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Ben Thompson is mostly wrong: Customers don't 'buy' iPhones, Carriers do i.e. iPhones are protected from low end disruption by carriers subsidizing and obscurin

Ben Thompson is mostly wrong: Customers don't 'buy' iPhones, Carriers do i.e. iPhones are protected from low end disruption by carriers subsidizing and obscuring the price with plans/contracts. In markets where carrier subsidy isn't as popular (e.g. Europe) iPhone market share is very low. Likewise, iPad market share is dropping quickly becausr there are few subsidies for that product. NB Apple was always careful to sell low end iPods like the nano and shuffle so they continuously disrupted themselves in that product market and kept other companies from doing so.

DigitalJack 12y ago
I've got an android phone that costs the same (within 10%) of an iphone of the same screen size. You can usually get a step up in storage space in the same price bracket as an iphone, but they are on par with each other from what I've seen.
jobu 12y ago
This model is changing due to disruption from T-Mobile. With AT&T you either buy a phone up front or pay for it in full over 18-24 months. Not sure why, but they do still have a subsidized 2-year plan, but the monthly rate is higher and you end up paying more than the cost of the phone over 2 years.
- lemmingsleft 12y ago
  The model is changing slowly but keep in mind that TMobile, Verizon, Sprint, AT&T are still incentivised to heavily push the iPhone due to multimillion units they've essentially preordered when partnering with Apple http://www.businessinsider.com/apple-verizon-iphone-2013-7 http://www.businessinsider.com/apple-verizon-iphone-2013-7 (NB the numbers were wrong, and iPhone demand and growth keeps increasing, but the underlying business relationship is as described)
encoderer 12y ago
I disagree. I think people shop for a phone the way many people (unfortunately) shop for a new car: On the monthly payment, not the sticker price. All that matters is that the carriers finance the phone, subsidies are dying. Every major US carrier now has installment options. > Likewise, iPad market share is dropping quickly becausr there are few subsidies for that product. You don't think it's because they essentially invented the market, starting out at 90% market share?
- lemmingsleft 12y ago
  > You don't think it's because they essentially invented the market, starting out at 90% market share? Apple essentially invented the harddrive digital music player with iPod+iTunes and maintained a +80% marketshare for the lifespan of that product > I disagree. I think people shop for a phone the way many people (unfortunately) shop for a new car: On the monthly payment, not the sticker price. All that matters is that the carriers finance the phone, subsidies are dying. Every major US carrier now has installment options. The monthly payments for cars vary widely with the differences measuring in hundreds of dollars per month. The monthly payments for contract cellphones in USA are mostly the same for a $0 low end phone or a $0 iPhone. Indeed for many years AT&T/Verizon/Sprint wouldn't give a discount on the monthly plan even if the consumer brought their own phone which made it slightly irrational to not sign a contract. It's impossible for the low end to disrupt when the high end is the practically the same price.

DigitalJack 12y ago

I've got an android phone that costs the same (within 10%) of an iphone of the same screen size. You can usually get a step up in storage space in the same price bracket as an iphone, but they are on par with each other from what I've seen.

jobu 12y ago

This model is changing due to disruption from T-Mobile. With AT&T you either buy a phone up front or pay for it in full over 18-24 months. Not sure why, but they do still have a subsidized 2-year plan, but the monthly rate is higher and you end up paying more than the cost of the phone over 2 years.

lemmingsleft 12y ago
The model is changing slowly but keep in mind that TMobile, Verizon, Sprint, AT&T are still incentivised to heavily push the iPhone due to multimillion units they've essentially preordered when partnering with Apple http://www.businessinsider.com/apple-verizon-iphone-2013-7 http://www.businessinsider.com/apple-verizon-iphone-2013-7 (NB the numbers were wrong, and iPhone demand and growth keeps increasing, but the underlying business relationship is as described)

encoderer 12y ago

I disagree. I think people shop for a phone the way many people (unfortunately) shop for a new car: On the monthly payment, not the sticker price. All that matters is that the carriers finance the phone, subsidies are dying. Every major US carrier now has installment options. > Likewise, iPad market share is dropping quickly becausr there are few subsidies for that product. You don't think it's because they essentially invented the market, starting out at 90% market share?

lemmingsleft 12y ago
> You don't think it's because they essentially invented the market, starting out at 90% market share? Apple essentially invented the harddrive digital music player with iPod+iTunes and maintained a +80% marketshare for the lifespan of that product > I disagree. I think people shop for a phone the way many people (unfortunately) shop for a new car: On the monthly payment, not the sticker price. All that matters is that the carriers finance the phone, subsidies are dying. Every major US carrier now has installment options. The monthly payments for cars vary widely with the differences measuring in hundreds of dollars per month. The monthly payments for contract cellphones in USA are mostly the same for a $0 low end phone or a $0 iPhone. Indeed for many years AT&T/Verizon/Sprint wouldn't give a discount on the monthly plan even if the consumer brought their own phone which made it slightly irrational to not sign a contract. It's impossible for the low end to disrupt when the high end is the practically the same price.