Does $100 Moto G Shake Notion That Unsubsidized Smartphones Must Be Expensive?

aioa-460The general line of thought in the wireless market is that prepaid customers are offered older and cheaper smartphones because most prepaid customers don’t also want to splash out the $500-800 for an unlocked, top-of-the-line device. Meanwhile, contract phone customers are pitched those pricier phones but at discounted rates (or monthly installment plans) that make the phones more affordable (and lock the customer into months or years of service). But does a good smartphone need to cost so much? Do phones for the prepaid market need to be so bad? Maybe not.

The Motorola Moto G — the less-frilly version of its Moto X — came out around Thanksgiving at a retail price of $179, unlocked, meaning AT&T and T-Mobile customers could take it on either network and didn’t need to sign a contract.

While it looks like our cohorts at Consumer Reports have yet to test the device, it does have some rather positive reviews, ranging from a 7.0 to a perfect 10 on Engadget’s round-up of ratings. It’s by no means a top-line device — it doesn’t have LTE capability, its screen is smaller than some more expensive competitors (though it has better resolution than some), and its camera has fewer megapixels — but many of the reviews say that the Moto G is about as good as you could hope for a $179 phone.

Then came reports earlier this week that the Verizon-compatible version of the device was selling for only $99.99 at Best Buy. For an unlocked, new phone, that’s virtually unheard-of. Best Buy has confirmed it’s been selling the Verizon version at that price since shortly before New Year’s and Verizon confirmed today that it will be adding the Moto G to its currently slim prepaid device pickings on Jan. 9 for the $99.99 price.

Sprint’s Boost Mobile says it will also be offering the phone, but at $129.99.

With its brightly colored options and the low price point, the Moto G is obviously looking at the iPhone 5C as competition. However, the iPhone’s $99 price tag is the subsidized version that requires a two-year commitment to a wireless provider. The unlocked 5C will actually cost you $549.

Granted, the 5C has more features than the Moto G (LTE service and a better camera chief among them), but do those improved specs really merit a $449 price difference?

Even the full-price AT&T/T-Mobile version of the Moto G is $370 less than the unlocked iPhone 5C. It’s also significantly cheaper than most of the options that T-Mobile sells directly to customers through installment plans. For example an iPhone 4 from T-Mobile will eventually cost the buyer $408 (24 installments of $17), and that phone came out in 2010.

As I mentioned last week, if phone companies are going to shed their practice of selling subsidized phones — a practice that, in my opinion, is an antiquated holdover from the transitional period between landlines and wireless — something will need to be done about the sticker prices of phones. While things like installment plans help delay the huge retail price of high-end smartphones, they are really just a substitute for the contracts we all hate.

If we want true mobility in the wireless market, manufacturers need to make affordable, unlocked phones that will give consumers the freedom to choose their wireless providers without having to pay an exorbitant price for that freedom.