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Cell Phones Becoming Profitless

saccade.com writes "EE Times has a fascinating article on how electronics companies are being sucked into a profitless spiral by the cell phone market. More and more of the small consumer gadgets are being folded into the phone: camera, music player, PDA, GPS, etc. So the market for non-phone gadgets is slowly going away as the phone picks up more functions. However, consumers don't buy most phones; they are given away (or sold very cheap) by the service providers as hooks to get people to sign up for mobile service. So the service providers are demanding (and getting) rock-bottom prices for fancy phones they can give away, and the micro chip companies are forced into brutal competition for a market that is shrinking into a single commodity gadget, the phone."

8 of 498 comments (clear)

  1. Very misleading and uninformed by adzoox · · Score: 3, Informative

    Most cellular services providers take the loss on phones NOT the manufactuer - they make this up by locking you into a contact and hoping you either go over in minutes or buy a plan that makes them money - which 75% + do.

    I know this because I had a girlfriend that worked for phone acquistion and deployment for Cingular. THEY almost ALWAYS paid full wholesale price for the phones. The Ericcsons they used to give away cost them $45 each. They cost Ericcoson something close to $19 to make.

    --
    Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
    1. Re:Very misleading and uninformed by starworks5 · · Score: 3, Informative

      hey all, i work for the lnp department at veizon wireless, and i have to concur with the gentlemen here. verizon and most other carriers dont break even on a contract until about 5 months into it on a typical 2 yr contract. and being that most carriers have a trial period. when the customer returns the phones to us, its costs us ALOT OF MONEY. several hundred dollars in most cases. just figure out the time of all the parties involved. the depreciation (phones can not be sold as brand new). and what the FCC charges (last time i checked they charge 10$ for each time i query the national portability administration database). really the carries initially take a loss.

      now this may sound like a shock, but actually you get cheaper service by these contracts than you normally would. imagine if everyone could change thier service whenever they wanted (easier with lnp), our overhead would be massive.

      but in my humble professional opinion, if you really want to get screwed, choose nextel. they have the highest prices, least minutes, the most overhead, and they have to have phones especially designed for thier company, thier cell towers are propietary, no service level agreements (minimal tower sharing). the thing i hate the most, is that people cant port thier numbers easily because of 'number gaurd' meant to protect fraud. but really meant to keep you from switching carriers, and keeping your tel#.

  2. Re:Cheap my eye by PeterChenoweth · · Score: 4, Informative

    SprintPCS does not charge you for the amount of data used. It's a flat $15/month for Vision, which gets you unlimited internet at about 10-15K/sec download speeds. Storage isn't an issue on my Treo 600. The built in memory can handle 300+ photos, and I have unlimited storage on Sprint's picture servers. The couple of SprintPCS Picture phones I've had the pleasure of using could save 20-40 photos internally, but of course there's unlimited storage when you upload there too. But yeah, the camera is crap compared to a real digicam. When I want to take photographs, I bring along my 5mp Minolta Dimage 7HI. When I just need to take a picture of something interresting and get it to anyone I want quickly, a cell-phone cam is very handy.

  3. Re:No, I did not read the article... by ipfwadm · · Score: 5, Informative

    Unless, of course, someone like Canon start making those integrated cameras which come with the phones.

    It doesn't matter who makes it. There are physical limitations of optics at work here. Correcting for aberrations takes a lot of glass, and glass isn't particularly light. There are currently limitations in the sensors such that larger sensors give better quality than smaller sensors. This will probably always be true to some degree or another (large format film camera give better results than 35mm, but for most of the market, who cares?). Sure, phone cams could potentially someday be enough for a lot of people, but they will NEVER take over the camera market as a whole. Just imagine holding a phone w/ attached 5 pound telephoto lens up to your ear.

  4. Re:Crossing the Chasm by Joe+U · · Score: 3, Informative

    Verizon will find some way to cripple that phone and still get me to sign a two year contract.

    They're good like that.

    Verizon has, by far, the best network in my area. Also, the rates are not too bad. Problem is, they tend to turn off some of the nicer features of the phones.

    My phone has GPS and Bluetooth, VZW turned them both off for some reason. Not sure why. Also turned off the WAV ringers, I guess they like MIDI better.

  5. Re:Good! by tdemark · · Score: 4, Informative

    Erie County (and possibly all of NYS, I'm not sure) has laws prohibiting the use of phones while driving... unless you have a handsfree set.

    So, you are not allowed to hold on to a cell phone while driving because it is dangerous, but, these, evidentially, are not:

    - smoke
    - chow down on that big mac
    - fumble with the radio
    - read the newspaper
    - tend to a crying child in the back seat
    - apply makeup or shave (hopefully, the correct conjunction is "or")

    That's why I hate cell phone driving laws - either target ALL driving distractions or target none of them.

    It would be the same thing as having "assault with a knife", "assault with a bat", and "assault with a lead pipe" laws instead of "assault with a deadly weapon".

    The only studies that I have seen quoted that supported cell-phone laws were ones that asked "Was a cell-phone in use during the accident?" not "What driving distractions were present during the accident?" Those are two completely different questions.

    The studies that I have seen that list out all driving distractions clearly show things other than cell-phones are leading factors - I think "tuning radio" and "smoking" were the top two.

  6. Re:Good! by tdemark · · Score: 5, Informative

    After I posted, I did a quick search on google and found this:

    Driving distractions:

    Outside person, object or event: 29.4%
    Adjusting radio/cassette/CD: 11.4%.
    Other occupant: 10.9%.
    Moving object in vehicle: 4.3%
    Other device/object: 2.9%
    Adjusting vehicle controls: 2.8%
    Eating and/or drinking: 1.7%
    Using/dialing cell phone: 1.5%
    Smoking: 0.9 %
    Other distractions: 25.6%
    Unknown: 8.6%

    Source: University of North Carolina Highway Safety Research Center

    My memory was a little off about the items (and order on the list).

  7. Re:Cheap my eye by ipfwadm · · Score: 3, Informative

    Some info from 3 reputable sites:
    http://www.photo.net/equipment/digital/sensorsize/
    http://www.dpreview.com/learn/?/key=Pixel_Quality
    http://www.luminous-landscape.com/essays/counting1 .shtml

    As for lens quality, it ought to be obvious that a better lens will provide better image quality. If it's not, go here, click on a couple lenses, and look at their MTF chart. If you're not familiar with how to read an MTF chart, here's the low-down: a better lens has all the lines closer to the top of the chart (for a more detailed explanation, check out Canon's glossary). Pick a couple lenses of comparable focal length, look at their MTF chart, and then compare the price. For instance, look at the 80-200mm f/4-5.6 compared with the 70-200mm f/4L or f/2.8L. The 80-200mm is currently going for $120. The 70-200mm f/2.8L is currently going for a little over $1100. FYI, lenses with an "L" in the name are their pro series. There's a lot more to a lens than just its ability to resolve detail and show contrast, of course -- look here for more info on why pro lenses are so much more expensive (and better) than consumer-grade lenses. And by "consumer grade" I'm not even getting close to the level of a camera phone lens.