But still.

If you look at sale price, books are different from songs or apps (songs are usually 99 cents, you recently said the average selling price for apps is 29 cents and many are free, and books -- well, I don't know what the average is, but most of the ebooks I've bought are 9.99). Maybe a $-based comparison would be more relevant.

And if you look at how much time you spend with a single song/app/book, there's a huge difference.

I really don't think you can make a meaningful comparison between these on volume alone.

It depends on what you think is the baseline. If you think that $700 is the baseline price for a real smartphone and $300 is the baseline price for a feature phone, then iPhone is alone at the smartphone level and Android phones are clustered at the feature phone price. If you think that $100 is a baseline price for a feature phone and $300 is baseline price for a smartphone, then the Android phones are clustered around baseline feature price and Apple is managing to charge a lot more and get away with it because people like the phone so much.

I think the baseline price for a smartphone should be considered closer to the $300 mark than $700 -- Apple's clearly able to charge a premium for the iPhone because people want it and the carriers are still making money so the economics work out; I'm pretty sure they could profitably charge far less. Evidence for this -- the contemporary Android phones pack in similar hardware and at least some of the vendors seem to be selling them at a profit for far less; also if you look at the iPhone siblings (iPod Touch has similar hardware starting at $200, iPad has much bigger and more expensive screen and still manages to come in at $500) you'd think Apple could profitably sell iPhone for $300-$400. If they had to, which they clearly don't today.

(See my post above for an argument that the carrier subsidy system, in the US at least, hides the true price of the phone and thus prevents downward price pressure on Apple.)

I was talking about iPhone vs other smartphones -- I think it's certainly true that smartphone users pay higher bills than non-smartphone users, and the carrier makes more money off them. But among smartphone users, I don't think iPhone users pay the carrier more than other smartphone (e.g. Android) users.

I don't think most smartphone users pay more than their contract minimum -- in the US at least, where data plans have been unlimited (and even AT&T's new-ish 2GB plan is more than most people use today), using the data side of your phone doesn't cost you more. Using more of voice or SMS without an unlimited plan for that will cost you more, true, but I don't think iPhone users are likely to use those services more -- if anything, they use less legacy voice, and either get an SMS plan or don't use SMS.

The above is all true of the many US iPhone users I know.

So really, in reply to your comment:
- yes, I'm assuming the user pays the minimum (relative to their contract) every month, but I think that's a defensible assumption in general
- I'm assuming they have a higher minimum/contracted amount, though, relative to non-smartphone users (but roughly the same across different smartphones, i.e. iPhone/Android; do you have data that iPhone users have higher monthly bills than Android users on the same network?)
- so yeah, iPhone users do pay more over the life of the contract and the carrier ends up making more money off them, compared to non-smartphones.
but again my point was only about smartphones, iPhone compared to other smartphones.

Right. I'm just curious if this is sustainable -- carrier is happy (enough) and has little leverage over Apple, users/consumers don't care because the pricing looks the same to them -- they pay the same, and how the pot is divided between carrier and phone manufacturer doesn't matter to them -- then there's no downward pressure on Apple's prices?

(OK, not really *no* downward pressure, because the carriers won't pay infinitely much, but the only downward pressure comes from the carrier, who has only so much leverage and doesn't seem to mind the current situation?)

Consider that most people in the US (the only market I'm really familiar with, sorry if this is too US centric, but I think the numbers are largely similar worldwide) buy any smartphone for approximately $300 with a 2-year contract which will cost approximately $80/month or $2000 over the life of the contract.

The phone price can vary a little but not hugely, the contract price varies more, but what I'm drawing attention to is the fact that the up-front price of the phone is (a) small compared to the overall cost over the life of the contract, and (b) pretty similar for iPhone vs other smartphones.

My question: to what extent does this inhibit market pressure to lower Apple's prices for the iPhone? Consumers don't care, since they don't see the price difference; they pay approximately the same for an iPhone or an Android phone, both up front and over the life of the device. If Apple is able to charge that much more than an Android vendor, it seems that the carrier is paying the difference, and willing to suck that up because over the life of that $2000 service contract, it's profitable for them either way.