" If the carriers truly aren't making enough money off of iPhone subs, then it is only a matter of when, not if, the premium Apple currently enjoys over other handset sellers goes away."
The math is simple-- $1600 > $400, even spread out over 2 years. Carriers are pining for yesteryear when they could pay $150 to attract the same customer and expect even more money on the backend (eg, from selling ringtones to a captive audience). I paid $400 for my first smartphone, fully subsidized and with a carrier contract. Apple did 2 things with the iPhone (esp the iPhone 3G). They set the expectation that a state of the art smartphone should only cost users $200 under contract, and they siphoned an extra $200 from the carriers per customer by promising higher ARPU. Now that other smartphones can sell data plans at a lower subsidy level, it's a good question how long Apple would keep such a sweetheart deal.
As it is, though, it makes sense for carriers to discourage early and superfluous upgrades, and even push customers towards devices with lower subsidies when possible, but at the end of the day, it still makes financial sense to use the iPhone to land the customer they would not otherwise get. Every iPhone customer is profitable. |
