iPhone 5 and Galaxy S 4: A War of Prices?
It’s always hard to know what exactly you’re paying for whenever you buy anything, and purchasing a cellphone from a mobile carrier is no exception. But a quick price breakdown for the latest Samsung (SSNLF.PK) and Apple (NASDAQ:AAPL) devices might clear up the confusion.
Industry-wide, $200 is a pretty common price to sell high-end devices up front — either that or free for lower-end phones. The new Samsung Galaxy S 4 doesn’t look like it will be breaking that trend, as its average price at the biggest carriers is set right around $200.
For the standard 16-gigabyte model Galaxy S 4, AT&T (NYSE:T) will charge $200 up front and require a 2-year contract. Sprint‘s (NYSE:S) offer is similar, but starts at $250 for the device and offers a $100 discount to customers switching from other carriers. U.S. Cellular Corp. is also offering the phone for $200, but it will throw in a free cover worth $60.
Deutsche Telekom’s T-Mobile (DTEGY.PK) is the odd duck out; it doesn’t require 2-year contracts anymore, plus it’s pricing the Galaxy S 4 at $150 up front. That makes the Samsung’s new phone arguably most accessible through T-Mobile…
Unfortunately, there isn’t anything simple about figuring out the actual price of a device based on the price charged upfront by carriers. No carrier is simply going to leave the subsidy on a device un-recouped. With pretty high prices on unlimited data plans — the ones that seem most suited for the high-end smartphones on the market — carriers can recoup the subsidy and then some over the course of the mandatory 2 year contract. In that regard, it’s quite impossible to tell where the phone’s cost ends and the service cost begins.
At T-Mobile, things are once again a bit different. Of course, it’s not charging only the upfront price, but it’s a little more transparent about how the device will be priced. With the $150 charge to start, and $20 monthly for two years, that puts the Galaxy S 4′s price with T-Mobile at $630.
Whatever the final price carriers end up charging for the Galaxy S 4, it may have trouble competing against the iPhone 5, which may be more easily attained. For instance, at T-Mobile, the device is available with an upfront fee about $50 below the Galaxy S 4′s price. While the S 4 is the newer of the two devices, and many may opt to spend $50 more to have it, that’s not always going to be the deciding factor, and the iPhone’s popularity could help it win in the end.
Apple’s website has the 16-gigabyte iPhone 5 priced at $199 with expectation of a 2-year contract from one of the carriers offering the device. The struggle between the phones could be intense, and the release of an iPhone 5S might make the stakes higher, as the new device would be more able to compete, and the current iPhone 5 would likely get a discount.
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