Do Mobile Price Wars Benefit Consumers?

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November 8, 2012

Over the past few years, the price of smart phones and tablet computers has decreased significantly. While some of this price reduction is due to improved manufacturing processes, a significant cause of recent price reductions is increased competition. As more manufacturers enter the mobile consumer electronics market, the price of these goods will drop. The following guide explores how mobile price wars impact the consumer experience.

Lower prices are always a good thing for consumers. Over the past few centuries, history has shown that capitalism can be an effective way to provide consumers with quality goods for low prices. When multiple manufacturers are competing for a consumer’s attention based on price, the consumer will be able to choose products based on quality, price, service and many other factors.


In most cases, these price wars are an effective way for an individual to get a smart phone or tablet for a great price. However, it’s important to understand the hidden costs associated with a mobile phone.

In many cases, cell phone companies will provide a very cheap smart phone for people who sign up for a two year contract. In many cases, a monthly cell phone contract can run over $100 a month. While a plan of this price usually provides Internet access and lots of minutes, these prices are usually heavily inflated.

The average smart phone is not very cheap. In some cases, a brand new smart phone with the latest technology can run as high as $800. Since most consumers are not willing to shell out this type of cash for a smart phone, cell phone companies will subsidize the price of a phone through a monthly contract.
In many cases, an individual will end up paying for a phone through an increased monthly bill. For example, imagine that an individual is able to get an $800 smart phone for free with a two year contract. With this contract, an individual’s average monthly cell phone bill is $100. Over two years, this person will end up paying $2400 in cell phone bills. This is three times the cost of the smart phone itself.

It’s essential to understand the hidden costs behind modern smart phones. While a smart phone can be lots of fun, cell phone companies will often disguise the true cost of a new cell phone through subsidies. If possible, it’s a good idea to read a contract for a new cell phone before signing it.

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