty much true, but there are many counter arguments to your points, so I'll agree to disagree overall.
But going back to what should have probably been the first line in the thread and not the last (I can see why the thread went the way it did, instead of the way I wanted):
"As consumers, if we were to all agree worldwide that we were not going to pay these prices for something we believe should be at least a couple of £/$100 cheaper. Wouldn't companies have to eventually reduce prices due the poor sales?"
Would this work? Or would the tablet market slowly die out?

Just Me said:
Very valid points. I fully understand that everything you said is pretty much true, but there are many counter arguments to your points, so I'll agree to disagree overall.
But going back to what should have probably been the first line in the thread and not the last (I can see why the thread went the way it did, instead of the way I wanted):
"As consumers, if we were to all agree worldwide that we were not going to pay these prices for something we believe should be at least a couple of £/$100 cheaper. Wouldn't companies have to eventually reduce prices due the poor sales?"
Would this work? Or would the tablet market slowly die out?
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I personally don't think this would work. There are many consumers who are extremely well off and are happy to pay the high price for early adoption. How would someone be able to co-ordinate such a consumer boycott. I think the current natural system works. If a manufacturer releases a product at too higher price, then less consumers will purchase it. As time goes on, and the product gets cheaper, more consumers are likely to jump on board to buy. However, if the product remains too high a price for the duration of the products life, then this will be seen with low total sales and low profit margins for the manufacturer (possibly even a loss). The manufacturer "should" learn their lesson and make the next product at a better price point.
If manufacturers can make more profit from selling 100k products at a high price than selling 1M products at a low price then they need some other incentive to sell at low price point.
Hypothetically speaking, if we could agree between all consumers to not buy the tablets at their high price to force manufacturers to release them at a low price then the profit margins could be so low that manufacturers give up on tablets as they realise they can get more profit from netbook/laptop and other consumer devices. So yes, I do think a global boycott for the high initial early adoption cost could kill the tablet market.

Practically, in here, yes they are. But comparatively with other devices/gadgets, the current tablet market is decently-priced.

Just like everything else the prices will drop after all the early adopters jump. There will be more choices and lower price points.

Related

Moto/verizon Android tablet (3.0)

check it out..
http://www.newsden.net/motorola-android-3-0-honeycomb-tablet-photos-and-specifications-emerge-5285/
It has very similar specs at the G-tablet except it has double the flash RAM, a back Camera..
The screen looks more square to me.. more like the Ipad..
That one will be pure sex. Too bad its prob going to cost a small fortune compared to teh rest of them.
Same specs but a Verizon price tag. The reason I like the gtablet is because DOESN'T have 3G or the carrier fees that come with it.
Lnin0 said:
Same specs but a Verizon price tag. The reason I like the gtablet is because DOESN'T have 3G or the carrier fees that come with it.
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I would not say same specs.
Android 3.0
32gig built in memory
And a better resolution display.
This thing will most likely be significantly better than our gtabs but the price is going to have to be just as significant.
Does look nice... I rather have USB than micro USB though. Also don't want to have to pay for a data connection. Does not mention GPS, that would be nice.
What are the chances this will be in the under $550 range (with no data plan)? Wishful thinking, I know..
RojasTKD said:
Does look nice... I rather have USB than micro USB though. Also don't want to have to pay for a data connection. Does not mention GPS, that would be nice.
What are the chances this will be in the under $550 range (with no data plan)? Wishful thinking, I know..
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I'm guessing it'll be $649 at the very least without a data plan. With a data plan, probably $499.00. Moto is gonna price it like the Ipad. But damn, that's gonna be sweeeeeet!
Lnin0 said:
Same specs but a Verizon price tag. The reason I like the gtablet is because DOESN'T have 3G or the carrier fees that come with it.
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Me too. I just don't get all of these people that whine about all these tablets w/o 3G when all it does is keep the price down, which is a good thing IMNHO. (Not to mention I really don't care about 3G and it's a non-feature to me, just adding cost...)
Look at the egregious pricing on the Tab and how so many fanbois are all over attempting to justify it, and it's not even Tegra2 based... just an old a8 which Samsung will probably soon replace with their new a9 based SoC, then do their usual lack of support/updates...
Pricewise yeah, that's a nice Tab and it has a few little features over the gTab that are nice like the higher res camera, extra flash, and higher res disp, but like the rest of you I fully expect it to be egregiously overpriced like the Tab... (I still think that the $400 price of the gTab is on the high side... $300 would be much more palatable... and closer to true value...)
I am thankful we have all these low budget knockoffs to combat the crazy prices.
Apple won't do anything to drive the cost of tablet computing down and it appears that the other big players are happy following their lead. Why not if people will spend that much for glorified netbooks.
Googles 3G requirements aren't helping matters since it just creates alliances with the cell phone carriers - not exactly known for 'friendly' pricing.
The more options people are given the more they will understand and demand justification for higher priced products.
The Galaxy just saw a price drop. Granted it is typical for cell carries to fleece early adopters before giving the same tech away free a month later but I still see the drop as a good sign...even if it was just on the subsidized price.
Like others have stated, 3G is not a selling point for many. 3G feels like dial up compared to the home/office connections most of us are used to and the ongoing fee doesn't justify the occasional convenience.
At least the G-tablet should be able to be upgraded to Honeycomb without any major hardware restrictions. I am more interested in the screen size, the size is more 4:3 rather than the G-table 16:9. Don't you think?

So Far Rivals Can’t Beat iPad’s Price (Research much?)

I was just reading some tech news when I stumbled upon this. It's funny, but I have a tablet that was $150 cheaper sitting on the coffee table....I had to post the article because I can't post links yet. From the New York Times:
So Far Rivals Can’t Beat iPad’s Price
By JENNA WORTHAM
The iPad 2, unveiled on Wednesday, offers several sleek improvements over its predecessor. But its most attractive feature is perhaps the same one its predecessor had: the price tag.
And what makes that feature even more compelling is that so far, Apple’s competitors in tablets cannot beat or even match it.
The iPad 2, like the original, starts at $499. Apple says that since it introduced the original last April, it has sold 15 million of the devices, generating $9.5 billion in revenue. Analysts say this is only the start of a lucrative market for tablet computers, which could soar as high as $35 billion by 2012.
The Motorola Xoom and the Samsung Galaxy Tab were introduced recently, both to generally good reviews but at higher prices. Dozens of hardware manufacturers are scrambling to bring their own variations to market this year: Hewlett-Packard with the TouchPad, HTC with the Flyer, LG with the G-Slate and BlackBerry with the PlayBook.
But prices, or even release dates, have not been announced, and industry experts say it is not yet clear whether the devices can be competitive with Apple on price.
“There have been nearly a hundred competitive tablets that have been introduced since the iPad,” said Toni Sacconaghi, an analyst at Sanford C. Bernstein. “But it seems that no one has eclipsed or even matched Apple on pricing.”
Analysts and industry experts point to a number of reasons. Primarily, they say, Apple’s deep pockets — a staggering $60 billion in cash reserves — have allowed it to form strategic partnerships with other companies to buy large supplies of components, for example, expensive flash memory. By doing this, the company probably secures a lower price from suppliers, ensuring a lower manufacturing cost.
At the same time, they say, Apple has sidestepped high licensing fees for other items it needs, like the A4 and A5 processors within the iPads. Those parts, designed in-house at Apple by a company that Apple bought, are among the costlier components needed to make a tablet computer.
Mr. Sacconaghi said Apple also could subsidize some of the cost of building iPads with the money it makes through its App Store, which generates more than a billion dollars each year. This means that Apple can take a lower profit margin on the iPad, 25 percent, than it does on, for example, the iPhone, which can yield as much as 50 percent profit.
Yet another advantage is Apple’s wide net of its own global retail shops and online stores; for customers, this means they can avoid a markup from a third party like Best Buy.
Although other companies have some of these factors in their favor, no one but Apple has all of them.
Steven P. Jobs, chief executive of Apple, who took the stage during the Apple press event Wednesday in San Francisco to announce the iPad 2, made a not-so-discreet swipe at rivals.
Is 2011, he asked, “going to be the year of the copycats?”
“Most of these tablets are not even catching up to our first iPad,” he said.
For example, like Apple, Samsung cuts costs for making its Galaxy Tab, a seven-inch tablet, because it builds many of the components itself. And like many other tablet makers, Samsung relies on the Android mobile operating system, which Google makes available free. Even so, the Galaxy can cost as much as $549 without a contract for cellular service.
“Just because a company sources internally doesn’t ensure that they get the best pricing on components,” said Rhoda Alexander, an analyst at IHS iSuppli, a research firm. “It doesn’t necessarily guarantee efficiency from a cost perspective.”
Justin Denison, vice president for strategy at Samsung, said that in the United States, the company relegates device pricing to its carrier partners, but that he was not worried that the cost of the Galaxy, which has received generally glowing reviews, might turn prospective buyers away.
He said the company was “quite happy” with early sales of the device, which it pegs at two million, adding that “consumers will decide for themselves whether the price is worth it.”
But adding to the challenge for Samsung and most other tablet makers is that they rely on third parties like Best Buy to sell the devices. Apple’s retail and online stores help eliminate this problem.
“You don’t see a markup in the same way a retailer would mark up an item, so it reduces that particular margin,” said Shane Greenstein, a professor at Northwestern University’s graduate business school.
Shelling out billions of dollars to build glossy retail stores or to make investments in chip processors is not an option for a smaller company like Motorola, which recently spun its mobile devices business into its own independent sector. Motorola’s Xoom, a tablet with a 10-inch screen, a dual processor and front- and rear-facing cameras, costs $800 in the United States without a two-year contract with a wireless carrier. That’s roughly $70 more than the equivalent 32-gigabyte iPad 2 outfitted with both Wi-Fi and 3G functions.
Alain Mutricy, a senior vice president for mobile devices at Motorola, defended the pricing of the Xoom, pointing to the tablet’s extensive memory, high-resolution display and compatibility with Verizon’s 4G LTE network, to which Xoom owners will be able to upgrade free, as justification for the price tag.
“The Xoom is priced exactly where it has to be,” he said.
Mr. Mutricy said he did not think the company would do anything differently to trim costs.
“It’s not that we are trying to lower the price and cannot,” he said. “We are pricing the Xoom based on what we are offering consumers.”
But he said that Motorola was planning to expand its line of tablets in the future that would most likely include smaller, lightweight options with a lower retail cost.
Huawei, a Chinese hardware manufacturer, has said it hopes to press into the United States market later this year with the S7 Slim, a svelte, rectangular machine running Android on a 7-inch display and a 1-gigahertz processor, for $300.
Ross Gan, the worldwide head of corporate communications at Huawei, said the company cut costs by using a modest marketing campaign.
“We didn’t set our margins based on massive advertising campaigns,” he said in a recent interview.
Sarah Rotman Epps, an analyst with Forrester Research, predicted that pricing would become increasingly important in the tablet market because as more options appeared — particularly cheaper, no-name Android-powered tablets — shoppers would want to pay less.
“Consumers expect that over time, electronics get cheaper,” she said. “They’re seeing all these other devices in the market and not necessarily distinguishing between processor speeds. There’s a huge variation in price and power but from a distance, they all look like 7-inch touch screens.”
Over time, analysts say, efficiency in production will help bring down costs for competitors.
But the market will be hypercompetitive until then, said Ms. Alexander of IHS iSuppli.
“The iPad may continue to own the market if competitors don’t get more realistic on their pricing,” she said. “Right now, it’s too high relative to what the iPad has for the product.”
Well, Apple has been full of **** alot lately. Always expect this nonsense to spew out their mouths now.
Wow! Was this Guy working for apple or just hoping to get a kickback for sucking apples dong. I thought the newyork times would have better research than that. What about the vpad7 for 300$ or the zpad / Gtab for under 400$? I could write a more comprehensive and less biased article than this joker even if I was writing it while I was drunk and angry.
I am not sure of the reason, but the gtab has really never recieved any press love. Agreed out of the box the device leaves much to be desired, and that is what tech journalist really review, but for a device that specs wise (minus the screen) can match the Xoom, you would expect atleast a little buzz.
Odd, but I'm not complaining as it has kept the price low.
Not surprising really, they were the first to open the tablet market this time round, and it has really opened this time, so it stands to reason they will be struggling with the large amount of competition that has followed them, I'm not a Apple fan, never was, but i do realize they opened the market, and business competition can get a bit underhanded
same article was on cnn...be its being used as a written ad. I just can't pay $500 and not have flash or sd/usb storage...they are dribbling out the improvements and the idiots line up... They are predicting huge lines when 2 comes out! for what? faster and thinner ...big deal.
Hopefully one day the ipad will be fast enough to run flash
P00r said:
Hopefully one day the ipad will be fast enough to run flash
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HA
Dictator Jobs would never allow it
Years ago I got in on the ground floor buying the Amiga 1000 computer. Everyone who had one or saw it were impressed. A great community of people supported each other, giving heads up on new hardware and software releases. Promoting the hell out of it.
It finally died, and was regarded as a good game machine and maybe some graphics. Most just didn't take notice.
Did I do it again buying the Gtab?

Xiaomi phone can't be legit

So, as someone living and working in China, I've been super excited following up on the Xiaomi Phone. When they released the price as 2000 RMB (about $310 USD), I knew it had to be fake, or there was some serious funny business. The numbers just don't add up.
Engadget recently had a review of the Xiaomi phone and had it benchmarking near the Galaxy S 2 in several tests, so I think it makes sense to compare these two:
SGS 2 Advantages: Super AMOLED screen; 4.3 inch screen (vs 4 inch); forward facing camera; 1080p video recording (vs 720p); onboard storage (16 GB vs 4 GB); slightly smaller footprint.
Xiaomi Advantages: Price; processor speed (1.5 Ghz vs 1.2); battery (1930 mAh vs 1650); GLONASS and GPS tracking; highly customizable UI out of the box.
In China, the SGS2 retails for about 4300 RMB (about $670 USD). So how does a phone which is in the SGS2's ballpark retail for less than half the price?
It gets even more peculiar. Here are some questions Xiaomi hasn't cleared up(or at least I haven't seen their responses yet):
1) Xiaomi uses a Qualcomm processor and a LCD screen from Sharp (Japanese import). So they can't be using local parts to save costs, how are they able to offer the phone at only $310?
2) Local competitors like Huawei and ZTE who have much more experience in manufacturing (and much more leverage with suppliers) have yet to produce a phone remotely like this. Also, their closest local competition in terms of specs is something like the Huawei Honor, a single core phone that retails for about $400. Yet Xiaomi, which has never produced hardware before is getting better deals than these guys on components? Samsung also does component development in-house, but Xiaomi is getting better pricing than Samsung?
3) Xiaomi was originally a software developer. How did they pull a piece of impressive hardware like this out of nowhere?
4) Why retail for $310? They could sell it for $500 and it would still be way cheaper than an SGS2. Hell, I paid more than 2000 RMB for the crappy 2 year old Nokia I'm still using over here.
My Chinese is OK so I've been trying to read more on the Xiaomi forums, but I haven't really gotten any new information, other than there's something like 300,000 preorders already. I figure there's got to be some serious funny business going on. Probably:
a) ridiculous free loans and/or development assistance from the government to built up national prestige; or
b) copying another phone's internals verbatim; or
c) fake components of some kind
It looked really smooth in the Engadget video, so I'm inclined to be believe it's option A. Good for consumers I guess, but probably lousy if you're a Chinese taxpayer. Any ideas on why the price is so low?
Smaller companies tend to do these kind of things.
However I'm interested as well.
I believe that it's one part 'a' and another that generally huawei and zte have primarily been marketed for export (to SE Asia, India, EU) but the government is really trying to subsidize local start ups to fight imports (like HTC, Sony, etc...) and get Chinese to spend their money on Chinese things. But if a Chinese phone were 3000 RMB and a Korean or Japanese phone was also 3000 RMB, no one would get the Chinese phone for obvious reasons.
so basically you just made up a thread without any evidence and full of speculation accusing Xiaomi not being legit.
india are making ARM Cortex 9 phones with 4 GB for only $35
if they can do it, so can china
lol
Mmmhmm .
I don't why people have so much comments , no offence though .
Forever living in my Galaxy Ace using XDA App
I support you , and do your know meizu'M9 or MX?
hehe
it is good for everyone. thank you!
AllGamer said:
india are making ARM Cortex 9 phones with 4 GB for only $35
if they can do it, so can china
lol
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Seriously?
cdesai said:
Seriously?
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yes, there is a post with the pictures and spec here in the forum
aprox 5 days old
it's made for the india school system
Hi it's my first post and I have no exact figures to support this other than a simple comparison to another industry.
I remember hearing from someone that the mark up on mobile phones (this was a while ago) was a few hundred percent. Remember that it doesn't cost 800 dollars to make a phone and the people that usually make it in third world manufacturing companies or places with poor working conditions only get paid a few dollars an hour to make your 800 dollar phones.
our
My comparison industry is optometry. The following information comes from someone I know who is an optometrist:
"Frames like Gucci and Prada cost $3 per frame to make. In the stores you pay $500 dollars to buy them. That is an insane mark up. However they can't retail it cheaper because of an agreement in place to prevent the devaluation of the brand."
I am sure the same thing happens in the cell phone industry.
Just thought that this might put the legitimacy of the phone in perspective.
Thanks for your time.
andao79 said:
So, as someone living and working in China, I've been super excited following up on the Xiaomi Phone. When they released the price as 2000 RMB (about $310 USD), I knew it had to be fake, or there was some serious funny business. The numbers just don't add up.
Engadget recently had a review of the Xiaomi phone and had it benchmarking near the Galaxy S 2 in several tests, so I think it makes sense to compare these two:
SGS 2 Advantages: Super AMOLED screen; 4.3 inch screen (vs 4 inch); forward facing camera; 1080p video recording (vs 720p); onboard storage (16 GB vs 4 GB); slightly smaller footprint.
Xiaomi Advantages: Price; processor speed (1.5 Ghz vs 1.2); battery (1930 mAh vs 1650); GLONASS and GPS tracking; highly customizable UI out of the box.
In China, the SGS2 retails for about 4300 RMB (about $670 USD). So how does a phone which is in the SGS2's ballpark retail for less than half the price?
It gets even more peculiar. Here are some questions Xiaomi hasn't cleared up(or at least I haven't seen their responses yet):
1) Xiaomi uses a Qualcomm processor and a LCD screen from Sharp (Japanese import). So they can't be using local parts to save costs, how are they able to offer the phone at only $310?
2) Local competitors like Huawei and ZTE who have much more experience in manufacturing (and much more leverage with suppliers) have yet to produce a phone remotely like this. Also, their closest local competition in terms of specs is something like the Huawei Honor, a single core phone that retails for about $400. Yet Xiaomi, which has never produced hardware before is getting better deals than these guys on components? Samsung also does component development in-house, but Xiaomi is getting better pricing than Samsung?
3) Xiaomi was originally a software developer. How did they pull a piece of impressive hardware like this out of nowhere?
4) Why retail for $310? They could sell it for $500 and it would still be way cheaper than an SGS2. Hell, I paid more than 2000 RMB for the crappy 2 year old Nokia I'm still using over here.
My Chinese is OK so I've been trying to read more on the Xiaomi forums, but I haven't really gotten any new information, other than there's something like 300,000 preorders already. I figure there's got to be some serious funny business going on. Probably:
a) ridiculous free loans and/or development assistance from the government to built up national prestige; or
b) copying another phone's internals verbatim; or
c) fake components of some kind
It looked really smooth in the Engadget video, so I'm inclined to be believe it's option A. Good for consumers I guess, but probably lousy if you're a Chinese taxpayer. Any ideas on why the price is so low?
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I'd get the M9 or M9x ( or something.. Quad Core? HELLOOOOO )
I don't see why someone would get a device ONLY for Miui, most phones out there have a build of MIUI.
You really think that $600 phone costs $600 to make?
The markup on electrical goods from brand names can be over 200%
My point is not really related to the idea of a markup, I KNOW all cell phones have a dramatic markup, and I read not long ago an iPhone 4 costs about $180 to make, while they retail for something like $600 out of contract.
I'm more interested in a) How did this company come out of nowhere with this sort of hardware? and b) They don't NEED to sell it for 2000 RMB for it to be a hit. They could have sold it for $400-450 and it would have still been a hell of a lot cheaper than a Galaxy S 2.
That, coupled with the fact that the big guns in China (Meizu, Huawei, ZTE) are not even in the same ballpark with specs or price, is really weird.
If i can demo one and it works well, i'll definitely pick one up, but there must be some serious funny business behind the scenes.
Why must there be funny business?
Well, you can build a cheap phone if you want.
The question is: can you sell it cheap?
Operating costs, brand advertisement etc. They have no problem there, they just build a phone having no ad space on western media.They can do it, they are smart enough.Plus: we enthusiasts are their advertisement plan, we buy it for cheap, all our friends will buy it.
It's a win win scenario.My 2 eurocents.
andao79 said:
My point is not really related to the idea of a markup, I KNOW all cell phones have a dramatic markup, and I read not long ago an iPhone 4 costs about $180 to make, while they retail for something like $600 out of contract.
I'm more interested in a) How did this company come out of nowhere with this sort of hardware? and b) They don't NEED to sell it for 2000 RMB for it to be a hit. They could have sold it for $400-450 and it would have still been a hell of a lot cheaper than a Galaxy S 2.
That, coupled with the fact that the big guns in China (Meizu, Huawei, ZTE) are not even in the same ballpark with specs or price, is really weird.
If i can demo one and it works well, i'll definitely pick one up, but there must be some serious funny business behind the scenes.
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The issue is risk. Do you risk spending $300 on a new unknown brand or do you spend $450 on a noname brand when you can get a well known brand for $600?
There is obviously going to be a greater curve of buyers the lower the price you go and finding the balance is where your marketers need mettle. I think the current price is going to be very good to get users into buying the phone. Obviously, if they can become the new HTC, their markup is going to increase hugely.
My concern is going to be: at ~$300, what is the customer service going to be like? HTC's is mediocre here in the UK, but if Vodafone, Orange et al resell this phone, it's going to be VERY attractive to us as the carriers are held responsible until end of warranty.
russ18uk said:
The issue is risk. Do you risk spending $300 on a new unknown brand or do you spend $450 on a noname brand when you can get a well known brand for $600?
There is obviously going to be a greater curve of buyers the lower the price you go and finding the balance is where your marketers need mettle. I think the current price is going to be very good to get users into buying the phone. Obviously, if they can become the new HTC, their markup is going to increase hugely.
My concern is going to be: at ~$300, what is the customer service going to be like? HTC's is mediocre here in the UK, but if Vodafone, Orange et al resell this phone, it's going to be VERY attractive to us as the carriers are held responsible until end of warranty.
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Just to clarify, the retailer is responsible until you have had a reasonable amount of use out of it irrespective of warranty
The law doesn't care about warranties, they're in the best case an agreement that the device will be repaired without the need to take legal action, and in the worst case used to illegally convince consumers they have no rights.
Take my Sensation, afaik it has a 12month warranty.
Say the screen dies after 18 months, I'll be demanding O2 repair or replace it otherwise I'll be contacting trading standards as being a phone provided on a 24 month contract I should be able to expect it to last at least 24 months and more especially considering the price when new.
I love being a consumer in the UK
Xiaomo said:
I support you , and do your know meizu'M9 or MX?
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yes~ Meizu much better than xiaomi
kerwin_pig said:
yes~ Meizu much better than xiaomi
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WHY DID YOU DIG UP OLD THREADS
Sent from my Nexus 4 using xda premium

[Q] Why smartphones are so expensive?

What is the difference between iPod Touch and iPhone? A $5 GSM/CDMA chip? Why $400 price difference?
Large screen Android tablets can be had for $200. Why unlocked phones are $600-800?
Sorry if it's been discussed, my search didn't find a good topic on the subject.
Wow, no answers! Noone else is interested in this question?
Sent from my PG86100 using Tapatalk
Which?
They're expensive because of convenience, demand. people want it they gotta pay....
Sent from my LS670 using XDA App
They are so expensive, because people buy them anyways.
Manufactors and carriers are all after our money, why should they lower the price.
Besides that some devices also have to pay back the research that went into developing them.
Don't have any idea why unlocked phones are costlier but it you compare tablet and phone, size does matter. Smaller, faster and costier.
go overseas and see the prices some can have more then a hundred dollars difference even if they are the same devices
The price triples at the 3rd world countries. I wonder why.
Yeah, you're lucky for not live in a country like Brazil, there a smartphone like S2 or Iphone4 costs around 1000,00 US$ bucks...
well maybe unlucking phone is expensive because its not really designated in any other area than the original area, but the publisher wants to publicly sale it to other region. that can be the cause too
Development is expensive.
You buy a brand, this is why most of the time you pay double.. buy another phone with the same specs but with a non popular brand and you will pay less...
Not to mention that you are talking about Apple...
All your reasoning would apply for everything else electronic- TVs, MP3 or Blue Ray players, etc. Yet they all keep coming down in prices. But not the phones.
Yea, good question I was wondering the same.
It really is a gigantic gap between say an Iphone and Ipod touch in terms of price, yet the hardware has very little difference.
Seems like a marketing thing, as most users will want all the goodies packed together in a small package + a phone in one device.
It's a conspiracy i tell yea
You should see it like this. When you buy a phone, you pay for the development, the construction, the shipping, the people who check it, the people who made the software. add that up with an expensive casing (like HTC has.) and the euro's (or dollars) fly onto the price tag. With Apple, I don't know, they just rip your wallet.
Smartphones are still upcomming, with new technology added every time a new device is being developed.
Why is SSD more expensive than a normal HDD, because it's a new technology. DVD drives used to be really expensive aswell, look at them now they aren't so expensive anymore.
Anything that's new has a price, and it's your choice if you want to pay for it or not.
I hope this helps.
It's not that unbranded phones are more expensive, the price just isn't subsidised by the network operators.
Network operators sell you the handset at a loss, but tie you into a contract to recoup their initial cost. Customer inertia means there's a good chance you'll stay with them.
well they give you much more ie. i have an ace and i can do everything what i usually do on my pc... except gaming ofc.
Unlocked phones are not only expensive because of the demand. When you buy one on contract, you are going to end up paying over $1000 over the 2 year contract anyways. That's why they discount smartphones so much on contract, they know they will get paid back from the contract.
Sent from my HD2
I'm guessing prices don't come down on phones because carriers subsidize prices. Manufacturers know that and therefore prices will stay rather high. Having said that, development on new phone technology is going at a fast rate right now so manufacturers also are recouping those costs.
Althestrasz said:
You should see it like this. When you buy a phone, you pay for the development, the construction, the shipping, the people who check it, the people who made the software. add that up with an expensive casing (like HTC has.) and the euro's (or dollars) fly onto the price tag. With Apple, I don't know, they just rip your wallet.
Smartphones are still upcomming, with new technology added every time a new device is being developed.
Why is SSD more expensive than a normal HDD, because it's a new technology. DVD drives used to be really expensive aswell, look at them now they aren't so expensive anymore.
Anything that's new has a price, and it's your choice if you want to pay for it or not.
I hope this helps.
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Click to collapse
Everything else also has to be developed, designed, engineered, assembled, shipped and retailed. In fact, iPod was developed before iPhone and they mostly made of the same parts.
Also, if you look at pricing for prepaid phones, I don't think that carriers subsidize that much. Mostly they hike their prices to force us in their contracts.
A week or so ago I saw a link on one of the "deal tracking" sites, an HTC tablet was offered for the same price with no contract or service as the "discounted" price from Sprint.
theyre expensives due to all research and work of the engineers...and of course to obtain more money from all of us...you want the finest and latest technology from theirs...you have to pay whatever their wants...

Selling phones at cost price?

Guys, i bought a LeTV x600. Excited about this phone and the new (yet big) company in the phone world, i went to watch their presentation. It looks they are selling this phone, other models too, at cost price! https://www.youtube.com/watch?v=6WHNbrYGWQM&feature=youtu.be&t=6395
Their idea is to sell at cost price and make profit from their streamming service (they are the chinese netflix) used from the phones of course. Chinese companies are already releasing flagship phones for half the price. Some are really great. But this could be a paradigm shift in the way of doing business. I mean most companies have to get profit from phones, they don't have "other" services in order to make up for selling the phones at cost price. Operators already do something similar to this, the phone is for free, but they obligate you to use their network for 1 or 2 years. We can buy this phone with no obligation to use their streamming service.
I'm no business expert, Apple and Samsung will always be Apple and Samsung, but i think this could really hurt the small/medium players. This is not a "cheap" badly made phone just for the purpose of watching stuff. Just watch the reviews about it.
Think HP selling printers at low price, hopping to get the real (and absurdly high) profit from ink.
What do you think about this?
On a sidenote, the LeTV ROM have some nasty/lame bugs and they are being a bit slow to fix them. IMHO, nowadays most phones are released inmmaturely. Sure, smartphones are more complex than older phones, but still companies could spend a bit more time doing QA on them. They understimate the work and time to have a really mature software. But time runs fast nowadays. Having great specs on a phone is not enough. I think on this case, if LeTV doesn't change their attitude, they can say bye bye to their great idea. Because customers are impatient and don't forgive much.

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