The 'breakup value' of cell phones
Posted: Sat Oct 23, 2010 1:17 pm
The original Wall Street had Gordon Gekko buying Bluestar Airlines because he could "wreck the company" in that if he sold its assets off piecemeal (one at a time, to the highest bidder) and bought an annuity to cover the employee pensions, there was millions of dollars left over.
We call this the "break-up value," or it sometimes is referred to as "gestalt," where the sum is greater than its pieces. That's why chop shops steal some cars to take them apart, because they can disassemble the car and sell it for parts for more than the whole car is worth.
Which comes to prepaid cell phones. Tracfone - I have one myself - is the largest prepaid cell phone operator because they provide very inexpensive mobile phone service. For those who use less than an average of 30 minutes a month or 200 text messages or some fraction of both you can get a portable phone for about $8 a month.
If you have a computer and broadband you can get the same thing - even cheaper phone service - for 2 1/2c a minute from Skype, or for effectively unlimited calls including an incoming number for about $3 a month. You can do this using a computer and a regular phone for $39 the first year and $20 a year after that from MagicJack. If you just want to do that without a computer you can buy a device to plug into your broadband adapter to plug your phone in for $69 for the first year and $20 a year thereafter from some other company whose name I can't remember. They have the advantage that you get basically unlimited or near-unlimited minutes.
Typically Tracfone sells an older model phone - I suspect refurbished - with 20 minutes for $10 to $20, and top up cards giving 60 minutes and 60 days of service for $20. I gather the current recession is really bad, because Tracfone is now bundling a phone, a car charger, a headset and carrying case, for $8 to $10.
I wanted to go buy one, not because I needed another phone, but because a headset alone will usually cost more than this. And if you need a car charger, the deal is even better. It's so good that I suspect other people are doing the same thing, they're buying these discounted Tracfones because the break-up value of the included components is worth more than the price, even if it means getting an extra phone they probably won't even activate.
The reason I suspect this is that the Family Dollar store I visited had many other prepaid cell phones, but had completely sold out of the phones on this offer.
I wouldn't be surprised if they sell a lot of these but don't get a lot of activations since the earphone sets and the charger are universal kits that fit most phones. (At least the ones that use the subminiature microphone/earphone jack type.)
We call this the "break-up value," or it sometimes is referred to as "gestalt," where the sum is greater than its pieces. That's why chop shops steal some cars to take them apart, because they can disassemble the car and sell it for parts for more than the whole car is worth.
Which comes to prepaid cell phones. Tracfone - I have one myself - is the largest prepaid cell phone operator because they provide very inexpensive mobile phone service. For those who use less than an average of 30 minutes a month or 200 text messages or some fraction of both you can get a portable phone for about $8 a month.
If you have a computer and broadband you can get the same thing - even cheaper phone service - for 2 1/2c a minute from Skype, or for effectively unlimited calls including an incoming number for about $3 a month. You can do this using a computer and a regular phone for $39 the first year and $20 a year after that from MagicJack. If you just want to do that without a computer you can buy a device to plug into your broadband adapter to plug your phone in for $69 for the first year and $20 a year thereafter from some other company whose name I can't remember. They have the advantage that you get basically unlimited or near-unlimited minutes.
Typically Tracfone sells an older model phone - I suspect refurbished - with 20 minutes for $10 to $20, and top up cards giving 60 minutes and 60 days of service for $20. I gather the current recession is really bad, because Tracfone is now bundling a phone, a car charger, a headset and carrying case, for $8 to $10.
I wanted to go buy one, not because I needed another phone, but because a headset alone will usually cost more than this. And if you need a car charger, the deal is even better. It's so good that I suspect other people are doing the same thing, they're buying these discounted Tracfones because the break-up value of the included components is worth more than the price, even if it means getting an extra phone they probably won't even activate.
The reason I suspect this is that the Family Dollar store I visited had many other prepaid cell phones, but had completely sold out of the phones on this offer.
I wouldn't be surprised if they sell a lot of these but don't get a lot of activations since the earphone sets and the charger are universal kits that fit most phones. (At least the ones that use the subminiature microphone/earphone jack type.)