Mobile Contracts: Raw deal for American consumers

Posted on by Mike Evans

It has been clear to me for a long time that smartphone users in the USA get a raw deal when compared with those in many other parts of the world. This research by Benedict Evans proves the point and helps explain why the desirable iPhone has a bigger market share in the USA than, say, in the UK.

Britons can make a dramatic saving by choosing a non-Apple smartphone. Total cost of ownership (TOC) of a non-Apple device, including initial cost of the phone and monthly contract fees, can be as little as $384. An iPhone, on the other hand, will cost at least $998. While this is considered high in the UK, it is under half the $2,120 cost in the USA.

The iPhone in the UK is thus up to 160 percent more expensive that another smartphone over the life of the contract. In the US, however, this premium is only ten percent so it is no wonder than more people choose Apple.

Apple’s iPhone 4S 16GB is available in the UK at ten different prices, including free, depending on the type of contract. In the USA it costs $200 on any contract. Furthermore, US consumers pay $80 a month to get any type of smartphone on contract whereas in the UK the cost can be as little as $16.

Ben Evans concludes:

Americans spend substantially more on their monthly phone bills than people almost anywhere else, making the iPhone price premium much smaller as a percentage of the TCO.

∞ Permalink