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AT&T CEO: Carriers Can't Afford Big Subsidies for Devices Any Longer
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how much you paid for them isn't how much they're worth. This is what is confusing you.
you paid $99 for the iphone, But that iphones value is $650. that $550 didnt dissapear. it was still accounted for and your carrier took it as a direct hit to their bottom line. if you want to look at it from "simplistic" point of view, you paid $99, and your carrier paid $550. the whole price of the phone was paid.
your N4 received no carrier incentive so you paid for that 100% in cash for $350.
So you have 2 phones, a N4 worth $350 and an iPhone worth $650.
at the end of the day, you go to sell the iPhone and you get $300 for it. thats a total drop of $350. or a loss of 54%
That N4, which you're now advertising at $150, will see you loose $200. or 57% of its retail value.
What is making you, and many other Apple users who resell their phones and claim its such a higher value retained, is that you're not paying upfront the $650. When you pay out of pocket $99 and then sell the phone $300, you actually made a personal profit.
If the carrier stops paying the $550 portion of you rphone, and you're forced to pay $650 upfront, that warm and fuzzy feeling of reselling your iphone dissapears.
This is humorous. As if they're losing millions day after day b/c of subsidized equipment. Might as well make the customer fork over their millions, right? The greed is strong with this one.
I have no issue with a company wanting to make a profit and keep the shareholders happy but don't sugarcoat it w/ a sob story about how much you're in pain b/c of subsidized smartphones.
I have no issue with a company wanting to make a profit and keep the shareholders happy but don't sugarcoat it w/ a sob story about how much you're in pain b/c of subsidized smartphones.
If I'm paying for my own device, I'm not signing a 2 yr contract nor am I going to pay those high priced fees Ma Bell and Big Red are charging. It's your choice carriers, which would you prefer?
actually...this is EXACTLY what AT&T is doing now. If you buy your own device outright, your monthly service is $15 cheaper. EVERY MONTH.
From Google Finance:
AT&T (NYSE: T)
3 months ending 9-30-13 - Net Income: $3,814,000,000
Verizon Wireless (55% owned by Verizon, 45% by Vodaphone)
Verizon (NYSE: VZ)
3 months ending 9-30-13 - Net Income: $2,232,000,000
Vodaphone (NASDAQ: VOD)
6 months ending 9-30-13 - Net Income: $29,265,020,000
And they expect us to feel bad for them that they can't "afford" subsidizing devices anymore? What a joke.
(That's net income AFTER all operating expenses have been deducted, by the way)
AT&T (NYSE: T)
3 months ending 9-30-13 - Net Income: $3,814,000,000
Verizon Wireless (55% owned by Verizon, 45% by Vodaphone)
Verizon (NYSE: VZ)
3 months ending 9-30-13 - Net Income: $2,232,000,000
Vodaphone (NASDAQ: VOD)
6 months ending 9-30-13 - Net Income: $29,265,020,000
And they expect us to feel bad for them that they can't "afford" subsidizing devices anymore? What a joke.
(That's net income AFTER all operating expenses have been deducted, by the way)
Then we must also not feel bad for Apple, who makes much more profit than the carriers... for doing much less... and just sticks most of it away. The carriers pay Apple an average 40% more in subsidies for iPhones, than for other devices.
How much more would AT&T's last quarter's income have been, if they hadn't sold over 3.5 million iPhones with an average subsidy of $450 ? (About $1.6 billion in subsidy expenses.) Or Verizon, with even more?
Personally, I just want my monthly bill to come down.
and it's why many of us take a very very critical viewpoint here towards actions apple does.
most people like to label us "shills" oor the like... I like Apple products themselves. I Think they make some of the nicest looking, and user friendly devices on the planet.
That doesn't excuse them for operating their company likes dicks to their consumers. there's a reason I didnt buy an ipad this season and went Android. when you're making around 45% pure profit on a device, while you have 40+ billion in the bank and continuously give your execs bonuses, while insisting on paying low wages to everyone else, and useing predominantly cheap overseas labour and using your vertical integrated platform to force upgrades and new purchases on people... yeah.. there's a reason this forum is full of people highly critical of apple's choices.
Get rid of subsidies
I think we are seeing the results of the T-Mobile campaign (and probably one reason Sprint wants to buy them). The subsidy model is starting to be exposed and most customers have no idea how much their phones actually cost. Ask any average user and I'm sure they'll tell you their iPhone 5s costs $99.
If we get rid of subsidies and the contracts that go with them there will be much more competition and rates should go down. I use an iPhone and am on ATT and my phone was subsidized... I think it's crazy that I'm paying the same monthly rate as a friend of mine who has a cheap terrible Android phone that brand new is probably $300 cheaper than my iPhone. And worst of all is the penalty all of us pay if god forbid we aren't taking a new subsidy the day we are eligible to do so as we continue paying the same rate long after the subsidy has been paid off.
I think we are seeing the results of the T-Mobile campaign (and probably one reason Sprint wants to buy them). The subsidy model is starting to be exposed and most customers have no idea how much their phones actually cost. Ask any average user and I'm sure they'll tell you their iPhone 5s costs $99.
If we get rid of subsidies and the contracts that go with them there will be much more competition and rates should go down. I use an iPhone and am on ATT and my phone was subsidized... I think it's crazy that I'm paying the same monthly rate as a friend of mine who has a cheap terrible Android phone that brand new is probably $300 cheaper than my iPhone. And worst of all is the penalty all of us pay if god forbid we aren't taking a new subsidy the day we are eligible to do so as we continue paying the same rate long after the subsidy has been paid off.
In the long-term, getting rid of subsidies may be a good thing for consumers but that depends on Apple lowering the prices of their iPhones by $100-200 in addition to AT&T/Verizon/T-Sprint lowering your monthly bill by a significant amount.
And don't forget about BluRay being a big bag of hurt so that Apple couldn't afford to include it.
Actually, no. You paid this subsidy every month, so reselling your iPhone simply refunds part of that extra you paid every month. Even buying an off-contract phone doesn't guarantee unlocking, which is necessary for fair resale.
I don't think we can tell Apple is doing "much less" than carriers. Their products have an attention to quality and detail that very few can boast. They're simply not in the same business anyway.
On the other hand, taking Apple's own products and not some would-be competitor's, the iPhone is way overpriced.
That would be honest, but carriers don't have the reputation of being so, especially in North America. They would rather give you some added options you may never use than give you a lower bill.
I can understand them, in a sense. This Blu Ray consortium is controlled mostly by big studios that don't recognize a private right to copy, the same ones who added completely artificial DVD zoning, preventing a user to rightfully play a foreign movie that may well have been unavailable in a given zone, or shamefully cut, such as Snowpiercer.And don't forget about BluRay being a big bag of hurt so that Apple couldn't afford to include it.
In that context, I find it legitimate to pirate (some) movies.
Before, you just paid the $15 regardless of whether you had a subsidized device or not. The issue here is that they got rid of the discounts for the lines on the plans with larger data buckets, so this ends up being a break for lighter users, and puts the screws to the heavier users.
I went to my AT&T account to see what I could do to upgrade from my iP5 to a 5S. Seems all I can do is pay monthly for the new device, or pay full retail. So AT&T won't give me a subsidy, but I still have to pay their exorbitant monthly rates? Go #### yourselves AT&T.
Use your upgrade.
If you're not eligible, every carrier offers you the exact same options. Pay full price or use their payment plan.
No carrier offers you a new phone every year without having to pay full price for it. Even TMobile.
Apple would be able to continue innovating as a mobile carrier, although the one sticking point might be that they would need to apply for and hold an FCC license, and would be subject to regulation. Although regulation is not a bad thing in and of itself. Being a carrier would allow Apple to offer its own data services over its own network, which it has already started to do in part with iMessages. I would be very interested in seeing this develop further. And while you are at it, sell your AAPL stock to me, and when the price goes up, I will be a rich man
If carriers go unsubsidised for all of their phones, there will be an exponential growth in a combination of OEM financing options (that already exist - Apple offers financing on all of its products) and third party retail outlets such as Best Buy, who already offer interest free or low interest financing on electronics.
It will just be a shift towards traditional OEM and retail financing. The bigger change will be upgrade cycles, which may slow down dramatically - simply because the change to traditional financing as opposed to carrier subsidising would mean people can't simply dump their phones for upgrade programs.
However, this will probably also increase the used market dramatically, as hand-me downs and gifting away of old phones should be reduced because suddenly these phones have more value attached to them, and people will need to sell them in order to be able to pay off the loans they have in order to take out a new loan for the upgrade.
It will be interesting to see what effect it has in the end on the market and buying behavior.
It will just be a shift towards traditional OEM and retail financing. The bigger change will be upgrade cycles, which may slow down dramatically - simply because the change to traditional financing as opposed to carrier subsidising would mean people can't simply dump their phones for upgrade programs.
However, this will probably also increase the used market dramatically, as hand-me downs and gifting away of old phones should be reduced because suddenly these phones have more value attached to them, and people will need to sell them in order to be able to pay off the loans they have in order to take out a new loan for the upgrade.
It will be interesting to see what effect it has in the end on the market and buying behavior.
Apple would be able to continue innovating as a mobile carrier, although the one sticking point might be that they would need to apply for and hold an FCC license, and would be subject to regulation. Although regulation is not a bad thing in and of itself. Being a carrier would allow Apple to offer its own data services over its own network, which it has already started to do in part with iMessages. I would be very interested in seeing this develop further. And while you are at it, sell your AAPL stock to me, and when the price goes up, I will be a rich man
You know that building a network is not cheap and it costs a lot if time to do, don't you?
And not taking into account that, surprisingly, there is a world outside of USA.
Apple doesn't have any incentive to be a mobile operator
Apple would be able to continue innovating as a mobile carrier, although the one sticking point might be that they would need to apply for and hold an FCC license, and would be subject to regulation. Although regulation is not a bad thing in and of itself. Being a carrier would allow Apple to offer its own data services over its own network, which it has already started to do in part with iMessages. I would be very interested in seeing this develop further. And while you are at it, sell your AAPL stock to me, and when the price goes up, I will be a rich man
Do you really think that if Apple owned a carrier they would charge less for their services?
Yeah. If anything, Google would be the one to operate a carrier, but that would also put them in a precarious position with the other carriers. And they would have to buy T-Mobile to do it, since they would need the network and spectrum. Although if they put their cash behind T-Mobile to build out, they might actually have a good network...
I would love a less expensive service, believe me! I agree with you on that
But this would be about more than just pricing. As a carrier, Apple would be able to use its hardware/software/services/carrier ecosystem to not only make the best quality handsets and software, but also would be able to build a solid backbone to carry all of the data that is sent to and from these devices.----------
Yes, there absolutely is a world outside of the U.S., and Apple would be able to offer mobile services outside of the U.S. market as well. But the U.S. would be a start. It would not be cheap, but Apple has a huge mountain of cash, and might be able to afford to do it.