Subsidised Smartphones - A Really Bad Deal?

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Dairyxox

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#109257 16-Sep-2012 22:06

Hi,

I purchased an iPhone 4, a couple of years ago on a 24 month contract from Vodafone.
Now that my contract is up im looking at doing the same with an iPhone 5.
On a contact plan so the phone was subsidised. It was a reasonable deal:
I paid $40 per month, and $650 upfront for the phone, which was the latest at the time (iPhone 4 16GB).

After the price of GST went up, so did the cost of my plan.
Now when I look at Vodafones website and put in the same type of plan (smart $45, 24 months), with the equivalent phone (iPhone 4S 16gb). The upfront costs is now $950 with the ongoing cost the same.

Now I realise the plans are different. For example my current smart 1 plan only has 30 minutes of calls per month. The new one has 100 minutes. I don't really care, I get by okay on 30 minutes. Data is more important to me. Both plans have 250mb data… now this is strange too. I got some kind of iPhone special where they upgrade you to 3GB of data. Do they still do this? I would hate to get on a new plan and only have 250mb data.

Originally Vodafone subsidised about $450-500 off the value of the phone. Now with a similar plan they only subsidise $100 off the phone. All for the sake of a 24 month plan. Why would anyone bother? I stopped following plans after i got on one i found suitable for me, but am shocked that two years later I cant get something similar.

Why is the upfront cost nearly 50% more now, than it was 2 years ago?

Does anyone know if any other carrier is offering a better 2 year contract deal?

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#686871 16-Sep-2012 22:18

Wait to see if Telecom gets it too and then there may well be a good deal on offer in competition

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loganjames

272 posts

Ultimate Geek

#686885 16-Sep-2012 23:45

Yeah I'd wait. Vodafone and Telecom are hardly going to advertise what plans are going to be on offer 2 weeks before the phone releases.

Just look at the SGS III when it launched, each carrier had a deal for a FREE $1049 handset at launch (telecom
$100 p/m, 2 degrees $89 p/m, vodafone $90 p/m) - I imagine that they'll all do the same or similar this time.

corksta

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#686886 16-Sep-2012 23:47

Telecom will definitely be selling the new iPhone, so as itxtme said wait and see what the two companies offer it for.

There were some pretty good deals when the Samsung Galaxy S III first went on sale, and now that Telecom is selling the iPhone (always only ever used to be Vodafone) I'd expect some pretty good deals to attract people like yourself. Most likely though the pricing won't be announced until just before the phone is released on 28th September.

Edit: loganjames beat me to it!

johnr

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#686890 16-Sep-2012 23:52

Follow the advice above!

loganjames

272 posts

Ultimate Geek

#686891 16-Sep-2012 23:53

corksta:

Edit: loganjames beat me to it!

SNAP!! you bring up a good point about Telecom; this will be the first time that we'll have 2 carriers offering the iPhone on launch day. And I imagine that 2 degrees wont want to miss out on any of the action either and will have some sort of BYO iP5 deal also (Or heavily subsidise the SGS III again.

Dairyxox

1591 posts

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#686893 16-Sep-2012 23:55

Thanks for the quick replies and PM's. I guess I'll wait and see what happens.

I like to be a bit organised and not leave things till the last minute, why does new technology make people anxious?
In lieu of concrete plans my current thoughts are to skip this iPhone entirely, or purchase outright - change to 2degrees prepay and save $$.

corksta

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#686895 16-Sep-2012 23:57

loganjames:
corksta:

Edit: loganjames beat me to it!

SNAP!! you bring up a good point about Telecom; this will be the first time that we'll have 2 carriers offering the iPhone on launch day. And I imagine that 2 degrees wont want to miss out on any of the action either and will have some sort of BYO iP5 deal also (Or heavily subsidise the SGS III again.

Yeah totally agree. At least with the S III it was a level playing field with all three companies selling it, but you're right, 2degrees will not want to miss out on the iPhone hype so I'd be confident they'll have some promotion as well, kind of like how Telecom did before they sold the iPhone and actively encouraged people to bring their iPhone to XT to receive a massive credit, something like $650 I think it was when signing up to a 24-month plan.

Regs

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Snowflake

#686896 17-Sep-2012 00:02

The RRP of the 16GB 4S is $1049 on the Vodafone site. Divide that by 24 and you get $43. That means that Vodafone would have to make more than $43 per month (*) from you in order to 'break even' if they gave you a fully subsidised phone. You can see why they only fully subsidise it on a plan that costs you more than $100 per month....

Now consider a $45 per month plan.

Two years ago, Vodafone might have been making more than half of that back as 'revenue' - say $25 (**). If they took half of that to 'subsidise' your phone, that would have been a $300 handset discount, and they would have been making $12.50 per month in net revenue.

A lot has happened in 2 years. That $45 plan will have more jammed into it than in the past. Now that revenue might be a lot less than what it was 2 years ago. Say $10 (***). Take half of that ($5) to apply to a handset subsidy and that gives you $120. That would bring the subsidised handset price down to around $929.

While I have zero confidence in my numbers, hopefully it gives you an idea as to why a handset subsidy might not be as good as you would hope. Vodafone (and the other Telco's) are in this game for a profit - they have to make their money somewhere.

NOTE: the iPhone 5 is offered for $199 on AT&T in the US with a minimum commitment of a $20/month 300MB DATA plan. In order to actually sign up for one of these it seems to also have to add a voice plan of $39.99 minimum. That would give you a $50/month 24 month commitment to get that $199 iphone on AT&T. $60/month for the 3GB Data plan option. An upfront price of NZ$240 and monthly of either NZ$60 or $NZ71.

(*) not quite accurate, Vodafone wont be paying $1049 for the iPhone. I'm sure their carrier discount isn't that big though.
(**) completely made up numbers. I have no idea what the actual vodafone revenue figures are
(***) completely made up numbers. I have no idea what the actual vodafone revenue figures are

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johnr

19282 posts

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#686897 17-Sep-2012 00:03

The OP did not mention what type of handset they even wanted

Dairyxox

1591 posts

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#686898 17-Sep-2012 00:06

Yeah, I said "Now that my contract is up im looking at doing the same with an iPhone 5."

johnr

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#686905 17-Sep-2012 04:09

Oh yep missed that sorry

nakedmolerat

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#686915 17-Sep-2012 06:53

Dairyxox:I got some kind of iPhone special where they upgrade you to 3GB of data. Do they still do this? I would hate to get on a new plan and only have 250mb data.

you are on the old 'smart' plan. at the time, they do give out 3GB of data per month. afaik, there has been no new plans that is directly comparable to this plan. I would keep this plan if I were you.

NonprayingMantis

6434 posts

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#686925 17-Sep-2012 08:11

loganjames:
corksta:

Edit: loganjames beat me to it!

SNAP!! you bring up a good point about Telecom; this will be the first time that we'll have 2 carriers offering the iPhone on launch day. And I imagine that 2 degrees wont want to miss out on any of the action either and will have some sort of BYO iP5 deal also (Or heavily subsidise the SGS III again.

the Iphone 4S was avialable from Telecom and vodafone on launch day

freitasm

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#686926 17-Sep-2012 08:14

NonprayingMantis:
loganjames:
corksta:

Edit: loganjames beat me to it!

SNAP!! you bring up a good point about Telecom; this will be the first time that we'll have 2 carriers offering the iPhone on launch day. And I imagine that 2 degrees wont want to miss out on any of the action either and will have some sort of BYO iP5 deal also (Or heavily subsidise the SGS III again.

the Iphone 4S was avialable from Telecom and vodafone on launch day

Correct. This is not the first time both the largest operators have the iPhone on launch.

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code15

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#686934 17-Sep-2012 08:33

Also, if you're looking to get a subsidised deal, don't wait around, get one in the first couple of weeks.

Telecom and Vodafone both seem to have launch prices that don't last for very long.

I got a 4S for 650 on a $40 plan with telecom, a year later it now costs $929 on the same plan.

I've always wondered if Apple forces these launch prices because, neither Telecom or Vodafone offer similar launch specials for android phones (e.g. S3).

Edit: so at the moment, the lower cost plans are not a good deal as they provide hardly any subsidy. After one year, i have the option of cancelling my plan for $130, which takes the total cost of my 4S to $780. A lot cheaper compared to the $1029 for an outright purchase.

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