Helpful Infographic: Android Pricing vs. iPhone Pricing

By  |  Monday, May 10, 2010 at 2:29 pm

Here’s a further thought on the fact that Android phones are selling well in part because they’re often way cheaper than iPhones. When iPhone purveyor AT&T finally hopped on the Android bandwagon, its first handset was Motorola’s Backflip:

As of this moment, AT&T wants $99.99 for a Backflip on contract–which is ninety-nine cents more than the cost of a plain-jane iPhone 3G. But if the Backflip appeals to you, here’s a slightly better deal: Amazon has it for a penny. That’s 1/9900th the cost of the iPhone 3G. (Amazon, in case you didn’t know, doesn’t have penny iPhones–and neither does anyone else.)

What do the 9900 subsidized Backflips you could get for the subsidized price of one iPhone 3G look like? Pretty much like this:

(You’re still with me, right?)

Now it’s perfectly true that most of us with $99 aren’t going to spend it on 9900 Backflips. (Signficant fly in the ointment: You’d need to sign up for 19,800 years’ worth of AT&T contracts and $7,128,000 in data costs alone, which would be a bad idea for everyone involved.) It’s also true that not every Android phone is a cheapie–Verizon’s new Droid Incredible is $199 on contract after $100 rebate, or the same price as a 16GB iPhone 3GS.

It’s still a striking contrast between Apple’s business model and the one which has powered the rest of the phone industry for many years. Anyone care to hazard a guess as to when you’ll be able to buy an iPhone–any iPhone–for one cent?

 
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16 Comments For This Post

  1. NanoGeek Says:

    Apple will never releaes a $0.01 iPhone. That’s just not their way.

  2. ak88 Says:

    Motorola didn’t release a penny-phone either. Amazon did. If Amazon felt they could absorb the cost somehow, they could release a penny-iPhone too.

  3. moo Says:

    You mention the fact that the subsidy is a significant fly in the ointment, but really the subsidy makes your argument largely invalid.

    If the subsidy for the iPhone 3G and the Backflip is say $400, you’re saying $400 vs $500.

    So you could buy 5 Backflips for the price of 4 iPhone 3Gs! Wow!

    Hardly as impressive. In fact, your graphic is so horribly misleading I’m kind of surprised you’re happy to run it. Seems like the kind of misleading reporting you’d object to elsewhere.

    In many countries you can get iPhones for free, with a contract.

  4. David W. Says:

    There are several advantages the Android has over the iPhone that can help explain its sales. For example, there are over a dozen separate models of Android phones that get counted as a single operating system, and Android phones are sold through all major American cell phone carriers instead of just one. Then, there’s the 2 for 1 deal at Verizon and the rebates all over the place.

    But an Android phone isn’t an Android phone isn’t an Android phone. There’s HTC’s Sense UI, the now five separate OS releases that are being sold today and which may or may not be upgradable. It maybe difficult to count all of those as a single operating system.

    Android also has some problems it must overcome. The Open Handset Alliance is a joke. HTC is doing its own Android releases and ignoring the Google standard. HTC may very well branch its version of Android leaving the world with two separate operating systems. Then there are the “customizations” that the carriers are demanding. For example, AT&T’s backflip doesn’t have the standard Google apps including the built in Google search. Plus, it cannot download “unsigned” apps from the Android Marketplace and forget about getting apps outside of the Android marketplace. Verizon is now looking into prohibiting its Android phones from even going to the Android Marketplace. Instead, its users might be forced to only get apps from VCast.

    Then, there’s the issue of whether cheap phones are good for the platform. Remember the once hot RAZR phone? At one time, it was $350 with contract. But, the bidding wars between the telcos used it as an incentive to get new customers. The RAZR went from $350 to $149 to $100 to $49 to Free. As that was happening, the carriers started demanding that Motorola cut its costs and profits. What once was a big source of profit for Motorola became a money losing operation. Motorola even announced it was splitting off its handset division to improve its profits.

    Android may have kept Motorola together for a few months, but with the constant churning of Android operating systems, the “preferred status” HTC seems to enjoy with Google, and the constant pressure to trim profits might make Motorola reconsider splitting itself up once again.

    So far, Android looks like a boon to the telcos who are once again dictating the phone design and features that we the consumer get. I haven’t really seen how Android has benefited the manufacturers (except for HTC) or even Google which has yet to make any money on Android.

  5. B Says:

    “Motorola didn’t release a penny-phone either. Amazon did. If Amazon felt they could absorb the cost somehow, they could release a penny-iPhone too.”

    No, they couldn’t.

  6. Craig R. Says:

    This has a high “lolkittenz” factor!

  7. Eric Says:

    This is a typical pundit stupid comparison. For a real comparison, what is the lifetime (let’s say, two years) cost of both phones side by side. Let’s say both phones are on AT&T and cost $80 per month for voice and data (obviously this varies by provider, phone, plan and features), so the two year cost of both phones is $1920. If you buy the crap phone from Amazon for one cent, your TCO (total cost of ownership) for two years is $1920.01. If you buy an iPhone the cost is $2,020. The percent difference is 1.05% over the two years. So you can buy the crap-phone and save 1% of the cost over two years or you can buy an iPhone and have an iPhone. Me, I’ll take the iPhone for the additional 1% cost. This is a real, sensible, practical comparison instead of the idiotic comparisons most pundits, case in point here, make. Have you heard the phrase, “get real”. You should try it out.

  8. Dennis Forbes Says:

    Just to be entirely clear on how epically ignorant this post is-

    -you use the Backflip to belittle the new data, despite it not even being available in the target period.

    -you grossly misunderstand the handset subsidy model to the point of intense denial.

    It isn’t surprising that Gruber would link to such utter tripe.

  9. Jay Says:

    Hey, I got my iPhone free with contract. I’m no mathmatical genius, but isn’t that cheaper than even 0.01c?

  10. Ryan Tate Says:

    This one is so absurd, Harry, and with your chops you should know it. That $99 iPhone 3G is so heavily subsidized it’s a breath — or C-suite executive decision — away from free. Ninety-nine dollars is barely a month on AT&T’s smartphone contract, out of 24. It’s a $2400 product and you’re making hay out of $1 vs $100!

    Further, as you yourself point out your whole comparison fails when you compare comparable products — when AT&T is doing the selling, the Android phone is actually _pricier_ than the iPhone.

    This whole post is ridiculous.

  11. Paul Eccles Says:

    This is a very misleading comparison. We all know the iPhone 3G doesn’t cost $99! It’s all about the data contract you sign, the $80 a month for 24 months!

    Compare the Androids & iPhones with their attached contracts, or compare them in terms of outright price, with no contract subsidy.

  12. Harry McCracken Says:

    @Paul Eccles–I get that–the iPhone 3G doesn’t cost a penny any more than the iPhone costs $99. This post was kinda tongue in cheek, but the one serious point is this: In a world full of powerful phones sold at dramatically discounted subsidies, it’s interesting that Apple hasn’t needed to do anything like penny phones or two-for-one deals.

    –Harry

  13. Steko Says:

    The NPD data showing android ahead is way wrong anyway. Android could “win” Q2 and should easily “win” this coming xmas, but no way did they ship more smartphones then apple last quarter.

    Apple sold 8.8 mil iphones and another 3+ mil itouch in the same quarter.
    Motorola sold 2.3 mil smartphones say 2 million were android.
    HTC didn’t sell near as many android devices as Motorola last quarter (they will this quarter). Let’s say 1.5 million.
    Samsung sold <1/4 the smartphones of apple and android powered about 1/4 of their smartphones last quarter (probably less). Say half a million.
    Huawei is the only other maker from last quarter worth mentioning, maybe another half million last quarter.

    That's still roughly 35%-40% under apple, 50% if you count itouches. Apple also had a larger installed base coming in.

    {yes the NPD data was us only, still wrong}

  14. Mike J B Says:

    @ David W

    http://developer.android.com/resources/dashboard/platform-versions.html

    Essentially, there are three versions of Android OSes. Yes, that’s one too many (I don’t understand why a 1.5 phone can’t upgrade to 1.6, even if it might not have the horsepower for 2.1). However, Android is in basically the same position it was in January, except with 2.1 replacing 2.0.1 and taking a big chunk out of the 1.6 percentage. It’s not “5 different versions being sold today” since that would imply much higher fragmentation. I’m surprised 1.5 hasn’t upgraded to 1.6 yet, though.

  15. Kenny Bats Says:

    Seriously, can someone give me a real reason why the iPhone is so great or better than an Android device or any smartphone for that matter? What does it do that other smart phones don’t? I dont see it. I get its easy to use as my mother, sister, and girlfriend use them and they are not technical in the least. Some may say the app store but it had a 3 year headstart on Android marketplace. Unless you root it you have exactly the same phone as every other iPhone user on a network that had the most dropped calls last year.

    So what is it that gets people so passionate about a generic device? Its like the Ford Taurus of phones. There are too many of them around and they are nothing special.

  16. die steel Says:

    Great thanks for sharing this article post.

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