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Old May 6, 2013, 01:24 PM   #1
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Apple Having Trouble Signing New Carriers Because of iPhone Subsidy and Minimum Purchase Requirements




Apple is missing the opportunity to reach 2.8 billion wireless customers because of their stringent requirements around minimum purchases of iPhones and price subsidies, according to a report from Bloomberg.

In order to carry the iPhone, Apple has strict requirements for carriers. One such requirement relates to minimum purchase agreements, which regional U.S. postpaid carrier Cricket has had some trouble meeting this year.

Some smaller carriers, especially those in emerging markets, have difficulties paying the pricey subsidies that Apple's $600 iPhones require. The rumors about a cheaper, plastic iPhone could address some of these issues, especially for those countries where subsidies are nearly unheard of and customers routinely pay for their phones up front.
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For smaller wireless-service providers, teaming up with Apple can be a double-edged sword. U.S. Cellular signed on last week to offer the phone after agreeing to sell $1.2 billion worth of handsets over three years. The company had long said that the handset costs too much; yet, not having the iPhone was costing it customers. Telefonica Czech Republic dropped the iPhone because it couldn't afford the subsidy.
Apple is rumored to be designing a lower-cost iPhone with a colored plastic shell, with one analyst expecting the device to be released this fall. This correlates somewhat with hints about future products that Apple CEO Tim Cook gave during his Q2 2013 earnings call last month.

Article Link: Apple Having Trouble Signing New Carriers Because of iPhone Subsidy and Minimum Purchase Requirements
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Old May 6, 2013, 01:27 PM   #2
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Not really that surprised, even in the UK new iPhones released usually have a more expensive contract up front price compared to flagship phones of other OS's on release.
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Old May 6, 2013, 01:27 PM   #3
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Requiring a minimum purchase seems silly to me. Having the iPhone set up with an exclusive carrier made since until the 2nd iPhone was released. After that, it is just a douche move by a major corporation. Apple should really drop the minimum purchase requirement and allow the iPhone on all carriers as long as the current hardware supports said carrier. What would the harm be in doing that?
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Old May 6, 2013, 01:28 PM   #4
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Didn't realize that there are so much countries where phones are tied to carriers. I thought it was only US kind of stuff.
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Old May 6, 2013, 01:28 PM   #5
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In other news, Tiffany & Co. is missing out on 200 billion consumers who cannot afford their high priced gold, silver and diamond jewelry.
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Old May 6, 2013, 01:30 PM   #6
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how many reports before analysts become an epidemic?
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Old May 6, 2013, 01:30 PM   #7
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Originally Posted by bbeagle View Post
In other news, Tiffany & Co. is missing out on 200 billion consumers who cannot afford their high priced gold, silver and diamond jewelry.
Apple is not a luxury brand.
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Old May 6, 2013, 01:31 PM   #8
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A cheaper iPhone will win more customers. But plastic? how many hundreds of dollars does that aluminum cost?
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Old May 6, 2013, 01:33 PM   #9
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oh boy...the whole world is coming to an end...
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Old May 6, 2013, 01:33 PM   #10
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If companies are held to their agreements and they aren't moving the phones - while "good" for Apple that it means units sold. But it's deceptive reporting (if they count them) to imply that the phones are in the hands of customers.
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Old May 6, 2013, 01:34 PM   #11
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Quote:
Originally Posted by Stella View Post
Apple is not a luxury brand.
Really!?

In the field of phones, laptops, tablets,etc., if Apple isn't a luxury brand, who is?
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Old May 6, 2013, 01:34 PM   #12
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Originally Posted by andrew78 View Post
A cheaper iPhone will win more customers. But plastic? how many hundreds of dollars does that aluminum cost?
Over millions of devices, it adds up to be alot.
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Old May 6, 2013, 01:39 PM   #13
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Originally Posted by Shrink View Post
Really!?

In the field of phones, laptops, tablets,etc., if Apple isn't a luxury brand, who is?
The iPhone stopped being a luxury brand when the price dropped from $599 for the original to the tiered pricing they have now. They are no more expensive then buying any other phone. I bought a Nexus 4 for $349.

iPad Mini has also stopped the iPad from being so much a luxury brand. $329 for a mini. I bought a Nexus 7 for $300 with cellular.
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Old May 6, 2013, 01:40 PM   #14
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Originally Posted by jessica. View Post
Requiring a minimum purchase seems silly to me.
Wouldn't it create an environment where the carrier goes all in to sell the iPhone and market it well since they are now committed?

Seems like a sound plan.
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Old May 6, 2013, 01:40 PM   #15
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If Wall Street had an uproar over Apples already extraordinarily high margins dropping slightly recently, how exactly are they going to react when Apple has to further lower margins to get this lower-priced (but not cheap), potentially higher volume iPhone into market?

Seems everyone wants it both ways. They paint a doomsday scenario because of Apples ridiculous margins dropping a tad, but then they keep yelling to lower prices and target the lower end of the market. Seems like Apple can't win.

I'd say they're doing just fine.
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Old May 6, 2013, 01:43 PM   #16
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Quote:
Originally Posted by Shrink View Post
Really!?

In the field of phones, laptops, tablets,etc., if Apple isn't a luxury brand, who is?
iPhones are priced consistently with other high end phones.

Apple computers inners are made of standard components. Its laptops are based around the same price as gaming laptops ( but without the graphics - and less hard disc space ).

In 2013 Apple is a consumer brand. Not a luxury brand.

Does there need to be a luxury brand?
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Old May 6, 2013, 01:43 PM   #17
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Originally Posted by andrew78 View Post
A cheaper iPhone will win more customers. But plastic? how many hundreds of dollars does that aluminum cost?
Its not the raw material, its the machining and precision assembly. Holy cow, when will you people understand that? A 20% increase in machine cost adds up to billions of dollars when they're shipping 100s of millions a year.
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Old May 6, 2013, 01:43 PM   #18
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Quote:
Originally Posted by Millah View Post
If Wall Street had an uproar over Apples already extraordinarily high margins dropping slightly recently, how exactly are they going to react when Apple has to further lower margins to get this lower-priced (but not cheap), potentially higher volume iPhone into market?

Seems everyone wants it both ways. They paint a doomsday scenario because of Apples ridiculous margins dropping a tad, but then they keep yelling to lower prices and target the lower end of the market. Seems like Apple can't win.

I'd say they're doing just fine.
This is why I believe Apple keeps it's prices artificially high. $100 just to go from a 16GB iPhone to 32GB is absurd. It should more like $50. But I guess if they push iTunes content enough, you'll opted for the "it's only $100 more" thinking and pad Apple's coffers.
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Old May 6, 2013, 01:44 PM   #19
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Originally Posted by andrew78 View Post
A cheaper iPhone will win more customers. But plastic? how many hundreds of dollars does that aluminum cost?
Making a plastic shell via Injection molding only costs pennies, once the molds are machined.

Machined aluminium shells, on the other hand... well, you see the problem. With plastic, you use machining to make the mold once but with aluminium you need to machine each shell one by one.

Even at the quantities that Apple needs, it's probably a few dozen cents for a plastic shell versus a few dollars for an aluminium shell.
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Old May 6, 2013, 01:45 PM   #20
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Quote:
Originally Posted by hexonxonx View Post
The iPhone stopped being a luxury brand when the price dropped from $599 for the original to the tiered pricing they have now. They are no more expensive then buying any other phone. I bought a Nexus 4 for $349.

iPad Mini has also stopped the iPad from being so much a luxury brand. $329 for a mini. I bought a Nexus 7 for $300 with cellular.
the iPhone 5 is $650. the iPad mini with cellular is $560 (32gb version for matching specs to your Nexus 7).

Apple is a luxury brand.
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Old May 6, 2013, 01:46 PM   #21
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Quote:
Originally Posted by Stella View Post
Apple is not a luxury brand.
So every tablet/smartphone manufacturer has its own boutique style store with a huge employee to customer ratio and 10 minute paperless device replacement process?

Apple is absolutely everything one would expect when it comes to a "luxury brand".
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Old May 6, 2013, 01:46 PM   #22
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Quote:
Originally Posted by phillipduran View Post
Wouldn't it create an environment where the carrier goes all in to sell the iPhone and market it well since they are now committed?

Seems like a sound plan.
I'm saying that requiring a minimum purchase is silly and your reason is just another reason. They already require the minimum purchase so sound plan or not, it is the plan.
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Old May 6, 2013, 01:47 PM   #23
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Apple has to curtail this issue because of Android/Samsung's huge push for their subsidizing culture.
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Old May 6, 2013, 01:50 PM   #24
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Quote:
Originally Posted by Stella View Post
Apple is not a luxury brand.
I think it is.
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Old May 6, 2013, 01:51 PM   #25
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Originally Posted by Shrink View Post
Really!?

In the field of phones, laptops, tablets,etc., if Apple isn't a luxury brand, who is?
if you can buy it at Walmart, it's not a luxury brand.
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