Pricing of Smartphone, is it fair?

There is one thing I’ll never understand, with the money for a smartphone, let’s just chose one, right, the galaxy S4, I could buy my self a 2 nexus 7, or a Laptop in that matter. What is it that make a smartphone so expensive now?

Cost to build an actual phone

Ok, you might think that if you spent 600$ on a phone, the build cost will be at least around 400$ or more. Well, think again, the cost to build an iPhone 5S  65 GB is no more than 250$, and the price for it out in the market is 850$. This is insane, WE, the consumer, have to pay 3.4 times what it’s actual cost is. Now, I understand this is also a business, OEMs have to make some money out of it, BUT, there should be an extend as to how they pricing their product, because smartphone right now is too overpricing. And just a reminder, Apple is not the only company to do this, Samsung is also doing this with their Galaxy line up.

Why?

For the most part, OEMs’ popular reason is labor cost, and at an extend, that is a valid point, and the MotoX (a VERY GOOD phone, by the way) is a perfect example of it, at release time, I believe the price unlock is around 500-600$, which is average for the market, and the reason why it’s that expensive is because the labor cost in the US is more pricey than other place like China . But now, the cost of it its 450$, so, even Motorola can make it with high labor cost in the US, than other company like Apple and Samsung should not use that reason to charge us that price. Now, some might say that Motorola don’t care about profit because they got Google behind their back, but they do, because now as a part of Google, their market value affect Google, doesn’t matter how small it is or how big it is, this is, partially, also a business for them.

Main Point

Don’t get me wrong, phone still need a value that match it’s quality, but it need to match its, not over it. OEMs need to become more aggressive in cutting price for their product because now,  Google with their Nexus 5 and Motorola with their Moto G, and even Nokia (The Lumia 920, a flagship for Nokia when it is released, unlock price is around 400-500$) is starting to become more aware of the pricing competition.
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