I realise miniaturisation costs money along with R&D, but given economies of scale i.e. hundreds of millions of units, are the cost of Smartphones being kept artificially high by manufacturers and mobile operators alike?

£500 would by you a pretty decent PC and monitor. What are the true costs of manufacture? Plus although specs are different on high end phones compared to their cheaper siblings is there really so much real difference in manufacturing costs. Are consumers being milked for every penny possible or are the prices realistic?

There have been so many instances over the years of companies acting in concert to keep prices of certain commodities artificially high one wonders if this is yet another example?

Definitely.

A $849 (£500.43) 64GB iPhone 5s only costs Apple $218 (£128.50) to build

http://www.zdnet.com/a-849-64gb-ipho...ld-7000021175/

The worst thing in my opinion is the price difference between the same phone but with more internal memory. Going from 16/32/64 can be absolutely INSANE price wise. It's completely unjustified as the hardware is identical except for the memory chip which will cost them barely anything.

They get away with this so easily because people don't understand, they genuinely believe the extra space costs a lot more. If people knew that companies manufacture 16/32/64GB models at almost the same price, I'm sure there would be outrage.

Absolutely.

This is why companies like Apple and Samsung are worth billions.

I suppose the thing to do would be for consumers to just not pay it. If people stopped buying flagship phones in favour of say, a Moto G you'd very soon see flag ship prices become more competitive.

But as long as people pay it. They'll charge as much as they can get away with.

That's the 'bill of materials' there's much more to researching, designing, building, shipping, the software, selling, marketing and supporting under warranty, the amount which makes up the VAT at 20% - there's more to it than just the bill of materials.

Components will be by far the biggest cost everything else put together will probably not double that cost. You can safely say that an iphone is over 50% profit.

VAT alone is £120 on an iPhone, and that's the wholesale, not the retail price. The retailer has to earn money too. The software has a cost to the device as well as the physical hardware as well.

Apple will probably not be making huge margins on the device, much more on the sale of digital music and apps, acting as a retailer on the platform and scooping 30% on everything sold.

HTC for example made big losses on their smartphones. If people think the bill of materials is what makes up the retail cost of their smartphone, they have a big gap in business knowledge.

yes agreed and?

I just said that all you listed that in my opinion doesn't double the components cost so say all in £200. Of course I think those breakdowns are probably more than Apple pay for components too.

Apple make more from iphone sales than anything else combined, clearly have a large gap in your business knowledge if you don't know that.

Under the rules of supply and demand, the cost of any phone will be dictated by what the market can cope with. Only a minimum price will be set by adding up the cost of everything and adding a profit figure.

Exactly why I will be buying my moto g 4G 16gb as soon as they release the bloody thing.. HURRY UP MOTOROLA.

but yes I NEVER buy flagship products or ANY apple products for the blaitaint theft. But... Monkey see...

This is why I like Xiaomi.

They build high quality phones and sell them at pretty much build cost whilst relying on revenue from services/apps to gain a profit.

You can get a phone with similar specs to the HTC One M8 from Xiaomi for under £170 in China.

The supply and demand rule doesn't just apply to mobile phones or similar gadgets, it is also true of everything you buy from the corner shop to the giant supermarket chains. The price you pay is simply what the public are prepared to pay. If Apple, Samsung, Coca Cola et al were able to get you to pay double what you do now then that is the price they would be. If cheaper items are available it means in the main that not so many people buy them and if the retailer did charge more they wouldn't sell.

This is a rather inane conversation. Every company in history has had the goal of maximising profit. This means charging as much for a product as the market will bear. The actual cost of manufacture is a complete irrelevance. If Apple is so evil for achieving a greater than 50% profit margin then why are the same posters not outraged at Microsoft charging £70 a pop for a copy of Microsoft Windows that perhaps costs 1/10th penny to manufacture (download cost).

That's correct.

Although I do disagree with your last sentence somewhat as it doesn't apply to all products.

Mac OSX for example costs £0 but people would still buy it at a higher price. Just Apple decided to do the free upgrade program. There are othe examples as well.

So they work the Google way

YOY that goes down, OEM manufacturers always finding new ways to compete.

Apple are now said to be using Wistron to make the iPhone 5c, so costing more than the high spec Moto G is simply down to policy and what they can get away with.
Wistron made many of the lower end Advent laptops for PC World.(Quanta usually made their higher end ones)

And like others say, price reflects little on actual cost. I bet coffee grower get pence or so for that £3.50 bag of ground coffee, and a 70p can of Coca Cola has about 3 pence worth of liquid inside.

It just seems to be madness to me. £500 for something which you will keep for only two years then start paying again for another one. It's like perpetual paying on the never never. Whilst technology moves on a pace I doubt a two year old high end phone is obsolete. My GS2 circa 2011 still does what it's supposed to do and does what most people would expect of a smartphone.

There is one comforting sign on the horizon though. I can't remember whether I have heard it or read it but the gist of the story is that sales of smartphones are finally beginning to slow as the western consumer shows signs of losing interest. This can only be a good thing as it's bound to bring a bit of sanity into pricing.

Bubbles can only expand so far before they eventually burst.

The cads.

Mind you, that's nothing compared to, say, the margins on coca-cola and popcorn at your local multiplex.

Was there a reason this became about iPhones so quickly, when it was originally about smartphones?

No idea, any reason why you're asking me then?

I wouldn't call it a bubble, more a technology that is maturing. We do seem to be plateauing, the large gains in specs are only giving minor bumps to the user. Take the jump to 1440p screens, how many will be wowed by them whereas 720p to 1080p was a decent jump. Phones may end up like laptops, there will be no incentive to upgrade.

That's for normal users. I will always want at least two phones a year ( I would have more if I could get away with it).

Don't forget that certain phones also maintain high resell values, so it isn't £500 every 2 years.

I smile everytime people complain about companies making money in a free market.

With bigger and bigger phones becoming the norm for heavy users, it has to be asked if the smaller expensive trinkets can stay so popular.

Fact is that few use them to their full so we certainly have differing users.
It is similar with tablets, with the smaller ones becoming less popular, despite them being cheap at the more portable size.

It's as much about brands as anything else.

If Ford decided tomorrow to double the price of a Focus, people would go mental. It just wouldn't work.

But when, say, BMW unveils a new M-sport limited edition, while it obviously has a higher cost due to the limited build and extra engineering etc, it's still important for it to be sufficiently expensive to make it clear to others that you've got a special, expensive, phone. It's a status thing.

A lot of people can't afford things like that to 'show off', but an iPhone is a relatively affordable way to show your status - which a Moto G won't do. And this thread isn't obviously about whether a Moto G is as good as a more expensive model.

Samsung and Sony are each trying to do the same, as they know that it's better to sell a smartphone or tablet for a lot more money if they can - and that people will regard the brand as more exclusive as a result. Problem is, Sony and Samsung also make low-end phones and so neither will likely ever be able to do what Apple can and does. (Likewise, some people will say the same of a company like BMW, as they also make run-of-the-mill cars too - so you have BMW and so on competing against the supercar makers).

There are of course plenty of people who don't give a stuff and will buy (and are buying) things like the Moto G, Nexus 5 etc. And even if more people start to buy these and realise you don't have to pay £500+ for a smartphone, I doubt that Apple will ever need to worry.

Unless Apple suddenly becomes an uncool brand, which I doubt is going to happen anytime soon.

Well, we will soon know how many iPhones apple have sold in the quarter, and hopefully we can find out how many 'smaller screen' phones the others sell. That will give us a good idea if "smaller, expensive trinkets" are still popular.

Although the fact that those with the technical ability have recently brought out smaller version of the oversize phones probably already tells us.

I suspect he's asking you because you are the one that turned a general discussion about smartphones into a rant agains Apple