China should end smartphone subsidies to overseas vendors and give more support to local brands, industry insiders said on Tuesday, as telecom carriers pledged to cut operating expenses and Apple Inc gets ready to debut its next-generation iPhone.
Xiang Ligang, a telecom researcher in Beijing, said cutting carriers’ subsidies to foreign-made handsets will not only reduce carriers’ operating expense but also leave local players with more market demand.
“It will be a one-stone-two-birds move for the Chinese smartphone industry,” he said.
I’m all for doing the same here in Europe and overseas in the US – but, of course, only if it applies to all smartphones, regardless of origin. Let people see what they’re really paying for their Galaxy S5 and iPhone 5s. Can you imagine if smartphone vendors and carriers can no longer mislead consumers?
IMHO, this is a business model that is well past its sell by date.
Being forced to use a work supplied HTC Android that had all the ORange crud as well as the HTC crud was the last straw for me.
Unlocked phones are it for me from now on. I have a dual sim device now. Great because I travel a lot I can buy a local sim card and not have to pay roaming charges, not that I pay them when I’m in the US. My UK network is currently 3. 4G at no extra charge and truly unlimited data has a roaming agreement with T-Mobile in the US. all the calls I make come out of my UK plan minutes. That plan is a SIM only deal, with a one month notice.
The other thing is that the US Carrier really need to get themeselves out of the 19th Century with all those extra charges and frankly stupid restrictions. They should get on with proving a decent service. If they do that then the customers will come.
This is why China is such a hard market to crack if you’re not a domestic company, there’s an extreme amount of protectionism going on there.
Kudos to Apple for trying, but ultimately I don’t think its a business environment conducive to foreign companies.
I’m all for a level playing field though, carrier subsidies distort the market heavily in the US, making cell phone prices irrelevant assuming you’re even remotely credit worthy.
I don’t really understand why people say subsidies are still a dominant effect in the US market.
Tmobile & At&t have completely moved away from subsidies. Price matters. No more hidden device fees.
However, the challenge is in marketing and selling unlocked devices that are not sold by the carrier. People still largely buy from the store, rather than shopping online for an unlocked phone. Its tough to get a feel for a phone via website.
So, I guess people still are thinking its a subsidy effect, but its really a carrier selection issue? Maybe?
Subsidies still exist, they’re just no longer tied to the service contract. You effectively pay a deposit and a monthly installment. Which they wisely keep enticing you to upgrade your device, having many concurrent installment plans running.
It achieves the same end result that straight up carrier subsidies do. The good thing that TMobile did is make it so that the two (service contract and phone installment plan) aren’t intermixed. Which is a win for transparency I suppose.
Right, that’s my point. Its no longer a two year contract at a fixed price, regardless of what phone you buy. It used to be the case where the true price of the phone was hidden from you. $100 a month regardless of the discount they gave you on a new phone when purchased on contract. That’s not the case any more. And choosing phones can lower or increase your monthly bill.
Edited 2014-08-21 22:52 UTC
Eh, actually after thinking over it I see what you’re saying. I think you’re right, there doesn’t really seem to be much more of a subsidized model in the United States.
Which makes me wonder what the mix of iPhones to other devices is on the carriers now that its the case. And if iPhone US marketshare will take a measurable hit as a result.
I think that the current year flagship iphone sales will probably taper off, if they haven’t all ready. I think the iphone 5c was in anticipation of this. If you want an iphone, but pay a little less Apple will have a phone for you.
Sometimes it can backfire …when in my country T-mobile did the change, a lot of stupid people came out yelling ~”I thought this phone would cost me only xx when signing the contract, why those thieving bastards from T-mobile are charging me monthly for a phone?!”
People will stop saying that subsidies are still a dominant effect in the US market when iPhone reviews will talk about the price being $599, not $199…
Edited 2014-08-21 21:50 UTC
I don’t know why reviewers don’t list the full price of phones. But maybe its related to the quality of their reviews. ( All phone reviews are terrible, everywhere.)
Even here?
What about Apple vs. Samsung a few month ago?
(Greetings from Euroland!)
Removing that 30% luxury tax on foreign imports would go much further, as it stands, anyone with the means goes to Hong Kong to buy those products at a significant discount.
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