Tuesday, February 28, 2012

Smartphones - Using Mobile to Rideshare

If Rideshare needs a mobile smartphone just to operate, doesn’t that make it more expensive than driving? Smartphones cost like $800!!!

This comment from a prospective Rideshare member not too long ago deserves an answer. And the answer is good news: no, it doesn’t make Rideshare more expensive than driving. In fact, it needn’t increase the cost of ridesharing one single dollar.
First of all, smartphone penetration is increasing all the time. There are now over 120 million smartphones in operation amongst the United States 330 million cell phone users, according to the latest Nielsen and Pew surveys.  Under-18s and over-65s were the two LEAST likely groups to have smartphones, so the 19-64 crowd, where our corporate commuters are located, are probably over represented in the smartphone population already, and face no incremental expense to download and use our free app.

Secondly, that number is only going up. Those same reports show that smartphones now account for 55% of all NEW phone sales, up from 34% just one year ago. So the smartphone population is growing rapidly, and this is becoming less and less of an issue every day.
Thirdly, is that price accurate? Do smartphones really cost $800? Let’s take a stroll through the “Big Four”(AT&T, Verizon, Sprint, and T-Mobile) websites and browse the smartphone selection.
The only $800 smartphone on the market is the iPhone 4S 64GB, the most expensive smartphone in history. And that is the unsubsidized price. Smartphones don’t do you much good without a carrier network to operate them on, and most carriers will subsidize a smartphone up to $450. That subsidy is free and doesn’t impose any marginal cost on the member. So what is the price that a person will actually pay out of pocket for a smartphone? Below are some examples:

                AT&T Verizon Sprint T-Mobile

iPhone 4S 64 GB $399.99 $399.99 $399.99 Not Carried
iPhone 4S 16 GB $199.99 $199.99 $199.99 Not Carried
Samsung Galaxy S2 $149.99 Not Carried $199.99 $229.99
HTC Vivid/EVO/Amaze $199.99 $149.99 $99.99 $179.99
HTC T-bolt/Inspire/WildfireFree Free Free Free
iPhone 3GS Free Not Carried Not Carried Not Carried

Different carriers have different names for the same or similar phones, so I am not sure I have “paired” the various models correctly. But at any rate you get the picture. While there certainly are expensive smartphones out there for people who want to buy expensive smartphones, there are plenty of options for the cost conscious customer. And certainly after the carrier subsidy no one is paying anywhere close to $800.

Perhaps the most salient point is the ever growing list of smartphones available for free after carrier subsidy, including, for the first time, an iPhone model. This means that a person may upgrade their current phone to a smartphone without paying a dime out of pocket. So while Rideshare does require a smartphone to operate, purchasing that smartphone does not have to cost our members any more than they are prepared to pay, including those who don’t want to pay at all.

The only exception to this would be the data plans that come with the smartphone. Customers who don’t have smartphones don’t need data plans, customers that do have them need them. This is a potential new cost for a small portion of our customers that don’t currently possess smartphones. We will examine this point more in the next post.