Smartphones have become the tool of choice for comparing prices and finding deals, and now the handsets themselves are increasingly a bargain.
Switching to a smartphone has become more desirable for on-the-go streaming of music and video, games galore and apps that do everything from calculate the restaurant tip to log your jog. Realizing that not every customer can afford to shell out a full retail price of $400 or more, more phone manufacturers are rolling out cheaper handsets and dropping the prices on older models instead of discontinuing them, says Allen Nogee, a research director for research firm In-Stat. After introducing the new iPhone 4S, Apple, for example, made its 3GS model free with a two-year AT&T contract and cut the price on the iPhone 4 to $99. In-Stat expects Android manufacturers will ship 21 million sub-$150 handsets worldwide this year, mostly outside the U.S., up from about 3 million last year. By 2015, that figure is projected to be nearly 340 million.
Cheap retail phones are better news for those on prepaid or pay-as-you-go plans, which typically require users to pay the full retail price of the phone, says Nogee. Cricket, for example, has the new ZTE Score for $130, but knocks the price down to $80 with a web discount. The Score -- with its 3.2 megapixel camera and 3.5" screen -- is $100 cheaper than the carrier's Samsung Vitality, which has similar specs. Contract subscribers are also seeing a wider range of good phones for free, or low price points, says Delly Tamer, founder of price comparison site LetsTalk.com. The $250 HTC Wildfire, which launched on T-Mobile in August, is already free on the carrier's web site. Most carriers also have a range of free BlackBerry, Palm and Android devices. "Most of these phones are quite good phones, they're just older," Nogee says.
There are some trade-offs, however, for going with a cheaper phone. The screen might be smaller than pricier models, or the processor not as fast. For example, Verizon's new Samsung Stratosphere is $50 cheaper than most of its other 4G-capable smartphones, but has 4GB of memory instead of the others' 8 to 16GB. AT&T's iPhone 3GS doesn't have the video calling capability of the 4G or the new voice-control assistant, Siri, from the 4S. Android models may not be able to update to the forthcoming new operating system, called Ice Cream Sandwich, says Samir Sakpal, an industry manager and senior analyst for Frost & Sullivan.
And of course, "cheap smartphone" is still somewhat of an oxymoron. Even as the handsets get less expensive, owning one is getting pricier because of new data plans, says Sakpal. This summer, Verizon eliminated its $30 unlimited data plan for new subscribers in favor of tiered charges of up to $80 based on usage. AT&T moved to similar tiers last year, and as of Oct. 1, now reduces the data speed of its heaviest users. Carriers have also made it more expensive to leave mid-contract. Sprint recently increased its early termination fee for smartphone users from $200 to $350.