To the consumer cost to the company providing the product/service is irrelevant. What really matters is the value you extract for the price you pay.
Some products need to be sold at a loss for anyone to consider purchasing them, some are sold at a loss to get you to buy other products from the same company, and some are sold with significant margins. None of these situations really matter to the consumer, do they? All that matters is that I'm getting X and am willing to pay Y. If I can pay .5Y, then that's great I just earned myself a deal. I may not want to pay 1.5Y though.
So from a consumer perspective... I don't understand "how badly you're being ripped off". As an entrepreneur though I read that and think, potential opportunity. Any product/service that has extremely large margins has potential for competition and profits. For a short time at least, until the race to zero makes it less compelling to compete any longer.
I agree. Part of the value is that it is a default application in every phone. My previous startup provides an SMS gateway that sending 500K messages each year to mostly SE Asia receivers (small amount compared to what other providers do) Even now although data plans are getting cheaper and more common, there are still a lot people NOT carrying IPhones, Androids, BB etc. If you want a ubiquitous push notification mechanism, SMS is still the only app. And maybe part of the reasons why the author is ranting about this is because when I compare SMS rates across different countries, US users are paying quite a premium for SMS as compared to Asia or SE Asia where I am located.
To the consumer cost to the company providing the product/service is irrelevant. What really matters is the value you extract for the price you pay.
Some products need to be sold at a loss for anyone to consider purchasing them, some are sold at a loss to get you to buy other products from the same company, and some are sold with significant margins. None of these situations really matter to the consumer, do they? All that matters is that I'm getting X and am willing to pay Y. If I can pay .5Y, then that's great I just earned myself a deal. I may not want to pay 1.5Y though.
So from a consumer perspective... I don't understand "how badly you're being ripped off". As an entrepreneur though I read that and think, potential opportunity. Any product/service that has extremely large margins has potential for competition and profits. For a short time at least, until the race to zero makes it less compelling to compete any longer.