What Does The Moto G Mean for Mobile Contracts?

Rob Nichols November 15, 2013 1

Motorola announced a new smartphone this week, dubbed the Moto G, and it’s quite possibly revolutionary. There’s nothing particularly outstanding about the device itself, but at a price of just £135 it could change the way people think about buying a smartphone.

With a 4.5” display, a 1.2GHz quad-core processor, 1GB of RAM and Android 4.3, you’d be forgiven for thinking the Moto G is a pretty standard device these days. You’d be right, but with such a low price point it significantly undercuts its rivals in the market, most notably of which could be Apple’s first foray at the ‘budget’ market, the iPhone 5C, which opens bidding at a comparatively ludicrous £469.

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Aside from how it stacks up against the competition, a more noteworthy issue is where this launch leaves the future of mobile contracts. Usually, as I’m sure you’re well aware, mobile networks such as O2 or Vodafone will subsidise the cost of the device in exchange for securing your monthly custom for up to two years. It works for devices that cost £469, as very few customers can walk in with that kind of cash and walk away with an unlocked phone, most don’t mind paying monthly, usually to the tune of £30-40 a month.

Now let’s not pretend that this is a top of the range device, its specs set it very much in the budget category, alongside the likes of the Galaxy S3 and the HTC One Mini. Google’s own Nexus 5 and Samsung’s Galaxy S4 are all still a way ahead of this in terms of power. So let’s compare some numbers for the budget devices mentioned with how much you would pay for the Moto G.

An HTC One Mini on Vodafone, if you want unlimited texts, calls and 1GB of data will set you back £29 a month, but you’ll get your device for free. For £32 a month you can get 2GB of data with O2. You’ll also find identical deals on offer for the Galaxy S3, so let’s assume that for a good contract you’ll be paying circa-£30 a month for a phone of this calibre.

Vodafone offer the same deal: unlimited texts, minutes and 1GB of Internet on a pair of SIM-only deals. For a rolling 1-month deal you’ll pay £23 a month, but can cancel at 30 days notice for no charge, or you can pay £21 a month for a fixed 12-month contract. But when you have an unlocked device, you have far more flexibility with your tariff, and most networks will offer an equivalent package for just over £20 a month, but for now we’ll compare like for like.

On Vodafone, £29 a month for a 24-month contract will set you back £696 over the course of your contract. A rolling one month contract at £23 a month will set you back £552 over the same duration, but of course you’ll have to front £135 for the handset, giving a total of £687.

Remarkably similar cost over the course of 24-months, so there’s no great monetary case to be made for either here, but there are a few other key factors to consider. First of all, can you afford to front even £135 on a new handset when there’s the offer on the table of essentially paying in instalments for two years? Secondly, Do you want to be tied down to the same deal for two years? And finally, opting for a SIM-only package allows you to be highly flexible throughout the term of having your phone. You can change at any time if you find yourself in need of a bigger tariff or a cutback on costs, you can cancel at any time and change to a new provider of you find a better deal, or are unhappy with the service.

Overall, there’s a case to be made for both contracts and rolling deals, or even pay as you go deals if you’d prefer, and that’s always been the case. But for many years now, as prices of mobile phones have soared, it’s become less and less feasible to have a good quality, premium phone without being tied down for two years. What the pricing of the Moto G does is put the choice back in the hands of the consumer, and that can only be a good thing, right, and it’ll only force the hand of competitors to do the same.

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