Why all smartphones are $199

2 Sep 2010 - 00:19 by soullezz

A hot new smartphone can be Incredible, Vibrant, Epic or just "eh," but no matter how it stacks up, it's a safe bet that it will start selling at $199.

On the four major wireless networks -- Verizon Wireless (VZ, Fortune 500), AT&T, Sprint (S, Fortune 500) and T-Mobile -- there are 13 smartphones priced at $199 with a two-year contract. There are no phone models with a higher starting price (add-ons like more memory can increase the price tag), and there are more smartphones selling at $199 than at any other single price point.

But spending $199 doesn't guarantee you a top-of-the-line phone. On AT&T's (T, Fortune 500) network, $199 will buy an iPhone 4, the best-selling smartphone of all time. But you'll need to fork over the same amount for a BlackBerry Bold 9700, a nine-month-old phone that lacks a touch screen.

It will also cost you $199 to get an HTC Tilt 2, which runs Windows Mobile 6.5 -- an operating system so out of date that Microsoft (MSFT, Fortune 500) is set to completely abandon it in the next few months.

So what's so special about $199?

"The obvious answer is that $199 is a magic price point for smartphone volume," said George Appling, partner at consulting firm Booz & Co. "The not-so-obvious reason is that carriers are not charging customers what they pay."

In other words, wireless carriers pay significantly more for smartphones than you do. In exchange for your signature on an expensive two-year contract, they'll offer you the smartphone for less than it costs them but as much as they think you'll pay for it -- and right now, that's $199 across the board. Buy an unsubsidized iPhone 4 straight from Apple (AAPL, Fortune 500) and you'll pay $599 for the 16 GB phone that AT&T sells for $199 with a two-year contract.

Smartphones generally cost carriers around $500 per unit. Volume deals and other negotiations with manufacturers can shave down that price tag, but the hotter the phone, the more a carrier will pay to buy it.

But that's just the start of their calculations of what a phone "costs."

Phones that tend to eat up more bandwidth -- hello iPhone! -- add to the carrier's overhead. Put together the upfront cost of the phone and the back-end cost to service it, and you're left with the phone's profit margin. For a model with really tight margins, the carrier might find itself essentially forced to charge more upfront than it otherwise would -- it can't discount the purchase price and still scrape out a profit. That sometimes leads to inferior phones, like the BlackBerry Bold, carrying the same price tag as more advanced rivals, like BlackBerry's Torch.

Read More...

Apple introduces movie and rental streaming, new Apple TV

2 Sep 2010 - 00:14 by soullezz

Industry News |

Apple introduced movie and TV streaming through its second-generation Apple TV Wednesday, a simpler and cheaper device than its previous product.

"We introduced it four years ago, but it's never been a huge hit — nor has any competitive product," said Apple CEO Steve Jobs.

Prices for TV show rentals —which now cost $2.99 through the iTunes Store — will be 99 cents, Jobs said. Offerings will be from ABC and Fox; "we hope the other studios will see the light and get on board with us."

First run, high-definition movies will be available for $4.99 on the same day they come out on DVD, he said.

Netflix, YouTube, Flickr and MobileMe users will also be able to stream movies, videos, music and photos to their sets using Apple TV.

Customers "said the No. 1, 2 and 3 things they wanted are Hollywood movies and TV shows, whenever they want them," Jobs said. What they don't want, Jobs said, it to have to deal with synching content from a computer to a TV, or worrying about where to store such huge files.

The previous price for Apple TV was $229. The new price is $99. It will be available in about a month.

Jobs said consumers will see the new Apple TV as a "phenomenal way to watch Hollywood movies and TV shows in your living room whenever you want," as well to stream movies and other content from other sources "right onto your TV."

Technology analyst Michael Gartenberg, a partner with Altimeter Group, a research and advisory firm, said the new Apple TV "is to television what iPhones were to phones three years ago." The stage, he said "is set for mass market adoption."

The battle for streaming to the TV screen is heating up; both Amazon and Google are looking to get into the arena.

Amazon is trying to create a service that gives paying subscribers unlimited access to some television shows and movies over the Internet, The Wall Street Journal reported Tuesday, although the Seattle-based company declined to comment about it.

Read More...

Disney and TWC duking it out

2 Sep 2010 - 00:05 by soullezz

Industry News |

Waiting for Disney/TWC

They may have stopped running attack ads against each other ... and they might even have come to terms ... but the Disney/Time Warner Cable saga was still on-going (or at least unannounced) as of late yesterday afternoon. Even if negotiations continue into the week, nobody seriously expects any stations to go dark. For one thing, the FCC is hovering over the talks; for another, nobody wants the black eye of punishing consumers. So looks like we'll keep waiting ... and talking about that 10¢ per ESPN3.com sub ... and wondering if, as noted in today's letter to the editor, monetizing the web will eventually lead to website bundles, with automatic buy-ins, and ....

Disney and Time Warner Cable

RE: This is also a pivotal point in the fight between Time Warner Cable and Disney. The Disney guys reportedly want 10¢/month/customer for ESPN3.com and TWC (quite rightly, I suspect) sees a world in which powerful content providers can hijack the Road Runner.

This could be the tip of a very expensive iceberg. 10-cents / month (double it when you add a profit margin for the cable operator). That's 20-cents for EVERY subscriber whether or not you even care about ESPN3.com. If Time Warner's Road Runner knuckles under, so will Comcast, Verizon, AT&T U-verse and all the internet providers. Once that happens many in demand websites...Facebook, CNN, Yahoo, Google etc. will seek a monthly fee from ALL internet providers. Once again the media moguls will have FORCED subscription bundling on the American consumer.

A few years down the road this could result in a doubling or tripling of your monthly cable bill. This is exactly what has happened to cable and satellite bills in the last several decades.

Don't get me wrong. If ESPN wants to charge for their web content, let them. The same way that the Wall Street Journal requires subscriptions for much of its web content. Just don't FORCE me to pay for content that I have no interest in just so I can log on to the internet.