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  1.    #1  
    I keep seeing this error being made in posts by dozens of posters across dozens of threads, and I feel the need to correct it. I will apologize in advance if this is something that you already know, or if I come across as a jerk. It happens.

    Subsidization is the work of the carrier [Sprint]. With a CDMA network, only the carrier sells the phones, both on contract and off contract. The cell phone manufacturer [Palm] will set a retail price for the phone, which the carrier uses as a baseline for where they will sell the phone off contract, and as a price to show the discount that new contract purchases will receive.

    For the purposes of visualization, Let's say that the Pre costs Palm $350 parts/labor/engineering to build. Palm wants to make a profit on every Pre sold, no matter whether it comes with a new contract discount or not. Let's say that to make that that profit, Palm charges Sprint $400 per Pre, exacting a profit of $50 per phone. At the same time, Palm sets a retail price of $599 in order to position the Pre as a similarly priced iPhone competition (the 8G iPhone 3G off contract runs $599). It is up to Sprint to determine at what price point they will actually sell the Pre.

    We'll start with the off-contract price. We can assume that straight out of the door, Sprint will be selling the Pre off contract (i.e. you are five months into your current contract with Sprint and want to dump you old phone, but aren't yet able to renew your plan for two more years) at the full retail price specified by Palm. Sprint will pull in $199 immediate profit (minus incidental costs of employees, facilities, marketing, etc) for each Pre sold. Palm already made their money when they sold the phone to Sprint.

    Now, the new-contract pricing: Sprint wants new customers like a fat kid wants candy. They will do anything (within reason) to bring you in and sell you the phone. In the case of Sprint, they've got a marketing drive that is winding up, their various Everything plans, and soon the Palm PrPrPr&#$275$;. $And$ $to$ $seal$ $the$ $deal$, $they$ $offer$ $you$ $a$ $sweet$ $phone$ [$the$ $Pre$] $at$ $a$ $sweet$ $price$ $that$ $seems$ $like$ $it$ $must$ $be$ $too$ $good$ $to$ $be$ $true$. $That$'$s$ $because$ $it$ $is$. $Optimistically$, $Sprint$ $will$ $price$ $the$ $new$-$contract$ $Pre$ $at$ $$199$, $which$ $means$ $they$'$re$ $going$ $to$ $take$ $a$ $$200$ $hit$ $right$ $out$ $the$ $door$ $on$ $every$ $unit$ $sold$. Remember, at this point Palm has already made their money.

    So how does Sprint make back that money? With that two year contract you've just been locked into. It doesn't cost anything near $99/month to actually transmit the typical user's calls, data, and text messages. Sprint not only makes back the money they lost selling you the phone on day one, but makes a tidy profit on your use of their services.

    Now there are some possible variations on this typical scenario:

    Palm could sell the Pre at loss to Sprint to spurn better sales. This is not likely given Palm's financial situation - they've been burning through cash as it is, and would like to stop the money loss post haste.

    Palm could also sell the Pre to Sprint at a price that makes them barely any profit. Their plan is to follow the Apple lead and make buckets of money by skimming off the top of App Catalog sales. While Palm will eventually take the second sentence to the bank, it won't happen for some time as it will take a while for Palm to build a user base (customers) and developer base to really make big bucks on App sales.

    I'm no expert on the nitty gritty details of how cell phone manufacturers and service providers actually work, but I do know the basics. Sprint is the one that will be selling the phone at a loss, not Palm.
    "'Form follows function' that has been misunderstood. Form and function should be one, joined in a spiritual union."
    Frank Lloyd Wright
  2. StefanP's Avatar
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    #2  
    tell us something we don't already know.
  3.    #3  
    Quote Originally Posted by StefanP View Post
    tell us something we don't already know.
    Like I said - some of you already know this. But enough clearly do not.
    "'Form follows function' that has been misunderstood. Form and function should be one, joined in a spiritual union."
    Frank Lloyd Wright
  4. #4  
    Bah... this whole CDMA thingy is a scam. Why won't Palm do the right thing and launch the GSM Pre (unlocked, of-course) first?
  5. #5  
    Quote Originally Posted by GreenHex View Post
    Bah... this whole CDMA thingy is a scam. Why won't Palm do the right thing and launch the GSM Pre (unlocked, of-course) first?
    Seeing as they have announced Sprint so far as the only carrier....No.
  6.    #6  
    Quote Originally Posted by GreenHex View Post
    Bah... this whole CDMA thingy is a scam. Why won't Palm do the right thing and launch the GSM Pre (unlocked, of-course) first?
    Because they signed a contract with Sprint. Palm does their research, and they know that there are a lot of Palm users still on Sprint. If they thought they could make more money launching on a GSM network first, they would have done so.
    "'Form follows function' that has been misunderstood. Form and function should be one, joined in a spiritual union."
    Frank Lloyd Wright
  7. #7  
    Quote Originally Posted by GreenHex View Post
    Bah... this whole CDMA thingy is a scam....
    I agree. All these CDMA carriers want you to have a locked CDMA phone that will only work on their private network, plus they want to lock you into a 2 year contract. CDMA carriers are starting to remind me of a dishonest car salesman. Not to say there aren't honest car salesmen.
    My Phone & My Wife's Phone Two Unlocked GSM Treo Pro's

  8. #8  
    Quote Originally Posted by StefanP View Post
    tell us something we don't already know.
    ...yeah, and not all fat kids like candy !!!
    .....Life is But Such Sweet Sorrow.....
  9.    #9  
    Quote Originally Posted by Merovingian View Post
    ...yeah, and not all fat kids like candy !!!
    Who doesn't like candy?
    "'Form follows function' that has been misunderstood. Form and function should be one, joined in a spiritual union."
    Frank Lloyd Wright
  10. #10  
    Quote Originally Posted by palandri View Post
    I agree. All these CDMA carriers want you to have a locked CDMA phone that will only work on their private network, plus they want to lock you into a 2 year contract. CDMA carriers are starting to remind me of a dishonest car salesman. Not to say there aren't honest car salesmen.
    And AT&T / Apple is different how? For that matter, all the GSM carriers require you to sign a multi-year contract to get a subsidized price, just like the CDMA carriers. And most GSM phones come locked to the carrier's network, too.

    In the U.S., there's no real difference in portability between CDMA and GSM, unless you can either sweet-talk the carrier into unlocking your phone (good luck), or someone figures out how to hack it.
    Bob Meyer
    I'm out of my mind. But feel free to leave a message.
  11. #11  
    Quote Originally Posted by meyerweb View Post
    And AT&T / Apple is different how? For that matter, all the GSM carriers require you to sign a multi-year contract to get a subsidized price, just like the CDMA carriers. And most GSM phones come locked to the carrier's network, too.

    In the U.S., there's no real difference in portability between CDMA and GSM, unless you can either sweet-talk the carrier into unlocking your phone (good luck), or someone figures out how to hack it.
    Not true at all. AT&T will unlock any of their branded phones upon request. The first thing I do when I get a new phone (always quad band) from them is call them to unlock it. The only exception to this rule is the iPhone which you could of course hack.
  12. #12  
    Quote Originally Posted by meyerweb View Post
    And AT&T / Apple is different how? For that matter, all the GSM carriers require you to sign a multi-year contract to get a subsidized price, just like the CDMA carriers. And most GSM phones come locked to the carrier's network, too.

    In the U.S., there's no real difference in portability between CDMA and GSM, unless you can either sweet-talk the carrier into unlocking your phone (good luck), or someone figures out how to hack it.
    I have an unlocked GSM Treo Pro and my contract is month to month. I'd just as soon buy an unlocked at retail price and avoid the multiyear contracts myself. The only major problem I see with the GSM market right now in the US is major carriers buying up the smaller GSM carriers, making your market selection slim:

    GSM Coverage Maps | United States
    My Phone & My Wife's Phone Two Unlocked GSM Treo Pro's

  13. Rhody's Avatar
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    #13  
    Quote Originally Posted by Captain Hair View Post
    Who doesn't like candy?
    And where do Razzles fit in? First they're candy, but then they're gum. I get confused.
  14. #14  
    Quote Originally Posted by meyerweb View Post
    And AT&T / Apple is different how? For that matter, all the GSM carriers require you to sign a multi-year contract to get a subsidized price, just like the CDMA carriers. And most GSM phones come locked to the carrier's network, too.

    In the U.S., there's no real difference in portability between CDMA and GSM, unless you can either sweet-talk the carrier into unlocking your phone (good luck), or someone figures out how to hack it.
    Your 2nd point is not true completely, if you don't get the phone through them. Factory or hacked unlocked phones WILL work without a contract, but they just aren't obligated to offer support for them, although sometimes they do.

    In the case of the iPhone, turns out the 3G version only requires an initial activation through iTunes with a contract SIM, then you can insert any AT&T SIM, including prepaid. Although it will remain locked unless you hack it. However they didn't say anything about me not being able to use my hacked unlocked first gen. iPhone, although it did register in their system. They are allowing me to use it, so far.

    It is true though that they rip you off big time with their own locked down phones on AT&T unless you get a contract. The price of the no contract version locked is the same price or sometimes more as a factory unlocked. I never pay them directly due to this, I always get aftermarket or unlocked phones. They usually don't care as long as you pay for the service.
    HP has officially ruined it's own platform and kicked webOS loyalists and early TouchPad adopters to the curb. You think after you drop it like a hot potato and mention it made no money and is costing you money, anyone else wants it??? Way to go HP!!

    And some people are fools to keep believing their hype. HP has shown they will throw webOS under the bus and people are still having faith in them??? News flash: if it's own company won't stand behind it, it's finished!
  15. #15  
    Quote Originally Posted by The Phone Diva View Post

    It is true though that they rip you off big time with their own locked down phones on AT&T unless you get a contract. The price of the no contract version locked is the same price or sometimes more as a factory unlocked. I never pay them directly due to this, I always get aftermarket or unlocked phones. They usually don't care as long as you pay for the service.
    I do the opposite. Pay the AT&T contract price and unlock the phone every 18 months. Its not like I am planning to move to T-Mobile.
  16. #16  
    Do you like the sucky firmware? Even if you do get it unlocked, you still have that, unless you know how to flash the generic ROM. Another reason to buy factory unlocked.
    HP has officially ruined it's own platform and kicked webOS loyalists and early TouchPad adopters to the curb. You think after you drop it like a hot potato and mention it made no money and is costing you money, anyone else wants it??? Way to go HP!!

    And some people are fools to keep believing their hype. HP has shown they will throw webOS under the bus and people are still having faith in them??? News flash: if it's own company won't stand behind it, it's finished!

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