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Get The Most Recent News About Iridium Satellite Phone Difference In Price Tag

The bigger US cellular phone companies have tens of millions of clients. Iridium currently (Mar 06) has about 150,000 - 100 times smaller than major cellular phone firms. The expense of its 66 satellite network is about $6 billion, and while those are all sunk costs, the satellites will need to be replaced at some stage.

A similar equation applies to the gear. Famous mobile phone versions sell in quantities of many millions, and the underlying technology changes little from model to design, allowing development costs to be split over several units, and with most efficient large quantity production methods. However the Iridium satellite phones are selling very slowly, and have unique technology in them.

And so, whereas your regular cellular cellular phone business can almost certainly make money by giving you a free phone and 1000 minutes of airtime for only $30/month; Iridium absolutely can not.

Lack of competition and price inelasticity

You have a lot of selections when choosing a typical mobile phone service. But there's only 1 fully international satellite cellular phone supplier - Iridium - and only 1 source of Iridium handsets.

Could Iridium market its 9505a handset for less than $1500? Almost certainly - the underlying variable cost per mobile sold, to Iridium, is likely $50. No need to decrease the phone price, because you will find no competitors.

Iridium might choose to drop the price tag with the device being a way of encouraging much more people to sign up for their support, in a similar way to how traditional cellular phone operators give away mobile phones, but to date it has resisted this kind of temptation.

Could Iridium market its airtime for less than the rates it does? That is a much more complex question; for certain, the variable additional price of accepting 1 more call onto their network is close to zero, but they have huge fixed costs that need to be covered. And, significantly like the mobile value, for folks who genuinely require a satellite phone, $1.50 a minute is a bargain. And for individuals who don't need a satellite cell phone, even 50¢ a minute is possibly as well a lot. Iridium probably feels that for the type of individuals who need and use its solutions, its costs are fair.

Future satellite cell phone cost trends

Considering these issues above, we don't predict key drops in either handset or airtime fees occurring with Iridium satellite program within the foreseeable long term.

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