Apple CEO Tim Cook: Enough of this silly talk over iPhone subsidies

“Apple CEO Tim Cook has some advice for investors concerned that subsidy cuts and/or stricter upgrade policies by U.S. wireless carriers could undermine iPhone sales,” John Paczkowski reports for AllThingsD. “Don’t worry so much. Apple doesn’t.”

Paczkowski reports, “Remarking on the subsidy issue during the company’s second-quarter earnings call Tuesday, Cook dismissed it, essentially saying that the iPhone is so exceptionally profitable for carriers that they’re not likely to mess with it.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]

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  1. Don’t kid yourself, I love my iPhone but if was to learn of a better phone, I might switch. I’m thinking the iPhone 4s has the highest subsidy of any mobile phone. If AT&T reduces this subsidy by $10 that’s like 50 million per quarter to AT&T. By $100, that’s 500 million, enough for shareholders to notice or, more importantly, to notice that it hasn’t been reduced.
    My contract for the 4s is worth $330 + $75/month * 24 months = $2130.00 plus taxes and I’m more likely to keep my DSL/home phone “triple play”. This is the real money to AT&T, the total triple play to AT&T is worth $4200 over two years. That’s a lot. I assume Apple is getting about $700 of this total.
    I’m happy with my AT&T mobile service and I get good download speed with the DSL. I’m not too happy about the unpload speed. My land-line phone costs $55/month, I keep that only for security reasons.
    The key with Apple, like any other company, is to make good products that people want to buy. I feel like Microsoft and most PC vendors had the attitude that you had to buy their products. As far as computers go, those days are over.

    1. That’s you. I doubt that you’re the typical consumer. Most of the people I know don’t want to keep jumping around trying to grab every latest feature. Most of the people I know get comfortable as long as their smartphones work reasonably well for them.

      I think it would be very foolish for any one carrier to take the risk on confronting Apple with some reduced subsidy demands. That one carrier would likely only lose iPhone subscribers to another carrier. For what? A matter of principle? To prove the carrier has more power than Apple over consumers? Once the average consumer has bought into the iPhone ecosystem, they’re usually hooked for at least two years. The longer they’re in the ecosystem, the harder and costlier it is to leave, especially if they have other Apple devices that share those apps and content.

      I think it would take a lot of balls for any carrier to say no to Apple and I honestly don’t think they’d have that much to gain. As long as Apple continues to sell high-quality products, consumers are not going to easily switch to something else that’s merely just as good.

      That guy that made up this iPhone subsidy blockade is full of crap. Sure, it’s possible if all Android vendors can build an Android smartphone that has far better features and quality than the iPhone for less money, but that just isn’t likely. I personally hope that dude chokes on his own BS because he’s either a liar or plain clueless. The iPhone provides subscriber stability to any carrier.

      1. Apple is also very smart about the “sticky” factor. iPhone is a sticky product because once you buy all these apps and become attached by making them part of your daily life you are much LESS likely to jump to the next “iPhone killer.”

    2. Not a lot of money to be saved by choosing another smart phone with one of the major carriers in the US. Correct me if I am wrong, but the monthly charges are the same… the only money to be saved is the original purchase price. Even a “free” smart phone on contract costs about the same as an iPhone over the 2 year period of the contract. There is money to be saved by going to one of the lower their carriers…. but only with an unsubsidized device.

    3. 1) Good luck finding a better phone

      2) The subsidies are not at the carrier’s discretion, they are required under contract. Why do you think T-Mobile doesn’t carry the iPhone yet? They won’t pay Apple’s subsidy price requirements.

      3) Your monthly service plan won’t change if you switch phones and keep the same carrier. You may be able to get a plan which saves you a few bucks a month by switching carriers if that plan fits your usage better than an AT&T plan, but the iPhone subsidy has nothing to do with it.

  2. I live in Canada so maybe things are different else where….

    I understand that if I buy the phone outright which allows me when I travel to put a local SIM card in and use it as I please. I’ve also heard of people trying to get their phones unlocked to do this once there contract completes.

    So if I buy the phone outright or once my phone’s contract completes and I don’t want to upgrade for whatever reason, why do I need to pay the same price for a plan as someone who just got there subsidized phone? Part of the plan price is to pay for the phone which I’ve already done by having the plan for 2 years or whatever or by buying it outright?

    Any ideas?

    1. That’s why you should always upgrade as soon as you are eligible and sell your old phone. The sale of the old phone pretty much pays for the upfront cost of the new phone, your monthly subscription isn’t any more expensive and you’ve got the latest goodies.

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