8/24/2012 2:15 PM ET|
The real costs of a smartphone
Apps, accessories, media, data plans -- it all adds up when you have a smartphone in your pocket. Some smart tips if you must own one.
Half of mobile phone users in the U.S. owned a smartphone in February 2012, compared with 36% a year earlier, according to Nielsen. That means a lot of people are either new to the sticker shock of a smartphone or have yet to experience it. (You conventional cellphone users are a shrinking breed; two out of three people who acquired a new mobile device recently chose a smartphone over a conventional cell, according to Nielsen.)
Here are some of the costs you need to watch for, as well as some ideas for keeping your smartphone spending under control.
Conventional cellphones can give you Internet access, email, a music player and a camera. Smartphones offer all that and much, much more. They tend to have larger displays and typing keyboards (either virtual or attached). Their advanced operating systems allow you to access multiple email accounts, create and edit documents, and use an incredibly broad universe of apps to do everything from playing Angry Birds to filing your taxes.
The upfront difference in costs is fairly substantial: A conventional cellphone from a wireless carrier typically costs around $20, but you can pay up to $150. Smartphones, on the other hand, usually cost $200 and up, although some older models and "entry-level" smartphones are less than $100.
Another potentially big expense: memory. It's fairly cheap when you're adding it to your computer. It's usually not when you want a smarter smartphone. The basic iPhone 4S with 16 gigabytes of memory starts at $199. For 16 additional gigabytes, you'll pay an extra $100 -- 50% more. Boost the memory to 64 total gigabytes and the phone's price climbs to $399 or more. Memory matters if you use your smartphone intensively, though, so you might want to upgrade from the bottom tier if you want thousands of songs, lots of movies or a bunch of memory-intensive apps on your phone.
If you lose or damage your smartphone before your two-year contract is up, however, you'll discover the real cost of your handheld -- which is usually between $500 and $700. Wireless carriers heavily subsidize the cost of smartphones to get you to sign up for those contracts.
The data plan
With your conventional cell, you picked a voice and texting plan. Now you need to add a data plan to use your smartphone's extra features. Depending on your carrier and how much data you expect to use, these plans will set you back $15 to $80 a month. Go over your limit and you'll rack up "overage" charges as well.
Fear of these charges is what leads people to buy a much bigger data plan than they actually will use. A study by Cisco found the average amount of data use per smartphone in 2011 was 150 megabytes a month, up from 55 MB per month a year earlier. Now, averages can be deceptive, and your mileage may vary considerably. Still, it looks as if the most popular data plans -- which typically provide two or three gigabytes for about $30 a month -- are overkill for many users, even if average usage once again nearly triples this year.
The high cost of smartphones leads many users to pay $4 to $8 per month to insure their device, but Consumer Reports will tell you the coverage usually isn't worth it. For one thing, you'll typically pay a $25 to $100 deductible, and you're unlikely to get a new phone. Instead, you'll get one that's been repaired or refurbished. (Consumer Reports said only 17% of insured buyers it polled got a new phone after theirs broke, and only 3% got new units after their phones were lost or stolen.)
Smartphone users will spend an average of $56 on accessories in 2012, predicts ABI Research, or twice the average outlay of conventional cell users. Cases, extra chargers, Bluetooth headsets and other goodies can add up fast.
The apps and downloads
You can spend a fair amount of money -- from 99 cents to more than $4.99 -- at a time. At least some of that money gets wasted: According to research firm Localytics, 24% of Android apps and 21% of iPhone and iPad apps are used only one time after download.
You also may find yourself downloading (and paying) for more movies, shows, music and books, now that you've got an entertainment device in your pocket.
Four in 10 adults download and pay for digital products or services, such as apps, movies and music, according to a recent study by the American Institute of CPAs. (Not all are downloading to smartphones; the survey covered computer, television and satellite radio as well.) Americans buy an average of five digital songs per month, five movies or TV shows, two apps, two games and two eBooks, the study found, spending an average $38 a month.
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