AT&T announced on Thursday that it plans to take pre-orders for the Galaxy S4 beginning on April 16. The device will cost $250 with a new two-year contract. Wow that seems overpriced, I thought to myself as I was writing up the announcement. It's not that I don't think $250 is worth it over the length of a two year contract, it totally is, it's just out of the norm for high-end smartphone prices. Worse, AT&T didn't clarify if the pricing was for the 16GB or 32GB model, although my gut tells me that it's a good business practice to announce the lowest price possible.
Typically the only devices we've seen priced above $200 with a new two-year contract are Samsung's Galaxy Note smartphones. The iPhone always launches at the low-end with a $200 price point. The HTC One, another flagship smartphone, is expected to cost $200. Even Samsung's first Galaxy S device and the successor, the Galaxy S II, launched for $200. So why the big price increase?
I know the hardware is expensive to an extent. The 1080p 5-inch screen is stunning to look at, but so is the display on the HTC One. The materials can't cost that much to make — it has a plastic body while the iPhone 5 and the HTC One take advantage of a more premium aluminum material.
Perhaps Samsung knows its phone is going to be successful. Or maybe AT&T knows it. There's reason for the confidence; Samsung's Galaxy devices usually sell tens of millions of units shortly after launch. Samsung has sold more than 100 million Galaxy S branded phones in total. Add $50 to each unit sold and you're talking about a lot of money being made. But at the cost of who? Us, the consumers and fans.
Are we being milked for the extra $50 purely because of the confidence? It seems like it. I can't figure out why the phone wouldn't be listed at $199. Most of the innovation, if we call it that, is on the software and services side. That ends up being a cost in research and development, but it's certainly not an added cost to the build materials. I wonder if this will backfire on Samsung and end up being a benefit to HTC.
I suppose this is just a rant of mine. I just don't think adding $50 to the price of a phone because you know it's going to be successful is a fair bargain for consumers. Hopefully I'm wrong.
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