Apple Having Trouble Signing New Carriers Because of iPhone Subsidy and Minimum Purchase Requirements

[Gary03mw]

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?

I believe Apple has good reason for this. Here is why:

My girlfriend works at Planet Cellular which is phone store mostly located in the southern US. They sell phones for the AT&T network. The corporate company has told their sales people not to sell over 30% iPhones. Corporate doesn't want them to sell too many iPhones because of the large subsidy of the device compared to Android devices.

Also, the individual sales people, aka my girlfriend, work on a partial commission. When they sell other phones, aside from iPhones, they earn more GP which is the total amount of sales that their commission is based on.

Basically I believe that the minimum requirement may be Apples way of fighting back against major incentive for carriers and sales people to sell less of the iPhone and promote other brands.

People have to understand that the average consumer doesn't know what most people on these forums knows about cell phones. Everyone here may go into a store and know exactly what they want. The old women and men going into my girlfriends store can be sold on almost anything. Planet Cellular is just my own personal example of a store that I know is leading people away from iPhones.

 

[NathanA]

Apple should eschew the minimum purchase requirement, and start pushing direct sales to end-users much more aggressively themselves, rather than using the carriers as their sales channels.

If I want a landline phone for my house, I can pick up any old phone at Radio Shack/Walmart/Office Depot/what-have-you, and it will just work with my service at home. I don't have to buy a special model of phone that only works with Verizon service, or CenturyLink service, or Frontier service. The wireless industry desperately needs to move in this same direction. Let me buy whatever phone I want, and pair it with whatever provider I want. Don't tie the two together, either in the sales channel arrangement, or in the provisioning, on the technical side.

Apple shouldn't be beholden to carriers to reach certain markets, nor should the carriers be beholden to Apple to supply their customers with the experience they want. It's a symbiotic relationship, but it's not a healthy one...more like a parasitic one. Carriers need to just build the best darn networks they know how to, and Apple and other handset manufacturers free to make the devices they want and sell them directly to their customers.

The technical barriers that some would have you believe exist are not nearly as insurmountable as you might think: there are only two different, non-interoperable standards in this industry, and the iPhone already supports both in one handset. The main problem right now is with LTE, and the plethora of different radio frequency bands you need to support worldwide. If it weren't for that, Apple would still be manufacturing a single model of phone (as they did with the original iPhone, the 3G, the 3GS, and the 4S).

-- Nathan

 

[Stella]

Okay you're right there. If you Google 'is Apple luxury' the general consensus is 'yes-but', obviously this is subjective.

If you google "Elvis is alive" you'll get lots of links telling you how he is actually alive.

Like I said previously, I prefer to call Apple "High End".

 

[blackcrayon]

Apple is not a luxury brand.

They're at least a "premium" brand though.

 

[pirg]

Ah, so this is why the stock is up $11 today.

Seems legit. Apple stock: where nothing makes sense

 

[bbeagle]

Neither are luxury brands sold at Best Buy / Futureshop... BB and FS sell the entire Apple range.

Is Lobster or Sushi 'luxury food'? Why does every grocery store sell both?

 

[leon44]

If you google "Elvis is alive" you'll get lots of links telling you how he is actually alive.

Elvis' death isn't subjective
Paul McCartney on the other hand...

 

[ElTorro]

Really!?

In the field of phones, laptops, tablets,etc., if Apple isn't a luxury brand, who is?

Vertu is the luxury brand for phones, but I am not surprised that you haven't heard about it, since it costs $5000-$10000 for a phone.

How rich do you feel with your iPhone now?

 

[Big Dave]

I believe Apple has good reason for this. Here is why:

My girlfriend works at Planet Cellular which is phone store mostly located in the southern US. They sell phones for the AT&T network. The corporate company has told their sales people not to sell over 30% iPhones. Corporate doesn't want them to sell too many iPhones because of the large subsidy of the device compared to Android devices.

Also, the individual sales people, aka my girlfriend, work on a partial commission. When they sell other phones, aside from iPhones, they earn more GP which is the total amount of sales that their commission is based on.

Basically I believe that the minimum requirement may be Apples way of fighting back against major incentive for carriers and sales people to sell less of the iPhone and promote other brands.

People have to understand that the average consumer doesn't know what most people on these forums knows about cell phones. Everyone here may go into a store and know exactly what they want. The old women and men going into my girlfriends store can be sold on almost anything. Planet Cellular is just my own personal example of a store that I know is leading people away from iPhones.

I get frustrated when a salesperson tries to talk me out of a product for another. I have even left a store because of it. Granted alot of consumers are uninformed, but the idea of customer service is to help the customer in the customer's interest and not the company's.

 

[samcraig]

Is Lobster or Sushi 'luxury food'? Why does every grocery store sell both?

Lobster and Sushi quality vary by region and supermarket. The iPhone is the same wherever you buy it.

That being said - I don't consider the iPhone a luxury item. But that's a #firstworldissue. But if one does consider it a luxury item - them there are dozens of cell phones in that category.

 

[Gary03mw]

Apple should eschew the minimum purchase requirement, and start pushing direct sales to end-users much more aggressively themselves, rather than using the carriers as their sales channels.

If I want a landline phone for my house, I can pick up any old phone at Radio Shack/Walmart/Office Depot/what-have-you, and it will just work with my service at home. I don't have to buy a special model of phone that only works with Verizon service, or CenturyLink service, or Frontier service. The wireless industry desperately needs to move in this same direction. Let me buy whatever phone I want, and pair it with whatever provider I want. Don't tie the two together, either in the sales channel arrangement, or in the provisioning, on the technical side.

Apple shouldn't be beholden to carriers to reach certain markets, nor should the carriers be beholden to Apple to supply their customers with the experience they want. It's a symbiotic relationship, but it's not a healthy one...more like a parasitic one. Carriers need to just build the best darn networks they know how to, and Apple and other handset manufacturers free to make the devices they want and sell them directly to their customers.

The technical barriers that some would have you believe exist are not nearly as insurmountable as you might think: there are only two different, non-interoperable standards in this industry, and the iPhone already supports both in one handset. The main problem right now is with LTE, and the plethora of different radio frequency bands you need to support worldwide. If it weren't for that, Apple would still be manufacturing a single model of phone (as they did with the original iPhone, the 3G, the 3GS, and the 4S).

-- Nathan

I agree... It's to Apples benefit to sell more phones through their own retail. They know this and they will continue to build out their retail chain because of it. Hopefully Apple retail, as well as Google and Microsoft retail that is starting will be significant in making this transition you're talking about a reality.

 

[samcraig]

Basically I believe that the minimum requirement may be Apples way of fighting back against major incentive for carriers and sales people to sell less of the iPhone and promote other brands.

Planet Cellular is just my own personal example of a store that I know is leading people away from iPhones.

Well - two sides of the same coin. Except Apple's "incentive" is nothing of the sort. It's a punishment vs Android's model which is reward based.

Second - people who are lead to device (idevices or others) are likely those that have no real idea what they want or strong desire. There's no "stat" or proof point that says they would have bought x phone or y phone if not lead by the salesperson. If someone WANTS an android phone - they aren't likely to buy an iPhone just because of the salesperson any more than if someone really want's an iPhone is going to buy an Android.

 

[Glideslope]

Yes

oh boy...the whole world is coming to an end...

Agreed. Close the thread.

 

[leon44]

Vertu is the luxury brand for phones, but I am not surprised that you haven't heard about it, since it costs $5000-$10000 for a phone.

How rich do you feel with your iPhone now?

What makes it a luxury brand other than the price and them telling you that it's luxury, it runs Android, has an 8MP camera, a dual core processor and a 3.7" screen. You don't buy an Aston Martin or Lambourgini with the same size engine and specs as a Renault Clio.
You'd have to be a rich idiot to pay over £5k for this smartphone, and that's their target market, rich idiots.

 

[Gary03mw]

I get frustrated when a salesperson tries to talk me out of a product for another. I have even left a store because of it. Granted alot of consumers are uninformed, but the idea of customer service is to help the customer in the customer's interest and not the company's.

I agree. I think it's not only annoying but also immoral. Purposely misleading people in order to profit for yourself. It's wrong, but it happens all the time in cellphones right now.

I was just offering up my guess as to why Apple sticks with the minimum requirements. I think it makes a lot of sense.

 

[samcraig]

What makes it a luxury brand other than the price and them telling you that it's luxury, it runs Android, has an 8MP camera, a dual core processor and a 3.7" screen. You don't buy an Aston Martin or Lambourgini with the same size engine and specs as a Renault Clio.
You'd have to be a rich idiot to pay over £5k for this smartphone, and that's their target market, rich idiots.

What makes a rose a rose. A diamond a diamond. Marketing and scarcity.

You can walk into walmart and get an iPhone. That's not just about price or build quality. It's the fact that they are a dime a dozen so to speak. Millions and millions are made.

Compare that to Vertu - how many do you think they make?

It's not one factor - it's several together that define a luxury brand.

 

[scott523]

Old news in seeing how long it took for T-Mobile to get on board (and they needed to partner with Apple's Barclays to finance).

 

[leon44]

What makes a rose a rose. A diamond a diamond. Marketing and scarcity.

You can walk into walmart and get an iPhone. That's not just about price or build quality. It's the fact that they are a dime a dozen so to speak. Millions and millions are made.

Compare that to Vertu - how many do you think they make?

I think they probably make about 12 and struggle to sell them, because even the snobbiest oligarch knows iPhones are better.
Look at virtually every celebrity on twitter tweeting 'from iOS', I'm sure they could all afford a Vertu but who wants to pay that for an Android.

 

[pirg]

I think they probably make about 12 and struggle to sell them, because even the snobbiest oligarch knows iPhones are better.
Look at virtually every celebrity on twitter tweeting 'from iOS', I'm sure they could all afford a Vertu but who wants to pay that for an Android.

I'd never even heard of it before now. Regardless of whether it runs android or not, that takes the cake for the dumbest product ever created.

 

[samcraig]

I think they probably make about 12 and struggle to sell them, because even the snobbiest oligarch knows iPhones are better.
Look at virtually every celebrity on twitter tweeting 'from iOS', I'm sure they could all afford a Vertu but who wants to pay that for an Android.

If you want to put blinders on - go ahead. The iPhone being better is completely subjective.

And although 2005 (so who knows if they've continued buying) but this article points out that David Beckham, Gwyneth Paltrow, Brad Pitt and Saudi royalty have bought Vertu's. So I guess some celebs can both afford AND buy one.

http://www.guardian.co.uk/technology/2005/oct/20/mobilephones.guardianweeklytechnologysection

 

[uknowimright]

Vertu comes with a bunch of exclusive services, it's not just an android phone

 

[Frazzle]

Agreed, Apple is not Rolls Royce. But Apple is very much like Audi (at least with the European pricing of Audis). You see many Audis on the streets, they are mass produced, many people can afford them. But still, when you look at the price list... you feel the pain in your wallet. Most VWs that offer just as much space and performance (and quality, being from the same group and sharing many parts) cost significantly less. But the brand and the design do count, so people are willing to pay.

On the whole, I really think we need to stop this stupid carrier subsidy system. Pay a real price for an unlocked device, then demand lower prices for your subscription. Good for competition (no more lock-in), good for the second hand market, good for consumers overall.

 

[lazard]

What makes it a luxury brand other than the price and them telling you that it's luxury, it runs Android, has an 8MP camera, a dual core processor and a 3.7" screen. You don't buy an Aston Martin or Lambourgini with the same size engine and specs as a Renault Clio.
You'd have to be a rich idiot to pay over £5k for this smartphone, and that's their target market, rich idiots.

they're not paying $10,000-$20,000 for the technology. They're paying for the worksmanship (all Vertu phones are handmade), the quality of the materials used: Sapphire crystal;, Grade 5 titanium alloy body, alligator skin accents, ruby bearings, etc, and last but not least exclusivity.

 

[GoCubsGo]

I believe Apple has good reason for this. Here is why:

My girlfriend works at Planet Cellular which is phone store mostly located in the southern US. They sell phones for the AT&T network. The corporate company has told their sales people not to sell over 30% iPhones. Corporate doesn't want them to sell too many iPhones because of the large subsidy of the device compared to Android devices.

Also, the individual sales people, aka my girlfriend, work on a partial commission. When they sell other phones, aside from iPhones, they earn more GP which is the total amount of sales that their commission is based on.

Basically I believe that the minimum requirement may be Apples way of fighting back against major incentive for carriers and sales people to sell less of the iPhone and promote other brands.

People have to understand that the average consumer doesn't know what most people on these forums knows about cell phones. Everyone here may go into a store and know exactly what they want. The old women and men going into my girlfriends store can be sold on almost anything. Planet Cellular is just my own personal example of a store that I know is leading people away from iPhones.

That is actually very good information and it shows that there are a few compounding problems as a whole; cellular shops promoting other brands and Apple perhaps believing that they need to "fight back." In the end though, don't you think the iPhone, at this stage, sells itself? I really do. People either want it or not.

Apple should just buy all the emerging carriers

Now this is the silliest thing I've seen in the last 10 minutes on this site. I wouldn't want Apple to own the carrier. Do you really think they will do anything for their users if they were to own their own carrier?

It's bottom line would be harmed and share holders will hold Apple accountable. And at present Apple needs all the money it can get seeing as it's dropped in profits of late.
I agree with you totally, but, you can also blame the carriers as if the carriers all refused to sell the iPhone under Apples terms, then Apple would be forced to change them.

You are right, most likely. I still don't see the harm. Apple is a healthy company.

 

[HenryDJP]

Just don't quote me, especially if your the tin foil hat brigade believing paid android fans come on here to ruin your day

Everyone that has a negative opinion on Apple is paid by Samsung or Google, apparently.

Yeah, that's generally what is happening on MR. Funny that you're so defensive about it though.