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

[samcraig]

More on Virtu and their 300K plus phones sold over the last decade + what their concierge service can do...

http://www.bloomberg.com/news/2011-...rtu-phone-defies-slump-to-win-sales-tech.html

 

[Taz Mangus]

I would like to see more carriers adopt what T-Mobile is doing. The consumer can choose to pay off the phone over time or up front all at once.

 

[CJM]

Still can't take American news casters seriously.. They're way too good looking.. And.. Orange. I feel like I'm watching something from the 80s.

 

[Gary03mw]

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.

For the first point, No. You are looking at this all wrong. Neither of these are a "model." There is no "Android model." It's not as if Google came up with some reward program to help them win in the marketplace. Apples disadvantage is inherent in the way the US cell phone market is set up. This is not something that Apple or Google did, it's just Apples way of getting sales people to do their job the way they should be doing it anyway. Which means helping the customer, and not serving their own interests.

For the second point, I agree. That's basically exactly what I said in my initial post. There are some who are going to know what they want and go in and get that. There are also a lot of people who are going to come in and buy what the salesperson recommends. Not long ago I was in the market for a new washer and dryer. Unfortunately I didn't know much about them and was relying on a salesperson to help me find what I needed. Hopefully, that salesperson operated in my best interest and didn't sell me what was best for his commission.

 

[samcraig]

For the first point, No. You are looking at this all wrong. Neither of these are a "model." There is no "Android model." It's not as if Google came up with some reward program to help them win in the marketplace. Apples disadvantage is inherent in the way the US cell phone market is set up. This is not something that Apple or Google did, it's just Apples way of getting sales people to do their job the way they should be doing it anyway. Which means helping the customer, and not serving their own interests.

But the result is - one is an incentive to make money. The other is a penalty. That's my only point.

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Hopefully, that salesperson operated in my best interest and didn't sell me what was best for his commission.

It's possible he did both.

 

[absurdamerica]

Iconic logo? Yep. Boutique store as you mentioned? Yep. Massive profit margins? Check. All normal staples of a luxury brand. But Apple doesn't have one thing that usually is associated with a luxury brand: exclusivity.

Louis Vuitton, Hermes, Ferrari. You're not buying these things at WalMart. They're just not readily available and millions upon millions of them aren't being churned out of a factory. In the traditional sense Apple has all the staples but the one that's found in about every luxury brand.

Now we could certainly argue that Apple is changing the notion of what it means to be a luxury brand. But as it stands it's hard to lump them in with other luxury brands.

If there was a higher demand for those things, more would be produced.

BMW and Rolls Royce are obviously both luxury brands, yet there are millions of BMWs on the road and there are not millions of Rolls.

 

[gnasher729]

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?

To answer your question: There's the risk for Apple that stores would display the iPhone on the outside to lure customers in, and then do a hard sell on competing products. When you call it a "douche move" (which is something that you should explain for the benefit of anyone who hasn't had American English as their first language), if you want to sell _any_ product where the manufacturer relies on engaged and qualified selling, you will have to enter some kind of contract that guarantees to the manufacturer that you will be actively selling the product.

 

[Gary03mw]

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.

For sure the iPhone sells itself, but you can understand how a customer would come in and the conversation would go like this:

Customer: I'm here to get a new phone and was thinking about the iPhone 5
Sales: That's a nice phone, where you considering anything else?
Customer: Not really.
Sales: Well would you mind if I show you some other devices?


Customer: I'm here to get a new phone and was thinking about the S4
Sales: That's the best phone on the market right now and I'm sure you'll love it. What color would you like?


For the most part they aren't going to blatantly lead you astray or be overly forceful, but anybody on the fence is going to be sold on Android first... At least at Planet Cellular. My girlfriend is an Apple fan, she uses an iPhone 5, but she also knows that most Android devices not only get her about $5 more in commission, but will also help her meet sales goals and get bonuses.

 

[gnasher729]

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.

If companies are held to their agreements, then the phones _will_ be sold. If a phone company had hypothetically 100,000 iPhones in a warehouse and owe Apple maybe $50 million for those phones, what do you think are they going to do? The often quoted different between "shipment" and "sales" only matters if the shops can return unsold goods to the manufacturer.

 

[maxosx]

Its not the raw material, its the machining and precision assembly. Holy cow, when will you people understand that?

That's an easy question to answer. The key is improved quality control.

As one who has many years of experience, having purchased something new of substance ie: computer, iPad, iPhone, year after year, I can honestly say that the quality of products I have received in the last four years has degraded quite noticeably.

Where once Apple could be trusted without a second thought, to deliver a product out of the box that looked new and functioned like new (notice I didn't say perfectly, as most cutting edge tech have some bugs), those days have been replaced by the fact that now it's a bit of a crap shoot, when ordering from Apple.

Sometimes you get properly built, inspected product, other times you don't. It's as simple as that.

I notice it a bit more than others since I work in a very large scale enterprise where we use both Apple, and Windows computers and replace them often.

Thus besides the high volume of Apple gear I buy for myself, I see a lot at work. The degradation in quality is discouraging to an Apple enthusiast as myself.

 

[gnasher729]

But don't forget you can spend 15 million on an iPhone, the most expensive phone ever sold, in gold with diamonds:

I think that one was debunked. Apparently the guy _claims_ to have created an awful lot of very expensive goods (including a gold plated yacht), but none of it is actually true.

 

[AdonisSMU]

And IMO, when iPhones and iPads own the largest part of their respective segments, that isn't indicative of a luxury brand. Unless I'm confusing luxury with exclusiveness, because iOS devices aren't exclusive at all. Good quality, yes. Luxury when the are so common, I'm not so sure. Of course this is just my take on the matter.

Just because people are willing to actually buy Apple's luxury products by the millions doens't mean they aren't luxury. I don't equate luxury with the fact that other people can't afford or won't buy an item. I associate it with the price and quality relative to the competitors.

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I would like to see more carriers adopt what T-Mobile is doing. The consumer can choose to pay off the phone over time or up front all at once.

T-Mobile is going to force ATT and others to give up something that is worth while.

 

[apolloa]

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

Well if I was being paid to come on here I would be very happy haha, but no. I just like to think I can see the good as well as the bad in Apple, have used many products over the years. And it gets annoying with the chatter on here sometimes.

This used to be a good place, but now not so much, people are afraid to face the reality that the competition have caught up with Apple and Apple are in no way the golden company they used to be by placing profit before quality, aka yellow screen issues, retina MB pro issues, iOS issues etc.

That's actually another reason why Apple is in no way a luxury brand I think.

 

[lkrupp]

according to a report from Bloomberg.

That's pretty much is all we need to know isn't it. I'll pass.

 

[iLog.Genius]

That's actually another reason why Apple is in no way a luxury brand I think.

Like someone mentioned earlier in this thread, it's which factors you consider to be luxury.

BMW is considered a luxury brand but lately they've been having a lot of problems with overall quality. But at the same time, with cars and electronics, you won't find the problems until it's been driven or used a while. Compare that to clothing where defects and faults are easily caught because you can see them before shipping it out.

 

[maxosx]

More on Virtu and their 300K plus phones sold over the last decade + what their concierge service can do...

http://www.bloomberg.com/news/2011-...rtu-phone-defies-slump-to-win-sales-tech.html

Out of sheer coincidence, the last three business trips I've made to New York, I've encountered an owner of a Custom Vertu each time. What is particularly noteworthy is the incredibly perfect (a word I don't use often) assembly quality, perfect cut of the diamonds (if it has diamonds) or the other fine materials used on the Mens custom versions.

In person, up close, these are indeed extremely impressive. The other comment I hear from these owners is the voice quality and clarity and coverage range that they experience. Pricey yes, but for those who are so inclined, and purchase a Vertu, they are getting a very well designed hand made phone.

While that last statement may seem obvious, believe me it's not. I've seen many very pricey high end, famous label, hand made luxury goods that fail to live up to their billing.

I remember when Vertu was announced in 1998, frankly I didn't expect that they would develop the longevity that they have. It's a very interesting success story.

Here's one model I've seen in person, designed for men, it's simply spectacular.


http://www.vertu.com/en/discover-vertu/vertu-and-ferrari.aspx#constellation-quest

 

[apolloa]

I think that one was debunked. Apparently the guy _claims_ to have created an awful lot of very expensive goods (including a gold plated yacht), but none of it is actually true.

Got any links to state it was debunked? Because it was a widely reported story across all media, enough to make it a believable story. People that rich are usually obnoxious enough to spend that much on items.

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Like someone mentioned earlier in this thread, it's which factors you consider to be luxury.

BMW is considered a luxury brand but lately they've been having a lot of problems with overall quality. But at the same time, with cars and electronics, you won't find the problems until it's been driven or used a while. Compare that to clothing where defects and faults are easily caught because you can see them before shipping it out.

Apple is not luxury, it is fashionable, their is a difference.

And I don't consider spending over 2.5k on a laptop only to have finger prints behind the glass scree, then for the replacement to also have fingerprints, to be the mark of a luxury brand. And that was with the first gen unibody MB Pro's, then we had yellow screens, iOS bugs which are still prevalent now, Retina MB Pro issues.

In fact Apple doesn't have a good reputation with quality reading the threads on this site.

 

[iLog.Genius]

Apple is not luxury, it is fashionable, their is a difference.

And I don't consider spending over 2.5k on a laptop only to have finger prints behind the glass scree, then for the replacement to also have fingerprints, to be the mark of a luxury brand. And that was with the first gen unibody MB Pro's, then we had yellow screens, iOS bugs which are still prevalent now, Retina MB Pro issues.

In fact Apple doesn't have a good reputation with quality reading the threads on this site.

I personally don't care, call Apple high-end or luxury, doesn't make a difference to me but just because it was mentioned and brought up, it's arguable.

Going back to BMW (I find they're similar to Apple), I don't expect to pay $40k+ to have leatherette seats and halogens headlights as standard. When I need to get my car serviced, I expect to be treated better at the dealership. But at the end of the day BMW is considered luxury despite certain aspects of their products which say otherwise. And let's not start with German cars and reliability.

 

[FirstNTenderbit]

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.

Your anecdote hits the nail on the head harder than many other posts I've read on this topic. I'm in sales, software, but sales is sales. At times management wants us to push certain software based on corporate vendor agreements. That's great if the sales team is salaried. Commissioned sales? If it makes money, it gets sold. If it makes less money, it gets sold less.

If your GF makes less money selling iPhones, why would she sell them? I think that's where the disconnect arrives. Management at these companies may think "Get the iPhone in here, no matter what. They will sell themselves." But they don't actually sell themselves, sales people do. You said your GF is an iPhone fan, but if Android, BB, or WP puts more food on the table...

Some bash sales people for pushing phones other than iPhones, but outside of our posting on MR is world filled with real people who require real money. Brand worship doesn't pay much and you can't pay bills with this

 

[maxosx]

That's actually another reason why Apple is in no way a luxury brand I think.

I concur.

Another reason Apple is not a luxury brand is it's stubborn silence. After spending well over $3k on a MBP retina and immediately upon setup experiencing substantial issues, neither the genius bar crew, or AppleCare via phone "had ever experienced the issue" and would have to get back to me.

OK, I chose to trust them as it was indeed a preordered model, and one of the first "batch" so to speak, therefore I waited patiently to hear back. In my case being just one of many Macs I have, I was not left high and dry.

Yet it took nearly three weeks, a couple of conversations that I had to initiate before they volunteered to replace it. Far longer than a "true" Luxury manufacturer would make one wait, especially given the fact I live within 5 miles of an Apple store. They could have easily built (it was BTO) a replacement and shipped it to the local store for my pickup in a week. That's the normal time frame for any of my MBP to arrive after ordering.

But the good news is that Apple can look at their present quality issues as an opportunity, or they can continue to live in denial.

 

[Born Again]

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".

What luxury brands do you purchase where you have this mentality?

iPhones are the same price as other phones.

Poor college students own iPhones iPads and MacBooks

THAT IS not luxury lol

 

[Shrink]

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?

Holy Crap!!

Happily, I'm too stupid to really know the difference...when ignorance is bliss.

Geez, for that kind of money for the top priced phone, and another $7,000 0r $8,000 ...I could have a Patek Phillipe watch!!

 

[Born Again]

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".

More on Virtu and their 300K plus phones sold over the last decade + what their concierge service can do...

http://www.bloomberg.com/news/2011-...rtu-phone-defies-slump-to-win-sales-tech.html

You win

Best post

It's asinine to consider the iPhone luxury lol

 

[walnuts]

Smartphone is the luxury

For all those arguing whether Apple is technically a luxury brand or whether it is compared to other smartphones, I think you are missing the point. Having a smartphone at all IS a luxury in some parts of the world.

I think it is a valid point not fully explained here. It seems to me that Apple has tapped (or has almost finished tapping) all of the areas with the income level to afford smartphones or the expensive data plans that come with them. I think we are talking about people and places that would consider $100 for a phone and more than $30 a month for service (for example) to be luxurious (no matter where you put the cost, subsidy or up front payment). I think this is the so-called untapped market, but I'm not so sure there are people in these markets sitting around with money just waiting for the iPhone to be available to them.

I think the real challenge here is for smartphone manufacturers to develop a "starter smartphone". Perhaps something just a few steps above a feature phone and with data limitations to avoid high data rates which would require costly infrastructure that poorer areas might not have.

In that context, is that a market Apple wants to get into? I'm not so sure- I think they are too much of a luxury brand for that. In the past, Apple has been content selling Macs to a niche market. I know the market is exerting an "expand or die" philosophy here, but people have always called for cheaper Apple products with looming threats of doom, but it never really swayed Apple. We will see I suppose.

 

[LagunaSol]

This is why I believe Apple keeps it's prices artificially high. $100 just to go from a 16GB iPhone to 32GB is absurd.

"Artificially high?" Really? Hmm, and here I always thought pricing went hand-in-hand with market demand and product desirability.