The carrier coup must be stopped


The trouble with gadgets, especially commodity devices like netbooks, is that when everybody is buying on price, margins shrink and nobody gets rich. The carrier superstore idea is seen as a way to boost those margins and enable the carriers and the device makers to make much higher profits.

Everyone believes they're making rational decisions when they buy things. In fact, they are not. Behavioral economist clearly how consumer decision-making is governed primarily by how companies present their products and their pricing. Ariely demonstrates that when confronted by pricing complexity, consumers almost always pick whatever "package" has been chosen for them -- whichever option is simplest.

Knowing this, marketers can make a fortune by contriving a very profitable and very simple option for consumers, then offering that option along with several other very complex options. They know that consumers will pick the simpler option, even if it's a rip-off.

When you buy a netbook without mobile broadband service, there is very little complexity. This one is $400, that one is $300. I'll buy the cheap one. Whichever company is selling low gets the sale, but in order to do so it has to reduce margins to near zero.

But when you buy a netbook from the carrier, suddenly a great deal of complexity is introduced. Now, instead of a choice between one price or another, the buyer is offered the netbook with a two- year contact. But which contract

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