Apple Faces Sales Risk As US Networks Shrink Handset Subsidies
Published on: 22nd Apr 2014
Apple could come under pressure to maintain sales volumes in its core US market if the mobile networks continue to cut back on handset subsidies.
A report in the Wall Street Journal notes that the move to reducing heavy subsidies on top-end smartphones was sparked by T-Mobile USA's replacement of a handset subsidy with payments spread over the same period of time is making consumers more aware of the actual cost of smartphones.
With Apple's iPhone being one of the most expensive on the market, it is particularly vulnerable to a shift in consumer awareness about just how much of their phone bill is being absorbed in repaying those subsidies.
The cheapest unsubsidised iPhone 5s sold in the USA starts at $650, which is far higher than most people would expect to pay with a contract.
Although T-Mobile has shifted its stance, larger rival Verizon is sticking to the current model, saying that the smartphone subsidy has worked well for it to date.
However if subsidies do continue to shrink, then sales of top end smartphones from Apple, and Samsung could suffer, in favour of the mid-range models, where Apple is still struggling to deliver.
On the web: Wall Street Journal