Get The Most Recent Story Concerning Iridium Satellite Phone Distinction In Price Tag
The larger US mobile phone companies have tens of thousands of clients. Iridium currently (Mar 06) has about 150,000 - 100 times smaller than major cellular phone companies. The price of its 66 satellite network is about $6 billion, and although those are all sunk fees, the satellites will need to be replaced at some stage.
A similar equation applies to the gear. Popular cell phone designs sell in quantities of several millions, and the underlying technology changes little from model to model, permitting development fees to be split over numerous units, and with most efficient large volume production methods. But the Iridium satellite phones are selling very gradually, and have distinctive technology in them.
And so, whereas your regular cellular phone company can most likely make money by giving you a free cell phone and 1000 minutes of airtime for only $30/month; Iridium completely can not.
Lack of competition and price inelasticity
You have a lot of choices when choosing a normal cellular phone provider. But there's only one fully international satellite phone provider - Iridium - and only one source of Iridium handsets.
Could Iridium offer its 9505a handset for much less than $1500? Almost certainly - the underlying variable cost per mobile sold, to Iridium, is probably $50. No need to reduce the mobile price, due to the fact you can find no competitors.
Iridium might choose to drop the price tag of the handset like a way of encouraging far more people to register for their assistance, in a similar way to how traditional cellular phone operators give away phones, but to date it has resisted such temptation.
Could Iridium offer its airtime for less than the rates it does? Which is a lot more complex question; for certain, the variable added cost of accepting one more call onto their network is close to zero, but they've huge fixed fees that need to be covered. And, a lot like the mobile price, for people who truly have to have a satellite phone, $1.50 a minute is often a bargain. And for folks who don't need a satellite cell phone, even 50¢ a minute is probably too very much. Iridium probably feels that to the kind of individuals who need and use its solutions, its prices are fair.
Future satellite telephone selling price trends
Considering these problems above, we don't predict main drops in either handset or airtime fees occurring with Iridium satellite service in the foreseeable future.
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