Anyone paying attention to the internet knows that Google announced a while bunch of goodies yesterday. On the mobile front, Google Play Music All Access looks stupendous. It’s like Spotify integrated into your Google Play Music library, rendering Spotify and other music apps redundant for Android users. While that announcement garnered plenty of attention, Google did announce another mobile development. They will sell the Galaxy S4, unlocked, for $649.
Reportedly the announcement drew boos from the Google I/O crowd due to the price tag. It defies our expectations for what a phone costs, by a significant sum, so the reaction isn’t surprising. Yet expectations aren’t the only issue at play here. The way the system works in the US, consumers have little incentive to use unlocked, unsubsidized phones.
(And another reason why we shouldn’t be restricted in unlocking our phones in the first place.)
A customer with an upgrade can walk into an AT&T store and purchase a Galaxy S4 for $199.99, and then pay $90 per month for cellular service. To bring an unlocked Google Galaxy S4 to AT&T would incur the same $90 per month charge, but would cost the consumer an additional $450. Therefore, it only really benefits consumers who want the S4 but do not have an upgrade — although they could simply pay the full price at AT&T. At $640, a consumer would save $10 that way.
The only advantage of owning a locked phone in the US is the ability to eventually take the phone to T-Mobile. Previously you’d have encountered the same issue there, paying the same price as someone who is repaying a subsidy. The way T-Mobile works now you can pay $70 per month for unlimited everything. If you were to buy a Google unlocked Galaxy S4, it could work if you activated it with T-Mobile.
Of course, T-Mobile itself sells the Galaxy S4. You can walk out of a store with it for $150, and then $20 per month for 24 months. That brings the total device cost to $630, not only $20 cheaper than Google but also spread over two years. Since the value of money diminishes with time, you make out much better paying the $150 up front and the $20 per month. If you just want it outright, you can pay the $630 up front if you wish and still save that $20.
There might be some cases where buying the unlocked version does make sense. But for the average consumer, purchasing the phone through AT&T or T-Mobile still makes sense. Maybe if you could bring a phone to more than one other carrier, and if you weren’t paying a monthly fee that takes into account a subsidy, an unlocked Galaxy S4 would make sense. But the way the carriers currently run the business it doesn’t add much value.
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