Why are our phones the best 1998 has to offer?

[Guest danjea]

T-Mobile is going to hold off on selling the new Motorola MP 100/X phones (rumor). Monthly mobile data plans are 10x more expensive than landline broadband connections and 10x as slow. Phones cost more than some computers. Is this innovation? Is this marketplace economics at work? Are we being fooled by subpar products attempting to satisfy (un)realistic demand?

One has to question the economics of both the hardware and the services related to mobile communications. Why can't we have a model where choosing a phone service is akin to choosing a broadband provider? Why are we still locked into a video game console model where the software provider dictates our hardware? Would this be tolerated in the PC market? I think not. Am I wrong?

[Guest chucky.egg]

Phew, do you feel any better for that?

[*]Mobile data is more expensive because the networks paid way too much for 3G licenses and now they want to get the money back from us

[*]Phones cost more than some CARS! I used to have a car I bought for £50. It was rubbish, but it was a car (technically at least)

[*]Smartphones (of all types) are innovation, yes.

Comparing the smartphone (generic term) market to the PC market is where you are going wrong.

[Guest bigmak]

I think not service providers but the software industry (Yes, I mean Microsoft) dictates the hardware. And the software. Where computers are used you stick to your brand (Macs for graphics, Windows for everyone else).

[Guest Dr Who]

Phones cost more than computers 'cos of the size of the components, surely? Your comment re:1998 is quite interesting. My desktop at work in 1998 was LESS powerful than the phone I hold in my hand. Now, THAT is progress surely. And that is what you pay for. And as far as I remember that PC was horribly unstable as well. In fact its foibles were far worse than those I encounter daily on my phone. And lets face it Microsoft took, what, 10 years to come up with an operating system that worked properly, after 3.1. So it might take a little while for the smartphone OS to sort itself out. Course, microsofts problem, compared to Apple, is that they have little control of the hardware that their software runs on, which makes things that much harder. Apple Smartphone anyone? I bet it would be stylish and easy to use.

I do agree that we are being robbed blind for data though. Government chose a GREAT time to sell 3G licences - just before the bubble burst. And now I am paying for it. £4 for 4Mb on GPRS, b******s. Even 3G cost on Orange looks bad, 300Mb for £70 anyone? Hmmm, no video calling for me then????

[Guest danjea]

So let me sum up the initial responses:

1. Our data plans are overpriced because the carriers got screwed by the government. - Really? When was the last time your government received FMV for any commodity it sold to the private sector?

2. Phones are small and therefore expensive. - While certainly true, one has to consider if the market is being artifically manipulated (add up the independent manufactures and carriers and you get a shockingly small number). The iPod Mini is comparable to a Smartphone in terms of components and compactness and sells for quite a bit less, not to mention numerous competitors and knock-offs. The difference? No service contract with the iPod (forget iTunes).

3. Phones today are better than those from 98 - again, this is true. But does anyone who pays attention to the phone industry feel "wowed" by the latest phones, or are you saying to yourself "well, it's about time"?

4. Software rules phones - true, but only if you're talking about 5% of phones manufactured since 2003. What does it cost to license a copy of the MS Smartphone OS? Compare that to the retail cost of the phone (see #2 above). Licensing cost is trivial.

5. Computers in '98 sucked - ummm...

I'm not trying to be overly antagonistic but I think there needs to be some soul searching on the part of the early adopters out there. The smartphone industry is relatively immature right now and not a single carrier in the US seems to "get it" about providing compelling mobile data services (maybe it's different in Europe?). It looks like we may be in for another round of twice the service and four times the cost when it comes to data on our phones. This model is not in the long term interests of consumers (that's you) and hopefully the alarm bells are going off.

Consider this - how ludicrous would it be if you could only buy a PC from your ISP, and only under the terms of a service contract?

[Guest chucky.egg]

So let me sum up the initial responses:

1.  Our data plans are overpriced because the carriers got screwed by the government.  - Really?  When was the last time your government received FMV for any commodity it sold to the private sector?

FMV=Full Monetary Value? Or something?

In the UK the Government made BILLIONS from the network operators for literally selling them the air. I'm not saying they got screwed by The Man, they bid in a sealed auction and just got carried away. Their fault really, but now they want the money back.

2.  Phones are small and therefore expensive.  - While certainly true, one has to consider if the market is being artifically manipulated (add up the independent manufactures and carriers and you get a shockingly small number).  The iPod Mini is comparable to a Smartphone in terms of components and compactness and sells for quite a bit less, not to mention numerous competitors and knock-offs.  The difference?  No service contract with the iPod (forget iTunes).  

Er, well yes, miniaturisation does increase the cost to the consumer, but mostly because people are willing to pay extra for a small device because it's more convenient.

3.  Phones today are better than those from 98 - again, this is true.  But does anyone who pays attention to the phone industry feel "wowed" by the latest phones, or are you saying to yourself "well, it's about time"?

I think we should be "wowed" a bit. My phone does all the things (that I would want to do on the move) that my computer does. Surely that deserves a small "wow" at least.

Show your Granny what your phone can do, and explain the implications to the user of those facilities, and see if she thinks it's impressive.

4.  Software rules phones - true, but only if you're talking about 5% of phones manufactured since 2003.  What does it cost to license a copy of the MS Smartphone OS?  Compare that to the retail cost of the phone (see #2 above).  Licensing cost is trivial.

TBH i don't pretend to understand how the industry works. License costs are not something I can comment on.

5.  Computers in '98 sucked - ummm...

Only by todays standards, just like phones in '98 sucked by todays standards. But you can't just jump from '98 to '04 - you have to go through the development process.

Data prices in the UK are stupid IMO, and operators would make a lot more if they reduced the cost and increased take up. Once people realise just how crap picture messaging is they won't bother with it any more and the GPRS usage will dry up.

Consider this - how ludicrous would it be if you could only buy a PC from your ISP, and only under the terms of a service contract?

I don't understand that. You can buy phones without a contract.

Networks subsidise the handset cost to keep the market high, and to encourage new contracts (which is where they make their money). What's wrong with that?

[Guest Dr Who]

In response to Danjea, (I know Chris has already addressed this but I thought I would throw my hat into the ring also!)

1) Carriers weren't screwed by the government they shafted themselves, and now I am paying for the fact their respective CEO's at the time thought 3G was worth £4-6 billion for the right to carry it. This was 5 years ago and I am still to see any 3G phone on any of the major networks. I am quite used to the consumer being screwed by big business but because of their failings in the boardroom - that really sticks in my craw!

2) I don't think the hardware could be called overpriced. Apple have a monopoly and yet you seem to think the ipod is a fair price, so I think your argument regarding the lack of competition bumping up the price of smartphones is a little facetious. I suspect the reason is it is currently a small market and therefore not a high volume/low profit margin item. Unlike the ipod.

3) True, I haven't been 'wowed' by my smartphone but I don't use any of it's business functionality. However, plenty of my mates and random strangers have been, even birds. Much kudos. The only, "it's about time" moment is the inclusion of a full html browser - should be on EVERY phone these days.

4) Like Chris, I have no handle on this so will not comment

5) Computers in 98 really did suck. 486's would crawl with 95, let alone 98, early Pentiums weren't very stable. Oh, and the 95 and 98 OS were full of more holes than gruyere cheese. The situation was very poor.

Regarding your rant, I think you are mostly right. Data is the lifeblood of modern life and my service provider has me by the danglies. What a shame for GPRS, in a very short time it will be redundant and nobody will have ever used. Due to the failings of my ISP I has to use my smartphone as a modem for my desktop the other day and it was SO much faster than my dialup. If I didn't pay £1 per Mb I would use it a lot. Since it does, I don't. Kinda makes you wonder if they can't be bothered to provide the infrastructure to allow a lot of data transfer and cover up a lack of investment by making it too expensive to use the service. I hold out little hope for 3G improving matters.

[Guest midnight]

I'm just gonna stick to one small point here.....

You havent been wowed by the technology?????

Hold on a second, we have a device here that is smaller than any other multimedia computer, you can watch movies on it (divx, mpg, wmv), listen to music (mp3, ogg, wma and others), browse the internet (its not the case of having a FULL html browser, thats restricted by screen size and bandwidth issues), take photos, play games (hasnt yet been used to its full potential, but trust me, its pretty powerfull), note appointments, store contacts (not just phone numbers), sync it with your home pc, create your own applications for it, make voice recordings, oh, and use it as a mobile phone (this is a small list, theres much more you can do with it). And soon screen res of 240 x 320. Tell you what, that certainly impresses me.

[Guest Dr Who]

Yeah, as I said I use very few of the SPV functions. I no longer watch the Simpsons on the way to work, as I am cycling (forgotten about that actually, I was pretty amazed by that), I have a minidisc player (and HATE mp3s for the low grade tat they are), photos are pointless and rubbish (and I have a camera anyway), don't play games, use no contacts or calendar functions BUT the mobile phone part IS pretty good. Actually I am more impressed with the mobile part since I had to use the missus Nokia to make a voice call the other day - the quality was awful compared to the E100. Only reason I have a smartphone is for the internet. Now if it didn't turn itself off every few hours and occasionally reset itself for NO reason I would be happy to swap the camera for that.

I should have perhaps pointed out that I am quite hard to please.

[Guest midnight]

the point is though, all these functions on ONE device, thats the impressive part

[Guest Dr Who]

Yeah, I guess it is impressive to put a PC into I phone. Maybe if I'd ansered 12 months ago before I had my E100 I would have been more objective. And more excited. Amazing how quickly one gets used to things. Still looking forward to my next upgrade......

[Guest Taoski]

Only by todays standards, just like phones in '98 sucked by todays standards. But you can't just jump from '98 to '04 - you have to go through the development process.

yeah!

Just like Kylie! :shock:

[Guest gravity]

You always have the option of buying a phone without the operators subsidy, then you'd be free to choose who gets your GPRS money. One thing that should be noted here is that us westerners are getting screwed pretty hard by the networks. During my travels to india, I had to pay 2.50 Rupees, which is a few cents, per minute. This leads me to believe that calls aren't as expensive as they're made out to be. I guess 3G will make the price of data drop at a good rate eventually.

And if you think Operators control our phones here, you should see Japan. Their Operators actually specify the specs for the phones, all the manufacturers do is design the looks of it.

With Microsoft's entry into the mobile market, I think we will soon start to see standards being developed which the hardware manufacturers will be forced to follow. Right now if you design a MS Smartphone, you have to follow their rules. Now imagine once Windows Mobile really takes off, and there is a huge software catalogue for it, how many manufacturers will make non Microsoft phones? Then imagine that Windows Mobile becomes the only platform 99% of the programmers develop for(I'll give it about 8-9 years time). How many manufacturers will make non microsoft phones then?

If you think the software determines the hardware right now, I don't think you're going to like the future.