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What's Keeping US Phones In the Stone Age?
knapper_tech writes "After seeing the iPhone introduction, I was totally confused by how much excitement it generated in the US. It offered no features I could see beyond my Casio W41CA's capabilities. I had a lot of apprehension towards the idea of a virtual keypad and the bare screen looked like a scratch magnet. Looks aren't enough. Finally, the price is ridiculous. The device is an order of magnitude more expensive than my now year-old Keitai even with a two-year contract. After returning to the US from Japan, I've come to realize the horrible truth behind iPhone's buzz. Over the year I was gone, US phones haven't really done anything. Providers push a minuscule lineup of uninspiring designs and then charge unbelievable prices for even basic things like text messages. I was greeted at every kiosk by more tired clamshells built to last until obsolescence, and money can't buy a replacement for my W41CA." Read on as this reader proposes and dismissed a number of possible explanations for the difference in cell-phone markets between the US and Japan. He concludes with, "It seems to me more like competition is non-existent and US providers are ramming yesteryear's designs down our throats while charging us an arm and a leg! Someone please give me some insight."
I finally broke down and got a $20 Virgin phone to at least get me connected until I get over my initial shock. In short, American phones suck, and iPhone is hopefully a wakeup call to US providers and customers. Why is the American phone situation so depressing?
Before I left for Japan about a year ago, I was using a Nokia 3160. It cost me $40 US and I had to sign a one year contract that Cingular later decided was a two-year contract. I was paying about $40 a month for service and had extra fees for SMS messages.
After I got to Kyoto, I quickly ended up at an AU shop and landed a Casio W41CA. It does email, music, pc web browsing, gps, fm radio, tv, phone-wallet, pictures (2megapixel), videos, calculator etc. I walked out of the store for less than ¥5000 (about $41) including activation fees, and I was only paying slightly over ¥4000 (about $33) per month. That included ¥3000 for a voice plan I rarely used and ¥1000 for effectively unlimited data (emails and internet).
Perhaps someone with more knowledge of the costs facing American mobile providers can explain the huge technology and cost gap between the US and Japan. Why are we paying so much for such basic features?
At first, I thought maybe it was something to do with network infrastructure. The US is a huge land area and Japan is very tiny. However, Japan would have lots of towers because of the terrain. Imagine something like Colorado covered in metropolitan area. Also, even though places like rural New Mexico exist, nobody has an obligation to cover them, and from the look of coverage maps, no providers do. Operating a US network that reaches 40% of the nation's population requires nowhere near reaching 40% of the land area. The coverage explanation alone isn't enough.
Another possibility was the notion that because Americans keep their phones until they break, phone companies don't focus much on selling cutting edge phones and won't dare ship a spin-chassis to Oklahoma. However, with the contract life longer, the cost of the phone could be spread out over a longer period. If Americans like phones that are built to last and then let them last, the phones should be really cheap. From my perspective, they are ridiculously priced, so this argument also fails.
The next explanation I turned to is that people in the US tend to want winners. We like one ring to rule them all and one phone to establish all of what is good in phone fashion for the next three years. However, Motorola's sales are sagging as the population got tired of dime-a-dozen RAZR's and subsequent knockoffs. Apparently, we have more fashion sense or at least desire for individuality than to keep buying hundreds of millions of the same design. Arguing that the US market tends to gravitate to one phone and then champion it is not making Motorola money.
At last I started to wonder if it was because Americans buy less phones as a whole, making the cost of marketing as many different models as the Japanese prohibitive. However, with something like three times the population, the US should be more than enough market for all the glittery treasures of Akiba. What is the problem?
I'm out of leads at this point. It's not like the FCC is charging Cingular and Verizon billions of dollars per year and the costs are getting passed on to the consumer. Japanese don't have genetically superior cellphone taste. I remember that there was talk of how fierce mobile competition was and how it was hurting mobile providers' earnings. However, if Japanese companies can make money at those prices while selling those phones, what's the problem in the US? It seems to me more like competition is non-existent and US providers are ramming yesteryear's designs down our throats while charging us an arm and a leg! Someone please give me some insight.
I finally broke down and got a $20 Virgin phone to at least get me connected until I get over my initial shock. In short, American phones suck, and iPhone is hopefully a wakeup call to US providers and customers. Why is the American phone situation so depressing?
Before I left for Japan about a year ago, I was using a Nokia 3160. It cost me $40 US and I had to sign a one year contract that Cingular later decided was a two-year contract. I was paying about $40 a month for service and had extra fees for SMS messages.
After I got to Kyoto, I quickly ended up at an AU shop and landed a Casio W41CA. It does email, music, pc web browsing, gps, fm radio, tv, phone-wallet, pictures (2megapixel), videos, calculator etc. I walked out of the store for less than ¥5000 (about $41) including activation fees, and I was only paying slightly over ¥4000 (about $33) per month. That included ¥3000 for a voice plan I rarely used and ¥1000 for effectively unlimited data (emails and internet).
Perhaps someone with more knowledge of the costs facing American mobile providers can explain the huge technology and cost gap between the US and Japan. Why are we paying so much for such basic features?
At first, I thought maybe it was something to do with network infrastructure. The US is a huge land area and Japan is very tiny. However, Japan would have lots of towers because of the terrain. Imagine something like Colorado covered in metropolitan area. Also, even though places like rural New Mexico exist, nobody has an obligation to cover them, and from the look of coverage maps, no providers do. Operating a US network that reaches 40% of the nation's population requires nowhere near reaching 40% of the land area. The coverage explanation alone isn't enough.
Another possibility was the notion that because Americans keep their phones until they break, phone companies don't focus much on selling cutting edge phones and won't dare ship a spin-chassis to Oklahoma. However, with the contract life longer, the cost of the phone could be spread out over a longer period. If Americans like phones that are built to last and then let them last, the phones should be really cheap. From my perspective, they are ridiculously priced, so this argument also fails.
The next explanation I turned to is that people in the US tend to want winners. We like one ring to rule them all and one phone to establish all of what is good in phone fashion for the next three years. However, Motorola's sales are sagging as the population got tired of dime-a-dozen RAZR's and subsequent knockoffs. Apparently, we have more fashion sense or at least desire for individuality than to keep buying hundreds of millions of the same design. Arguing that the US market tends to gravitate to one phone and then champion it is not making Motorola money.
At last I started to wonder if it was because Americans buy less phones as a whole, making the cost of marketing as many different models as the Japanese prohibitive. However, with something like three times the population, the US should be more than enough market for all the glittery treasures of Akiba. What is the problem?
I'm out of leads at this point. It's not like the FCC is charging Cingular and Verizon billions of dollars per year and the costs are getting passed on to the consumer. Japanese don't have genetically superior cellphone taste. I remember that there was talk of how fierce mobile competition was and how it was hurting mobile providers' earnings. However, if Japanese companies can make money at those prices while selling those phones, what's the problem in the US? It seems to me more like competition is non-existent and US providers are ramming yesteryear's designs down our throats while charging us an arm and a leg! Someone please give me some insight.
No two ways about it. Especially the old-school players like VZW, who have that MaBell attitude.
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Q: What's Keeping US Phones In the Stone Age?
A: State of the "Free Market" in the USA
To answer your question, US consumers are keeping phones in the "stone age." The *vast* majority of US cell phone users buy the phones and use them as - get this - phones . Sure, teens love to text and techies love wireless... but most people use cell phones for their original, intended purpose. Manufacturers have seen this and responded accordingly.
It offered no features I could see beyond my Casio W41CA's capabilities.
.txt and .gif files like I've been able to do for 10 years already."
You're making the mistake of counting features, ignoring *how* they're used. I remember back in the early 1990s, when this new world wide web thing popped up. Plenty of comments then from people who couldn't see the forest for the trees, that were much like yours - "The world wide web offers no features I could see beyond downloading
Sure, the web can be seen as just text and image files, but oh boy... did the presentation and access difference ever change the world. How things work really is important.
I think one of the problems with the US market is the way that it was initially set up. When cell phones started breaking out into mainstream use, service providers such as Sprint, AT&T, the Bell's, all had contracts with specific cell phone manufacturers such as LG, Samsung, Motorola. Alot of phones are sold exclusively by one provider and are not available with another service. In asia, this is usually not the case. Many phones use a SIM card (similar to cingular), which really allows the phone to be connected to a network. The phones are sold separately and are not associated with only one service provider. Thus, you can use almost any cell phone with any provider. In this way, it makes the cell phone manufacturers compete with the design and functionality of their new phones, and for service providers to compete only with their quality and cost of connection service. You can buy a phone separately and choose any service provider. If you choose to leave that provider, you can keep your phone and go to another service provider. it's that simple. In America, if you really want that specific certain phone, you have to buy it from Verizon or other. In the same way, you have to buy a NEW phone if you decide to switch providers. The fact that American companies do not do this, is an injustice to the american people. For America to claim to be the archetypical capitalistic economy yet still stifle innovation for the accrueing of profit is something we shouldn't stand for. I doubt anyone here is happy with their level of service.
I think you're missing the point. This isn't a rip on the iPhone, but on the American cell phone industry as a whole. There are many things lacking here.
If you've ever been overseas to a developed Asian country, you'll understand. If you haven't, I don't blame you for your shortsightedness.
He didn't say his phone was better than an iPhone, he said the features which are touted as new on the iPhone are not as novel or original when compared to the phones on the Japanese market.
In fact, I think his actual question was more like "Why are the features of the iPhone exciting, when the U.S. market should have been providing those or similar features already"
He doesn't dis the iPhone (other than implying it and all other U.S. phones cost too much).
In fact, his question is not low level enough. What he should be asking is why can't I buy a phone from any vendor, then a SIM card from a service provider, and plug it in and go?
Why do we in the U.S. have to even deal with ATT to get an iPhone? Why can't I just put a Verizon SIM card in my Nokia 3200? Why is the U.S., arguably the technology forerunner for a lot of the 20th century, falling so far behind so quickly? I mean, "No Child Left Behind" shouldn't have done that much damage yet!!
I think that what is happening is a stratification of economy. In the U.S. we have "evolved" past the customer is always right business model, and entered the age where a companies most important job is pleasing stockholders, not customers. Europe and Japan were quick to adopt (and improve) many of our technological advances in manufacturing, etc. over the past hundred years, I just hope they have the wisdom to avoid adopting our economic "advances" now.
"Proximity to wonder has blunted our perception and appreciation of it" --Tim Hartnell in 'Exploring ARTIFICIAL INTELLI
It's a phone. Yes, a PHONE.
It's supposed to do one thing and one thing well.
Everything else is just stuff to distract you from the fact that your phone network quality suddenly degraded to 3rd world levels.
If I want to do something else. I will do it with a device that was designed for that purpose rather than that function being frankenstein'ed into a device that's supposed to be dead simple and dead reliable.
A Pirate and a Puritan look the same on a balance sheet.
How can one phone save you 10-15 hours a week over another? What are you doing? Did you previously have no phone, so you had to drive across town several times a week to see if people were home to talk to?
The premise underlying most iPhone criticism comes down to judging every device as merely the sum of its parts. People (pundits and punters) look at the bulletted feature list and say "other phones can do more". Try sitting down with an iPhone, and really using it. The added value is in usability-- not just slick and attractive interfaces, but ones that let you use the device quickly and easily.
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Well, you're half right: American consumers don't "want" long contracts, but they *do* want a "free" phone.
Americans are basically cheap. I'm always amused by the people who will spend $10 in gas to drive to four different stores to try to save $5 on some item. Or spend 40 hours on the internet to save $25 on plane tickets. And of course, a "free" *anything* is always better, not matter the costs down the road. It's a false savings, but a lot of people will fall for it every time.
American wireless carriers know this, and so they play the "give away the razor and sell the blades" game: pad up the monthly bill to subsidize a "free" phone, but lock out the useful features to force customers into spending extra money for simple things like SMS, internet, IM, BlueTooth, etc.
Learn from the mistakes of others. You won't live long enough to make them all yourself.
Please stop and read your own posts before you write them. You're saying that american consumers "do not want more do-dads"? Are you certifiably insane? We'd attach a spork to a blender if we thought it would be beneficial.
Incorrect. Americans do not know that we get shafted by Cellphone company collusion to keep prices high.
Americans on the whole are incredibly uninformed and blissfully like it that way for the most part. The news doesn't dare report that Americans on average get shafted hard for internet, cable, satellite and Cellphone service as they don't want to upset the bread and butter advertisers.
America lives and dies by the Boob-tube (TV) we do what it tells us to do.
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I hate talking on my cell phone with voice data compressed down to 9.6 kb/s. The POTS copper lines devote 56 kb/s to voice data. I can actually have a conversation without straining to pick up overly compressed speech. Yup, the U.S. has a well-developed copper telephone system and I prefer to use it whenever I'm in my home or office.
Actually, no, it's not a phone. Phones were analog devices invented in the 19th century that are both powered by and designed to communicate over wires. They had a single purpose like what you describe in your post. The devices we're talking about are miniature computers coupled with RF modems powered by rechargeable litihum batteries. So, if you want your miniature computer to only be able to stream audio wirelessly to and from single points, that's fine, it's all about consumer choice. But why begrudge the rest of us the choice to get more functionality out of what are essentially general purpose devices in a small form factor?
No, we would attach a spork to a blender if we thought it would make us look cool.
We don't care if it is actually useful.
I think you by accident have managed to mention the REAL problem here: The binding between phone and provider, a.k.a. "locking". No US phone company will sell you a phone that hasn't been locked to them, and usually also crippled. And almost no customers know that they can buy phones that haven't been locked in the first place. And the few that do know that tend to ignore it, because in the US, shopping for the /cheapest/ and not the best is the way of life.
/them/ and not me, and I have the choice between buying from them or not buying at all. Cause a free market doesn't imply that there will be competition, but almost always causes monopolies and oligopolies to form.
So customers buy whatever phones the phone company makes available. Which is whatever is cheapest for the phone company -- either by the phones being old models that the manufacturer will sell them for a pittance, or by them not having functionality that might cut into the phone company's own revenue stream (like uncrippled file transfer over BlueTooth, WiFi or USB).
Worth noting here is that a great many Americans are poor, and can't afford anything except the cheapest available. While there's plenty of rich people here, they're not nearly as plentyful as the less rich, who have to turn the penny over before spending it. The median income in the US is way lower than other Western countries. This too drives what's being made available.
Combined with an unwavering belief Americans have that we're the prime nation on earth with the most technologically advanced equipment god and money can buy, they really THINK that what they're getting is state of the art, when in reality it's so obsolete and limited that the average European or Japanese wouldn't take it for free.
The overall mentality of corporate control and buying based on price more than anything else is also reflected in other ways in the US. Look at TV and radio, for example. Where many if not most western countries now have all the programming in wide screen, and radio broadcasts are digital, in the US, you still can buy low-res 4:3 TVs and people still listen primarily to FM (and even AM!). They still sell cassette tapes here, for crying out loud! 10+ Mbps internet which is common in Europe? Can't even get it most places, and Americans consider a crippled 0-256 kbps shared DSL line "broadband".
Back to the reasons why the US is such a technological backwater: I think it's mostly due to the demographics, with the median income being so low (meaning that most people don't have a lot of money), but also the capitalist system's propensity for ending up with very few and very large companies with near-monopolies or oligopolies in their areas, making it possible for them to sell their customers whatever makes the most profit, and where the customer's only real choice is to take it or leave it.
Where I live, I have the choice between Verizon for mobile phone (T-Mobile works in good weather, but with spotty coverage), Comcast for cable TV and AT&T for phone. Thus they can offer whatever makes the most profit to
Europe is full of less densly populated areas that have far better coverage than similar areas in the US.
Almost every village in Scotland has cell coverage from multiple providers. 3G coverage is spreading rapidly into the larger towns. Scotland has a population density about the same as Virginia or North Carolina yet has much better coverage. When it comes to ADSL, every telephone exchange is enabled, and 99% of the population has access to broadband. Absolutely not the case in the US.
Whatever the reason for the lack of these things in the US, the population density argument isn't it.
Already there. I don't need my mobile doing everything under the sun. I don't want to be able to surf the web on my phone, don't need it to be my electronic organizer, or even take pictures/video. I need it to be a reliable communications device, which it most assuredly is not. When my reception is not failing the phone is exhibiting all sorts of quirks that make it the electronic equivalent of a schizophrenic.
And face it -- the average consumer only buys these things because marketers tell them they should. I suspect if you took a random sample of 1 million cell phone users in the US, you'd find a good chunk of them don't use most of the functions their phone offers, and a subset of them probably don't even know they have certain capabilities in their phone.
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In fact, I think his actual question was more like "Why are the features of the iPhone exciting, when the U.S. market should have been providing those or similar features already" The features of the iPhone are *not* really exciting. I've been doing just about everything the iPhone does on my US market cellphones for years now. What makes the iPhone exciting is the IMPLEMENTATION. Browsing on my MDA, my Treo, or any one of the numerous devices I had in the past was a miserable experience at best. Browsing on the iPhone, even on EDGE, is 400000x better. That's just one example.
I don't think any meritorious argument for the iPhone is based on the feature list.
The phone service providers in the U.S. took this advance knowledge, and attached hefty fees to everything that was popular in Asia and Europe - text, ringtones, photo uploads. When these features were first rolled out in Japan, they didn't know what people would find popular. So every phone manufacturer and service provider took the shotgun approach and bundled as many of these features as they could for as low a flat fee as they could. This was unbridled competition. By the time they figured out what was popular, they couldn't jack up the price because everyone expected it to be a flat fee, and raising the price would send your customers to your competitors.
When the digital cell network rolled out in the U.S., the providers here knew text messaging, ringtones, and photo sharing would be huge. So they attached a per-item fee to them to maximize profit on it. Every one of them did it, nobody broke ranks and offered a flat fee service (at least not without an additional fee). Kind of an implicit agreement to collude to fix prices to maximize everyone's profit.
Americans simply don't know that these things are free or a flat fee in the rest of the world. For them, a text message has always been 10-15 cents each. A ringtone has always been $1-$2. The cost per each one isn't that much, so they pay it. The same thing happened the other way around with landline telephone service in the U.S. vs. Europe. Most Americans (whose phone industry was deregulated in the 80s) pay a flat fee for unlimited calls. Most Europeans (with nationalized phone monopolies) pay per phone call. That's just the way "it's always been" and people don't know to ask for more.
Normally the market would correct this situation with a new company offering these services for less money. But the cell phone service market requires you to own bandwidth, which was auctioned off back in the early 1990s. There's no way for a new company to join the market (which is why the upcoming auction of the 700 MHz spectrum is so important, yes the one Google has been making noise about).
You have the answer right there. The US market is not competing for the customers. They are more then happy to keep business as usual, and are not pushing the technology, just like their wired relatives. To them, there is no reason to roll out costly network upgrades to support the new technologies, because they control what technologies connect to their networks. This is unlike many other countries where the consumer decides what connects to the networks, the cell phone companies simply provide a SIM card that the user transfers to their different phones. Here the phones are locked down and stripped of their features. Look at Europe where many people own one phone but have several different "local" cell phone plans for the different areas where they frequently travel, they simply swap out the SIM card to use the other networks.
We were all warned a long time ago that MS products sucked, remember the Magic 8 Ball said, "Outlook not so good"
Well, it is probably a difference in attitude towards cell phones too. In the US, a phone is considered pretty much a commodity item, and use pretty much ONLY for one thing.....calling and talking to people.
In other countries they seem to want to use the phone for everything..paying for purchases, gps systems, mobile computer.
I also find it a bit amusing. Most of the world chides the US for having the 'disposable' mindset on everything. That we buy things, use them a short while, and then throw them out and get a new one.
But, now in this article it is being frowned upon...the Americans buying cell phones and hanging on to them till they quit working. It would seem to me to be the 'green' thing to not buy a new cell phone every year or so...keep them out of the landfills, eh?
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Because the north american gov'ts are too bedazzled by arguments of "free market forces" to realise that they need to legislate standardisation for the common good.
Standardisation isn't really meaningful to the consumer unless everyone is doing it (the gain to the consumer is mobility and interoperability, but this only happens if everyone is standardised). Hence, there is no competitive advantage to be gained by standardising (essentially a variation of the prisoner's dilemma). Hence, it will not happen unless forced on the industry, it's too happy providing shitty, dated, overpriced services to consumers and claiming "difficulties in interoperability" between wildly different formats and protocols as an excuse.
Are you suggesting that if a carrier came out with a lower price, people wouldn't flock to it because people are okay with the prices they pay to Cingular and Sprint?
Yes. Most carriers offer a "free" phone (with sufficiently long contract). People shop networks/providers first, then phones. Oooh, Sprint is a PCS not a cellular network, Verizon has "the network", Cingular/AT&T has wide coverage and rollover minutes. Once someone picks a network, they shop phones. There are 3 kinds of people, those that want the free phone, those that want to spend $99 to $100 on something with some extra features (MP3, camera, whatever), and those willing to pay $200+ for lots of features. They pick from the phones available at the carrier they selected and are done. This means that if someplace offered a Razor V3 for $0, they wouldn't get a large flocking there. I've seen such offers, while the Razor isn't usually at such a low price with the major carriers (not that I'm checking on a daily basis).
There are a few times when phones have driven the market. The initial release of the Razor did it. The initial release of the iPhone did it. There will be more, but these are one-product-per-2-years kind of events. But again, that isn't a matter of who has it cheaper, but just who has it at all. Price is not as big of a driver in cell phones (both phone and carrier) as is stated. People rarely choose carriers based on cost, they pick what they like best (often coverage, but other factors count as well, like friends and family plans and such), then pick the phones and service plans they can afford. I'm not saying it doesn't happen, but it is rare when someone compares all their choices' plans and picks the plan that makes the most sense, counting TCO and phone costs and such.
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