Actually carriers initiated the move away from the subsidy model. Apple/Google/BB are simply reacting to the demise of the subsidy model.
Why Carriers Are Moving Away From Subsidized Cell Phones
Bloomberg
Apple measure success by the bottom line. Their market share has been declining. Upgrade cycles have been lengthening. Major markets like China are experiencing economic problems.
Installment plan goals:
Smartphone Notes: Apple's iPhone Sales Strategy, BlackBerry's Acquisition, Samsung's New Wearable
".....Crucially, Apple also unveiled an equipment installment plan of its own – called the iPhone Upgrade Program – that allows customers to upgrade their iPhones annually and receive an AppleCare+ extended warranty by committing to a 24-month financing period. We see the move helping Apple in three ways. 1) Shortening the upgrade cycle, which has typically stood at 2 years, translating to higher shipments over time; 2) Locking customers in to the iPhone ecosystem; and 3) Improving margins, since Apple will sell from its own stores, while bundling the high-margin AppleCare+ extended warranty plan with every sale....."
- Shorten upgrade cycle that has been rising
- Lock in customer with Apple contract
- Add warranty, raise customer total cost and Apple margins. Warranties are profit centers.
One doesn't need significant technology changes in a walled-garden to achieve the above strategy. In fact, technology improvements need to be limited to lower cost. A game of perception.
The installment plan also pulls forward demand as those sitting on fence take the offer.
Why Carriers Are Moving Away From Subsidized Cell Phones
Bloomberg
Apple measure success by the bottom line. Their market share has been declining. Upgrade cycles have been lengthening. Major markets like China are experiencing economic problems.
Installment plan goals:
Smartphone Notes: Apple's iPhone Sales Strategy, BlackBerry's Acquisition, Samsung's New Wearable
".....Crucially, Apple also unveiled an equipment installment plan of its own – called the iPhone Upgrade Program – that allows customers to upgrade their iPhones annually and receive an AppleCare+ extended warranty by committing to a 24-month financing period. We see the move helping Apple in three ways. 1) Shortening the upgrade cycle, which has typically stood at 2 years, translating to higher shipments over time; 2) Locking customers in to the iPhone ecosystem; and 3) Improving margins, since Apple will sell from its own stores, while bundling the high-margin AppleCare+ extended warranty plan with every sale....."
- Shorten upgrade cycle that has been rising
- Lock in customer with Apple contract
- Add warranty, raise customer total cost and Apple margins. Warranties are profit centers.
One doesn't need significant technology changes in a walled-garden to achieve the above strategy. In fact, technology improvements need to be limited to lower cost. A game of perception.
The installment plan also pulls forward demand as those sitting on fence take the offer.