Apple does not sell overpriced products, stop whining people [Rant]

…With the exception of Macs. I need to clarify this point before I get flamed. With the exception of Macs, Apple does not sell overpriced products. What exactly am I trying to say? I am saying iPhone, iPad, and iPod Touch are not overpriced, when compared to the competition. Don’t believe me? Let’s look at the facts.

Note: The following rant is based on a comparison of prices in the United States. While the facts and trends stated in this article should generally hold true in other regions, prices may vary around the world.

Before We Begin

Before we delve into a comparison of iDevices with the competition, let me clarify I am not an iSheep in the least. I own no iDevices and likely never will. My smartphone journey started with Windows Mobile powered Samsung Omnia; next came the Android powered Samsung Galaxy S; now I’m currently using Samsung Nexus S. I own no tablets but my first tablet will more likely than not be a Windows 8 powered tab.

Now that I have cleared the air of any potential Apple bias, onto the facts.

iPhone vs Android

Unlocked 16GB iPhone 4S retails for $649 while 32GB and 64GB versions are $749 and $849, respectively. The iPhone 5 will likely be priced the same. 16GB iPhone 4S on two-year contract sell for $199 while 32GB and 64GB versions sell for $299 and $399, respectively. This, again, will likely will be true for the iPhone 5. (Note: Sprint recently dropped 16GB iPhone 4S price to $149 on two-year contract in anticipation of the iPhone 5. This is an exception to the rule and not being considered in this comparison.)

Samsung Galaxy S III, the undoubted biggest competitor to the iPhone, sells for $599 for the 16GB unlocked version and $199-$279 (depending on your carrier) for 16GB version on two-year contract. The 32GB Galaxy S III retails for $649 unlocked and $249-$329 (depending on your carrier) on two-year contract. There is no 64GB Galaxy S III available at the time of this writing.

As you can see, when buying a smartphone on two-year contract, the price difference between the iPhone 4S and Samsung Galaxy S III is a farce. 16GB versions of both devices are for $199 (not counting Sprint’s recent price drop because the iPhone 5 will likely be $199, too), unless you are on T-Mobile in which case you pay $279 for a 16GB Galaxy S III. There is no bloody difference between iPhone 4S’s $199 and Galaxy S III’s $199.

A price difference between the two devices does arise for anyone opting for 32GB versions, with the iPhone 4S costing $50 more unless you are on T-Mobile in which case you pay $80 more for the Galaxy S III. Similarly, if buying unlocked phones, the iPhone 4S is $50-$100 more expensive than the Galaxy S III, depending on 16GB or 32GB version. However, any extra costs associated with unlocked or 32GB iPhone 4S is completely negated by resale value.

Like it or not, iPhone has much higher resale value than Android devices. Fact is iPhone 4S resells much better than the Galaxy S III, regardless of how awesome of a device the S3 is. For example, it has been almost a year since the release of the iPhone 4S and it can be traded in for over $400, contingent on the condition of the traded in device. I guarantee you will never find an Android device that resells for 2/3 of its original retail value almost a year after the device has been released. If you don’t believe me, let’s look at another example. The 16GB Galaxy S II (white international version) can be traded in with Amazon for $210 while black version can be traded in for $79. iPhone 4 16GB black AT&T version can be traded in for $270. The iPhone 4 came out in 2010 while the Galaxy S II came out in 2011, yet the iPhone 4 — a device that is over two years old — can be traded in for more money (Note: iPhone 4 16GB was priced the same as iPhone 4S 32GB, so it had a higher up-front cost than the 16GB Galaxy S II.)

To sum up, when purchasing 16GB versions on two-contract, there is no price difference between the iPhone 4S and Galaxy S III. A price difference does arise when looking at 32GB versions or purchasing either device at retail price. However, when taking into consideration the much higher resale value of the iPhone, all price differences are nullified and in fact, in some cases, makes the iPhone cheaper than its competitors.

Now, some people might be thinking Ashraf only compared the iPhone to one Android device — what about the others? Yes, I did only compare the iPhone to the Galaxy S III for two main reasons. Firstly, there are way too many Android phones out there for me to compare the iPhone to every single one. More importantly, however, the general trends discussed in iPhone vs Galaxy S III pricing holds true for the majority of other high-end Android devices. Yes, you will find price differences between iPhone and entry-level or mid-range Android devices, and there will be some high-end Android devices that are priced lower than the iPhone. Generally speaking, however, what I have stated above is accurate for iPhone vs high-end Android.

By the way, I’m sure people will argue that since the iPhone 4S has no expansion slot and Galaxy S III’s internal memory can be expanded by up to 64GB with microSD, the Galaxy S III is a better bang of the buck. However, the comparison of expandable memory is a feature difference and I’m not discussing feature differences in this article — only price differences. If I were to discuss feature differences, that would open up a whole new discussion because then other things could be argued such as iPhone has XXX so it is better value, Galaxy S III has XXX so it is better value, etc. It is a whole different can of worms.

iPad vs Android

The story with tablet pricing is a bit different than phones because there is more competition in the tablet market (i.e. more companies creating tablets) than the phone market, and this extra competition is driving down prices. However, as you will see, still there are Android tablets priced the same as the iPad and iPad’s high resale value pretty much knocks out any extra upfront costs you may have to pay for it.

16GB WiFi new iPad retails for $499. 32GB WiFi new iPad retails for $599. 64GB WiFi new iPad retails for $699. Tack on an extra $120 if you want WiFi + LTE connectivity to each of those prices.

The price of high-end Android tablets vary between $399-$499 depending on make and model. For example, Motorola XOOM 2 32GB WiFi’s price has been dropped from $499 to $449; 16GB WiFi Samsung Galaxy Tab 10.1 2 is being sold for $399; 16GB WiFi Samsung Galaxy Note 10.1 is selling $499; etc. Every now and then you may find a manufacturer undercutting the competitors by another $100, such as how last year the ASUS Transformer 16GB WiFi (10 incher) was being sold for $299. For the sake of comparison, let’s say high-end 10 inch Android tablets – 16GB WiFi versions – cost $399.

At $399 high-end Android tablets actually cost the same as the iPad 2, which is still being sold by Apple and is available for $399 (16GB WiFi version). To be completely fair, comparing high-end Android tablets to the iPad 2 is still applicable because, like it or not, the iPad 2 actually has specifications that still rival the high-end Android tablets of today. However, let’s ignore the iPad 2 for a second and compare Android tablets to the new iPad.

At $399 high-end Android tablets are $100 cheaper than the new iPad, yes? No, not if you consider resale value. For example, Amazon is accepting trade-ins of 16GB WiFi black iPad 2 (last year’s model) for up to $335. Come next year, the new iPad will likely be as highly valued. 32GB WiFi Motorola XOOM (last year’s model) is being traded-in for $180. The kicker? 32GB WiFi Motorola XOOM actually cost $100 more than 16GB WiFi iPad 2 until June 2011 when Motorola dropped the price to $499, yet iPad 2 still has higher resale value. If you compare resale value of other Android tablets, you will find similar trends.

To sum up, depending on which high-end Android tablet you buy, upfront costs may or may not be lower than the iPad. When factoring in resale value, however, the iPad turns out to be cheaper than its Android brethren.

P.S. Yes, I know 7 inch Android tablets are significantly cheaper than the iPad. However, 7 inch tablets and 10 inch tablets are two different beasts and shouldn’t be compared when it comes to price. When Apple releases their own 7 inch iPad Mini, then we shall compare.

iPod Touch vs Android

With the rise of smartphones, there are less and less iPod Touch competitors simply because MP3 players are being replaced by smartphones. In fact the only Android MP3 player I know that compares to the iPod Touch is Samsung Galaxy Player.

8GB iPod Touch (fourth generation) retails for $199 while the 32GB/64GB versions cost $299 and $399, respectively. Comparatively, 8GB Samsung Galaxy Player 5.0 retails for $199; there doesn’t appear to be 16GB/32GB/64GB versions of the Galaxy Player. What is the difference between 8GB iPod Touch’s $199 and Samsung Galaxy Player’s $199? Nothing! In fact if you compare resale values (Amazon is accepting 8GB iPod Touch fourth generation trade-ins for $115 while Galaxy Player 5.0 can be traded in for $78.75), 8GB iPod Touch is actually cheaper.

Okay, it should be mentioned Samsung Galaxy Player has a microSD slot and its storage can be expanded by up to 32GB. So, technically speaking, you could purchase 8GB Galaxy Player 5.0 for $199 then expand its memory by up to 32GB whereas you would need to shell out $100-$200 more for iPod Touches for more storage. However, as I mentioned in the iPhone vs Android section above, the difference between having expandable memory and not having expandable memory is a feature difference and, if we were to go there, we would have to do a full comparison, during which I’m sure there would be many pros and cons in both corners. For the purpose of price comparisons, we are not discussing features differences.

Conclusion

I’m no Apple fan, but I am getting sick and tired of people complaining about how Apple products are overpriced. Do Macs cost significantly more than comparable Windows PCs? Yes, they do. Do iDevices cost significantly more than comparable Android devices? No! So stop whining people. Sheesh.

[Image via Jason Balonski]

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29 comments

  1. Random

    $100 for every 16Gb increase, I do believe I can buy a 500Gb high speed harddrive for $60 at walmart. Also I saw some person ranting that apple uses quality parts but from what I hear that is not even the case.

  2. Akash

    @John Smith:

    I am sorry John if i hurt your feelings. I clearly state that I found the “iphone” expensive when I was purchasing my “s3″. Please read what i posted before jumping on the fanboy bandwagon, I never compared the S3 with the Ipad.

  3. Mark fka SmartPhone22

    @Frank: My apologies to Ashraf and the group. I’ve been a subscriber to this insightful group for a couple of years now and I do not want to degrade the interaction in anyway.

    I still stand by my original statement that we are not truly seeing the true price of the phone when we get a phone at what only appears to be a discount, but then pay more by getting locked into an overpriced 2 year contract.

    I could be wrong, but I think if people had to fork over the full retail price of the phone, I think some discounting wars would begin.

    That’s why I love my plan of buying the phone of my choice and a no contract plan with unlimited service for only $49/mo… That’s hard to beat.

  4. Mike

    Oops, I forgot my favorite example of Apple pricing (sorry, Ashraf): a USB/AC adapter plug, for a whopping $29 (or was it $30?). Of course, it does come in a very nice-looking (and wasteful) clear-plastic topped box. I purchased the exact same adapter from Meritline.com for $1.95, I think it was.

    ;^)

  5. Mike

    Interesting analysis. However, I’m not sure about factoring resale price into the equation–I guess that works if everyone resells a product, but if one doesn’t (does one factor in resale price in considering the purchase of other products, such as a food processor?), including that factor really just justifies the higher price of the Apple products.

    In fact, one might suggest that resale value should be excluded, at least under one analysis: Apple seems to omit certain key features, such as expandability (no memory card slot in the iPod Touch, for example), thereby forcing a new purchase to get a feature such as additional memory (and this definitely is part of the Apple interior gameplan, as espoused by Mr. Jobs years ago–wanting to get consumers to buy a new iPod every year).

    Anecdotally, and as wonderful a device as the iPad is, it just feels to be priced at a premium compared to the price of Android tablets as they are priced in the marketplace and easily can be found. Perhaps this is partly a factor of Apple products rarely being on sale, or only being on sale minimally (apart from refurbs available at the Apple website).

    And I’ll provide one prime example of Apple “overpricedom”: compare an Apple Shuffle audio player to a SanDisk Sansa Clip/Clip+/Clip Zip–no way that the Shuffle can be seen as justified price and feature-wise, apart from as snazzy engineering jewelry-wise. Of course, I guess, the other way to look at it is, the Sansa Clips just are a great deal, for both features and price (which they are).

  6. mukhi

    sorry Ashraf, apple products ARE overpriced outside US (i know, i know you have displayed disclaimer)…and, US is not all about the world.
    # in US, price of iphone becomes reasonable as you sign 2 yrs contract…doesn’t apply to (at least) my country. plus, we pay for VAT and other taxes here. therefore, the more the start-up price, the more taxes…
    # i feel the ipod touch to be overpriced because i never needed so many features in my MP3 player (rather felt to have FM and voice recorder add-on). a very std. MP3 player with these add-on features should never cost like this. i really don’t understand why i need video and internet features in my MP3 player (well, iphone is a cool idea though).
    # i should not comment on ipad now until i see the price of win8 tablets. it’s hard to compare ipad with android tablets since the android OS changes like crazy.
    # and, of course, macs are OVER-priced except for imac basic config. oh my goodness…for the price of little high-config MBP, i have bought my 3D laptop with mind-blowing specs.

  7. Keynes

    They are only NOT overpriced because they have defined the market and other pricing has followed. Remember when the average Mac was $5k and PC’s were close to that? The cheapest PC in that environment was $2500 – $3000. As demand and supply ramped up, prices declined. Apple’s did too, but not to the same degree.

    History will repeat itself here; in fact it’s already begun with Amazon’s Fire in the tablet market and Androids in the phone market defining the new price point, NOT the iPad or IPhone.

    Then there’s the mp3 player market, where my $35 Sansa is all that I (or anyone) needs. iPods are ridiculously priced.

  8. John Smith

    Another day, another Apple fanboy with less educated rants.

    Here is reality.
    Check iPad vs any other tablet prices.
    Check iPod vs any other media player prices
    Check iPhone vs any other mobile phone prices.
    Check iTunes apps and their prices vs Play and Windows app store prices of similar apps.

    In short, please do some research and YOU stop whining.

  9. meldasue

    ‘MP3 players are being replaced by smartphones’

    That’s like saying the tablet has replaced the laptop, which is true only for part of the market. If you’re going to buy a device just to listen to music, you can do better than anything by Apple at a much lower price.

    I looked at the Galaxy player recently and couldn’t see the point – my semi-smartphone does the same things, but at enormous battery drain. And the touch interface is really inconvenient if you listen to your player while exercising. When you compare any model of the ipod to the Sansa Clip, it comes up a loser in every category except brand name. (Love my Clip – it’s survived two years and multiple interfaces with the pavement. The battery charge lasts forever.)

  10. Eric

    So, basically Apple devices are not overpriced because they are permanently overpriced. That is, they are extremely overpriced in used condition and have high resale values. So those people are useful after all. “Hey look at me! I could have bought a new phone for the same price but instead I bought the world’s coolest used phone!”

    On another note, I will never understand how companies can justify charging $200 for an extra 48GB. That extra 48GB probably only costs them $20 or so. You can find good SSD’s for fifty cents to a dollar per GB now.

  11. Akash

    Good article! I never thought Ipad was overpriced as compared to other tablets. I did find the Iphone “expensive” when buying the galaxy s3 mostly because it cost me 550$ AUD unlocked (as i like prepaid better), but in saying so I do agree that Iphone’s have a better resale value.

  12. Ashraf
    Author/Mr. Boss

    @RobCr: I’m not so sure it is Apple that is setting prices according to the competition. Rather, it is the competition setting prices around Apple. iPhone literally created the $200-on-contract-$600-retail pricing scheme, and until summer of last year, manufacturers had trouble matching iPad’s pricing. I think I remember a 7 inch HTC tablet costing an astounding $800. Apple isn’t adjusting its pricing, at least not yet. It is other that are adjusting their prices.
    @SmartPhone22: Okay, I saw this coming the moment I saw your comment name. Please don’t spam; spam lowers the quality of dotTech comments.
    @Frank: Or, alternatively, we can keep these comments free of such links.

  13. RobCr

    No doubt competition has forced Apple to be competitive with mobile phones etc. (Or become despicable, low life, litigious swines.)

    My rant was based on the fools that kept paying twice as much for Macs, compared to PCs.
    (I noted that you mentioned/excluded Macs)

  14. Ashraf
    Author/Mr. Boss

    @Grantwhy: That is true, resale value may not be a factor for some. However, even if disregarding resale value, I would hardly call iDevices overpriced.
    I can’t promise such an article but maybe.
    @Frank: “If you wanted to latest and greatest smartphone of its kind you pay almost the same.” Yeah, I agree. I also agree that mid-range Android is probably the most cost-effective… depending on what you need, of course.
    @SmartPhone22: T-Mobile?

  15. Frank

    @Grantwhy: Dunno if you count the iPad1 as an “early iPad” but I do use mine almost daily for surfing.
    The only real mistake I made (and will never again do) was upgrading the firmware. It bloats and bloats and leaves less and less RAM for the actual apps making the browser crash several times a day,
    Still a very useful device to have next to my chair.

  16. SmartPhone22

    So what if the phone is priced $199/mo with a two year contract, you end up paying way more than the actual phone costs.

    I recently purchased a HTC One S but my monthly service is only $49/mo with unlimited everything on the fastest 4G network with no contracts and no credit checks… I love it!!!

  17. Frank

    @Ashraf: We could agree on the following: If you wanted to latest and greatest smartphone of its kind you pay almost the same.
    If you do a fair compariosion of the abilities and power you choose a mid-priced Android as truely comparable and saved alot.
    Besides it depends /a/lot/ on which feature of a smartphone you need. After having had a Galaxy Note even smartphones with 800×480 screens appear smallish to me. Whereas many people I know have no problem with putting up with 240×320 screens.

    Besides: I would trade in these bleeding multi-touch screens immediately for a single-touch resistive screen with a stylus. Nowadays buttons take half the screen despite <20 percent in these days…

  18. Grantwhy

    good writeup :-)

    now, not owning a mobile phone nor a tablet device (and not intending to get any soon) makes me somewhat irrelevant to the debate :-p

    … but, as someone who keeps and uses electronic devices/computers until they are well past their use-by dates, the resale value of a device does not come into calculations on buying a device. (which means for someone like me, Apple’s products are more expensive than their Android equivalents?)

    off topic/suggestion for a article: any chance of looking at the early iPad & iPhones vs the early Android tablets & phones and seeing which (if any) are still useful today (via OS Updates/software updates, are able to handle modern apps/web surfing etc). It might be nice to see whether Apple or non-Apple devices are better choice for a ‘long term’ (5 year +) owner?

  19. Ashraf
    Author/Mr. Boss

    @Gonzo: Ah but you see if you want to go there then you have to consider other things such as the date of release. iPhone 4S was released in 2011. Galaxy S III was released in 2012. See what I mean about a can of worms?
    I am only using the iPhone 4S for comparison because that is the latest iPhone. iPhone 5, when it comes out next month, will follow the same pricing. More likely than not, iPhone 5 will have specs similar to Galaxy S III.
    There is no way to *perfectly* compare devices, because of a variety of reasons. In this rant I’m only looking at one aspect of devices, which is price — because price is a huge determinate of what the average Joe buys. This same average Joe doesn’t give a rats ass of feature vs feature; he just wants a modern smartphone with as little hit on his wallet as possible.

  20. Gonzo

    Although I see your point, I have to disagree. You cannot do a price comparison when feature-wise the devices are very different.
    I don’t want to start yet another discussion on the matter, but the Galaxy S III is far more powerful (specs) than the iPhone 4S. Not sure about the iPhone 5, since I haven’t checked its specs, but it’s still not out there anyway AFAIK.

  21. Ashraf
    Author/Mr. Boss

    @Caleb Stein: After multiple price drops. Plus, as I mentioned above, there will always be exceptions to the rule — that is what is so great about competition. Nexus devices tend to be exceptions. They also have drawbacks. Good luck getting that GSM Galaxy Nexus you quote from T-Mobile or AT&T for a reduced price on contract. Also, how much do you think the next Nexus phone will cost? If history is an indicator, the same $500-$600 Nexus S and Galaxy Nexus debuted for, unlocked.

    And don’t get me started about resale values.