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Though Tim Cook recently downplayed fears aired by BTIG and others that iPhone (AAPL) subsidies...

  • Monday, May 7, 2012, 6:41 PM ET
    Though Tim Cook recently downplayed fears aired by BTIG and others that iPhone (AAPL) subsidies will decline, carriers are taking steps to limit the margin hit smartphone subsidies exact. While U.S. carriers are making indirect moves such as hiking data plan rates and establishing upgrade fees, Telefonica (TEF) and Vodafone (VOD) have discontinued subsidies for new customers in recession-hit Spain. Carriers around the world are paying close attention. (also)
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This news story has 8 comments:

  •  
    Maybe if we had to pay anything close to list price for our phones, consumers would be more careful with them and hold on to them for longer than 2 years.
    7 May 2012, 06:57 PM Reply Like
  •  
    I went to LaCosta store on Sunday. People were buying T-shirt which costed $150. I can buy the similar T-shirt without logo in Walmart for $8. And this LaCosta store was busy.

    My point is people do not care how much Iphone cost. Everybody have it except me.
    7 May 2012, 07:05 PM Reply Like
  •  
    More BS spin. Do a little research and it turns out Vodaphone reduced iPhone subsidies because their iPhone demand far outstrips supply...
    7 May 2012, 10:35 PM Reply Like
  •  
    Vodafone Spain stopped subsidizing all phone sales for new customers, not just the iPhone. I'm pretty sure demand isn't outstripping supply for all of them.
    8 May 2012, 08:57 AM Reply Like
  •  
    The subsidized model in the US ends up helping ATT and Verizon, and the carriers know this. Old iPhones (such as the 3GS and 4) have high resale value, are locked to a single carrier, and can run current software (unlike older or even current Android devices).

    Most of these old iPhones get resold or given to family members, and thus they end up on data plans of their own. So yes, the carriers take a hit when they subsidize a new iPhone, but due to the lasting quality of the product they usually end up with a net gain of a data customer--well worth the cost of a new subsidy.
    8 May 2012, 01:35 AM Reply Like
  •  
    The subsidized model in the US ends up helping ATT and Verizon, and the carriers know this. Old iPhones (such as the 3GS and 4) have high resale value, are locked to a single carrier, and can run current software (unlike older, or even current Android devices).

    Most of these old iPhones get resold or given to family members, and thus they end up on data plans of their own. So yes, the carriers take a hit when they subsidize a new iPhone, but due to the lasting quality of the product they usually end up with a net gain of a data customer--well worth the cost of a new subsidy.
    8 May 2012, 04:40 AM Reply Like
  •  
    I wonder how many phones you could subsidize if you didn't blow $4B on a deal that would hurt consumers in the long run?
    8 May 2012, 10:27 AM Reply Like
  •  
    interesting point
    27 Jun 2012, 04:37 PM Reply Like
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