“U.S. wireless carriers are making unexpectedly fast progress moving their customers away from subsidized phones, a shift that could put further pressure on sales of expensive devices like the iPhone,” Thomas Gryta reports for The New York Times. “Apple Inc. charges more for its phones than many companies charge for low-end laptops. Until recently, American subscribers have been insulated from the sticker shock by carriers that subsidized hundreds of dollars of the cost with hopes of recovering it via two-year service contracts.”
“Increasingly, though, carriers are moving toward a model where customers pay full cost for their phones, typically under installment plans. Smaller rival T-Mobile US Inc. sells all of its smartphones that way,” Gryta reports. “AT&T Inc., which reports first-quarter results Tuesday, sold 15% of its smartphones without a subsidy in the fourth quarter. UBS analyst John Hodulik estimates that figure will rise to 35% this year.”
“The U.S. is among the iPhone’s strongest markets, in large part because of subsidies. But it is already showing signs of strain amid strong competition and slowing adoption rates for smartphones as the market becomes more saturated,” Gryta reports. “The fading of subsidies adds more pressure on a device that starts at $649 for the latest-model iPhone 5s.”
“The iPhone makes up the majority of smartphones on AT&T’s network, but the focus on price could also hurt other device makers that make high-end phones. Samsung Electronics Co. recently launched the Galaxy S5, which sells for about $600 or more without a subsidy,” Gryta reports. “In reality, subscribers are paying the full price of their phones whether they are subsidized or not. Under the subsidy model, a buyer pays part of the price up front — say $200 — then pays off the rest via a what is essentially a charge bundled into their monthly bill. Under the no-subsidy model, those charges are explicit. Still, just knowing the cost of the phone could give cheaper models a boost.”
Read more in the full article here.
MacDailyNews Take: With Apple, as usual, you get what you pay for, the best smartphone – and the only 64-bit smartphone – on the market.
Yes, it takes a real genius to “save” a whopping $49 and screw him/herself with a piece of plastic crap from Samsung.
[Thanks to MacDailyNews Readers “Fred Mertz” and “Edward W.” for the heads up.]
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