“If you go into your AT&T or Verizon store to buy a new smartphone, odds are the salesperson will direct you toward a Samsung device,” Adam Levy writes for The Motley Fool. “A recent survey by Kantar Worldpanel found that 63% of smartphone buyers were recommended a Samsung. Comparatively, carriers recommended Apple just 30% of the time.”
“The iPhone is usually ranked as the best smartphone available,” Levy writes. “So, why is there such a huge discrepancy between recommendation rates? The answer shouldn’t surprise you: It’s not in the best interest of wireless providers to recommend an iPhone profit-wise.”
“Carriers seem to have a love-hate relationship with the iPhone,” Levy writes. “While the product certainly sells well, it carries a high up-front cost for the carriers because they must pay Apple subsidies to sell the phone for $199. Samsung and every other OEM have the same deal, but Apple’s iPhone typically carries the highest subsidy.”
Much more in the full article here.
[Thanks to MacDailyNews Reader “MotivDev” for the heads up.]
This practice dates back to the first iPhone. They don’t care about selling the best, only the fact that they can make more from the cheap plastic dropping out of Samsung’s ass.
Actually dates back to pushing MSFT desktop cops ahead of Apple in retail. Nothing changes, except we’re seeing where this ended up for MSFT.
cops = comps
“Desktop cops” also makes sense, kind of. Maybe the infamous annoying “clip”-“helper” was the desktop cop by MS. (Though it was not able to murder innocent people at least.)
Exactly bpondo. Further down the thread I mention seeing CompUSA staff pull the same customer screwing manoeuvres in order to make commission off selling the pet PC of the week.
I miss CompUSA. Wait, no I don’t.
——RM
What I mess is Computer City, owned by Tandy. It was my first computer mecca. I often nostalgically think of the time I spent there learning computer tech and playing ‘7th Guest’.
Best to buy the Samsung and then to return it and buy the iPhone.
This way the sales guy wins, Apple wins and Samsung loses.
Really? I never worked selling cell phones, but I did sell shoes, and if someone returned something I sold them, my commission was docked. I didn’t get to keep the commission on returned merchandise.
——RM
> Samsung and every other OEM have the same deal, but Apple’s iPhone typically carries the highest subsidy.
So, it’s NOT the “same” deal, obviously… 🙂
Not just AT&T and Verizon but if you go to a Walmart Store or Bestbuy they do the same thing, and they try to persuade you that Samsung is a better phone. Like hell it is!!
It’s always been that way even before iPhone, And that’s why Apple decided to open its own retail stores. Despite all predictions of Apple stores going the way of Gateway, Apples stores offer the best service support and Apple experience – anyone interested in Apple products should avoid the telco stores like a plague.
Galaxy 5 is the best phone bar none.
LOL. Cliched troll talk.
Crack is whack
it’s NOT a subsidy. you pay it back, and more, over time.
They are talking about what the carrier has to pay Apple for the privilege of selling the iPhone, not the “discount” where the customer pays for the phone over time.
They are the same thing. You buy a phone for $199 and the telco charges you an extra $35 per month on your contract to recover the $400 they gave to Apple for the phone wholesale. In the past they kept charging you the $35 per month even after they recovered the $400 two years down the road.
Now T-Mobile has broken that model and simply finances the phone for you for 2 years.
I’ve just actually decided to pay the full price for the unlocked iPhone 6 when it comes out because we really are getting ripped off by the carriers with the “Subsidy.” AT&T Gives you a $25.00 a month “Service Credit” when you have an Off-Contract phone. This totals $600.00 over 2 years. Not to mention the $40.00 upgrade fee on top of that. So for your $200.00 Subsidy, they charge you $640 bucks.
Pass…
I’ll pay full price from now on and pocket the difference.
Don’t they get it all back by the end of the contract? Never had a phone, probably never will.
WTF?! You’ve never had a phone?
What are you doing on a tech blog?
What do you interact with- your shoe?…
Why in the world would you expect a retail employee to sell anything other than what the supervisor told them to push?
Every retail floor operates on Spiff and Punishment. The spiff deals have NOTHING TO DO with the brand or the quality of the product. IT DOES have to do with the amount of incentive (spiff, commission) that come out of channel marketing budgets.
Many spiffs are paid in cash or in kind. Retail folks like this because it bypasses payroll taxes.
“Why in the world would you expect a retail employee to sell anything other than what the supervisor told them to push?”
In order to please the customers by meeting their needs? Telcos and cable companies mistreat customers routinely, and then when their monopoly develops a crack they are surprised that customers flee as fast as they can. Sales people and companies that put themselves first over their customers develop poor reputations, and though they may burn a lot of customers once, their tactics eventually catch up with them.
Even if your mind is made up that you want an iPhone they still try to convince you to take a different phone.. Sickening
1. Attempting to keep their sales numbers as diverse as possible
2. the iPhone needs no salesman
3. same thing every year
It begs the question……………
Is the current iPhone lineup STILL selling well enough this close to an expected new release that cellcos are attempting to steer customers AWAY from it? But the tech pundits say Android is winning…………………I guess it’s not ALL about marketshare
You are all forgetting about the daily network usage. iPhones and iOS devices are the drain on the carrier’s data networks. People will use the iOS devices and the Android users are the light weights. Also, they are clueless if they do not understand the advantages of the world’s only 64-bit most secure smart phone. You can keep using the iPhone for many years and the Android may already be running on an old Android OS.
Zackly
It is in the phone company’s best interests to sell contract plans with (1) cheaper phones, ie, on which they earn a better ‘commission’ (or, equivalently, pay a lower price to the manufacturer) AND (2) to people who will not use the network much.
I am surprised how many people are unaware that the phone company’s self-interests are NOT in the consumer’s best interests.
Many people would be better off w/ an iPhone — even an older/cheaper iPhone would be better in many ways (like security) — and a non-contract service.
plus factor in, the price they pay for a plastic phone (next to the same cost as an iPhone (( Droid vs Apple 1:1.05 )), the security issues (greatly out weight those found on iOS (( D vs A 30:1 )), the resale value (far less then iPhone (( D vs A 1:10 ), the life expectancy of the device (( D vs A 1:4 )) and the quality of apps (( D vs A 1:8 )) — steer clear of Droid sales persuasion and get the better phone – iPhone.
Holdover attitudes from the infamous Steve Jobs arrogance. Today, Timmy Cook is faced with the reality that ALL the competition is offering many more choices of all kinds of gismos on huge variety of phones that appeal to the pop culture sophomoric customers who care less about quality than they do about features – whether they are really useful or even work.
This market is the greatest we AAPL investors face – without a sustainable product not dependent on the vagaries of fickle customers, we are at risk.
That’s why the need for a new CEO has now developed into a full crisis. Yet, the useless board of directors simply don’t care. As long as the whooping and hollering continues when Tim takes the stage, the crisis will just get worse and our risk will grow and grow.
Oh, wait … there is that pipeline full of “great new products” so we should be okay. Right?
Why don’t you just sell your Apple stock?
Jay,
Is that why most Apple stock holders are laughing all the way to the bank?
“– without a sustainable product not dependent on the vagaries of fickle customers, we are at risk.”
The above comment is ludicrous on its face.
“Satisfy the customer” is Drucker’s famous quote and Apple is doing it better than Samsung by all I see.
“Many more choices” results in the confusion that nags at customers, like when you walk in to buy a TV.
Steve Jobs fixed that by cutting down product variations to understandable minimal models. It worked.
Jay,
without arrogant Steve Jobs and Apple there’d be nothing for you to rant about here, so you oughta be forever thankful.
No one would otherwise pay attention to what you’d have to say on other matters,
it’s just cos of these grand names in your ramblings.
That doesn’t make you grand, in turn, or anything.
Those ain’t your feathers.
Fuck off, JayMo.
Still waiting to hear what huge and great company you run, Jay, that you are so wise in the matters of what Apple should do.
Waiting….
Waiting….
I think there is a simple reason why this is happening. Carriers generally love the iPhone. There is no hate. It brings loyal customers, they tend to be much more pleased with their phone than any other device (which often translates into satisfaction with the wireless service — iPhone’s “halo” effect) and they go for more expensive plans.
However, retail clerks in carriers’ stores are a different story. The commission paid on peddling Samsung (the above-mentioned “spiff”) is much more lucrative than on the iPhone. Carriers are generally out of this loop, since the spiff is usually paid directly to the retail clerk and is all below the board.
From the article:
“Samsung is shelling out billions of dollars to get salespeople at your carrier to recommend and sell you its smartphones. Unlike Apple, Samsung offers spiffs to salespeople for selling its products. A spiff is an immediate bonus paid directly to the salesperson. (…) Samsung’s sales promotion expense — a lot of which is spiffs — totaled $7.8 billion.”
That’s almost $8 Billion (with a ‘B’). Last year. Obviously, Samsung is subsidising their phones by a very, very hefty margin (over $100 for premium devices).
…. which is one of the reasons why Samsung isn’t making anything like the profit that Apple makes.
Samsung’s excessive marketing and promotion costs are unsustainable. They decided to buy market share, but when they reduce the marketing expenditure, their sales drop dramatically.
Their problem is that their product isn’t good enough to sustain continuing sales as a result of the momentum gained from the marketing expenditure. When the marketing is reduced, the sales quickly slow down.
Things may be even worse than that as although I referred to sales, Samsung doesn’t released true sales numbers. There is a lot of ambiguity in the numbers that they release, so sales may actually be much lower than many analysts believe. Their financials statements touch upon the costs and consequences of channel stuffing.
1. Buy your iPhone from an Apple Retail Store as you do not need to go to a Carrier Store. Apple staff are not on commissions based salaries.
2. Buy your iPhone ONLINE via Apple, Amazon, Best Buy, etc, etc…. NO salespeople. NO commissions.
3. CUSTOMER has the power because YOU have the MONEY to spend NOT the salespeople.
I will be buying my sixth iPhone directly from Apple in about a month. I avoid the carrier’s office unless I have to go in there I wonder how much more business they would do in their stores if they were more responsive to customer desires..
I had that happen at T-Mobile and had to INSIST on buying an iPhone!!!
The other factor which the author does not address is that if these mobile carriers push the best phone (iPhone), that will be most of their sales, and they basically will become beholden to Apple for product. Apple will gain even more power over the carriers, and Apple could then start demanding different rate terms, etc.
If the carriers are to survive as somewhat non-dependent on Apple, then they HAVE to push other phones. However, as we saw with Verizon, Sprint and T-Mobile, they need the iPhone and its data-hungry customers to be competitive.
No one in my area (Joplin, MO) has any iPhone from any carrier except the 16 GB version of the 5c and 5s, AND they offer free Samsung upgrades !!!!
buy online… problem solved
This is the same in New Zealand, Vodafone push Samsung and attempt to make customers chose Samsung over Apple devices.
Everyone should go into one of the samsung pushers stores and ask to see an iPhone, then when confronted with the hard sell say “wow, i guess you just lost a sale for ignoring my wishes, shouldn’t do that, i think i will let your manager know”
The question is…… Does it matter? I think walk in to buy Apple and they do regardless of what At@t or Verizon recommend
Seems the complaint is that salespersons push other phones over iPhones in the carriers’ stores. The ones most bothered are the ones who walk in with buying only the iPhone in mind. iPhones are sold online, Apple stores, Walmart and Best Buy. Simple solution, do away with iPhone sales at Carrier specific stores. No one that expects to buy an iPhone need walk into a carrier specific store and those salespeople may not get spiffs to sell other makers’ phones since the iPhone is not in the store to ‘compete’ against, resuling in most likely reducing or eliminating spiffs. Carriers wlll still support the iPhone and no one will be bothered with being pushed another phone when they wanted an iPhone. If the subsidy is the main problem set subsidies the same across all smartphones and compete on feature AND price. Then the carriers’ will care less about the upfront costs of selling any particular phone.
That simply won’t work. When a person wants to buy a smartphone, chances are four out of five that they will walk into a mobile carrier store. Perhaps they are already on that carrier, or this is just an intuitive decision (you buy mobile phones at a mobile phone store, right?), but this is the most likely scenario. When they walk into a carrier store and ask for the iPhone, the salesman will try to sell them an Android device, and in four out of five cases, he will likely succeed. Vast majority of adult population still believes that technology stores have competent and trust-worthy sales people who you can rely on for an unbiased and qualified advice.
If discontinuation of iPhone sales at carrier stores were to reduce or eliminate spiff, it would free up a large percentage of Samsung’s promotional budget (currently tied up in all that spiff), which could be deployed for even more powerful marketing.
There is really no way to deal with the problem of spiff, other than perhaps re-educating the consumer to stop believing in everything salespeople say.
Everytime I notice all these little cell phone kiosks in the malls, I KNOW those aggressive salesfolks are pushing any other brand EXCEPT Apple because of the spiff (commission) system that pads their pay checks. Plus the typical mall customer is a bit unsophisticated and is going to put a lot of credence into what the representative is pushing. She is often buying her first cell phone. This spiff system is a big reason Samsung got to where it’s at, and it also goes to explain where a lot of Samsung’s (4X’s Apple’s) marketing budget went!
I’m very loyal to Apple and this year I plan to buy my iP6 from the Apple store so that Apple won’t have to pay ATT or Best Buy their cut!
Most carriers pay the same commission regardless of the brand that is purchased. You folks crack me up making claims without having any facts to back it. If a new phone is released, sure it is recommended over a piece of hardware that has been out a year. That’s common practice with any retail environment. Take the tinfoil hats off and get some sun.
Wow, we’ve come a long way since ATT’s ego was nauseating based on their exclusivity of the iPhone. NOW – They and Verizon are terrified of it because it and the Apple ECO-system are sucking the rest of their market dry… Legere is right.. these two behemoths are ready for the scrap heap… Especially this guy, Cunningham, that runs ATT… Hopefully T-Mumble and it’s new partners will take these two down over the next couple of years and we won’t have to live in their lie of the world any more…
This is 100% true– they do this. I go in every store I see to see what they. Sale people almost never say anything good about Apple unless one is obviously a very loyal Apple customer. I have asked many of them why? “off the clock” to find out they make more money from selling other devices. Why do I go around asking? I have Apple shares and it concerns me. I travel TN and the border states fyi. The same is true for most stores. I have been asking ever since Samsung became popular.
…odds are the salesperson will direct you toward a Samsung device
Just like CompUSA did with Windows boxes! Hilarious. It’s the same old ‘Screw Thy Customer’. It would be amusing to figure out why.
(I used to locally give Apple gear demonstrations at CompUSA after Apple created their ‘store in a store’ system. Many is the time I would cynically laugh listening to nice people get screwed over by CompUSA staff who would outright LIE to their customers in order to coerce them to buy some crap Windows box. I had to play nice and represent Apple. But it was disturbing. I did later learn that in some cases it was due to the staff getting commission payments for selling the pet PC box of the week).
Verizon and AT&T are not looking out for the best interest of their customers?!?!?
Shocked I tell you, I’m shocked!!!
Q – How can you tell if a sales person is lying?
A – His lips are moving.