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Apple reportedly having trouble signing new carriers, high subsidies an issue

Apple having trouble signing new carriers, high subsidies an issue

With potentially billions of customers on the line, Apple is reportedly having trouble negotiating with wireless providers in emerging markets like Russia and China, and in established markets like Japan. The carriers are, apparently, holding out for better terms from Apple than those currently enjoyed by carriers in United States under the subsidy model. Bloomberg reports:

China Mobile Ltd. (941), the world’s biggest phone company, and NTT DoCoMo Inc. (9437), Japan’s largest mobile carrier, are among providers that haven’t agreed to carry the iPhone, citing the high costs of subsidies needed to make the device affordable or other terms they find unacceptable. The slowdown in adding new partners is contributing to stagnating iPhone sales growth, giving Samsung-led competitors a potential advantage and putting pressure on Apple to deliver a cheaper device or make other margin-threatening concessions

Without the largest carriers in these countries on board, Apple will always be at a disadvantage to rivals like Samsung, which sells to nearly every carrier on the planet. As the competition between the two continues to rage, Apple will need to be where Samsung is, and that may require a change in tactics.

Since the debut of the iPhone, Apple has relied on customer demand in order to push carriers into the deals that Apple wants. But now that they are hearing no from major carriers, they may need to find a new tactic, including lower subsidies. That will either mean lower margins for Apple, or the much-rumored less expensive iPhone.

So, who do you think will blink, Apple or the carriers?

Source: Bloomberg

Joseph Keller

Joseph Keller is a news reporter for iMore. He's also chilling out and having a sandwich.

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There are 24 comments. Add yours.

Premium1 says:

Blame apple. That is what comes with when you want total control over everything and higher prices.

drabbit4u says:

I understand your point and I don't totally disagree. Everything is a trade-off isn't it? I do sometimes wish I had a little more flexibility with my iPhone but every day I read reviews about other phones where people complain about unwanted pre-packaged software they can't get rid of, buggy and malware laden apps and inconsistent quality in their app stores. Hell, I even appreciate the fact that my iPhone doesn't say AT&T on it. Do I love everything about Apple and the iPhone? No. But I always know what I'm getting with it and I don't think that can be said about any other device manufacturer.

drabbit4u says:

I can't and won't argue that but it hasn't exactly been done on the same scale or with such massive success. Apple clearly appeals to people in a way that Nexus hasn't.

GeniusUnleashed says:

I agree, I was just pointing out it's there. I have a feeling that the rumored Motorola X phone will be like the Nexus though. Other carriers and phone makers are seeing that people gravitate more towards stock Android for upgradability and safety reasons and are starting to talk about using it more.

drabbit4u says:

Stifledgenius, thanks for a civilized convo. What's good for one of us ultimately becomes good for all if us. Thanks for engaging.

GeniusUnleashed says:

haha, yeah, too many flameboys on here and civilized conversation is hard to come by. I just want multiple great phone makers to keep pushing each other like Mercedes and BMW do.

Dark_Blu says:

The carriers can wait, and while they do, Samsung will continue to encroach and rise while Apple's progress slows and profits fall.

angermeans says:

I'd like to see what your basing this on as apple hasn't dropped at all and still has record quarters every earnings report. Nt just that but apple is outselling the whole drove of android devices and the dozen or so Samsung variants. In fact, Samsung is no where even close to apple. The only place tey are is in developing countries where they sell off contract low quality devices. As for their extremely popular Galaxy S. Appe is selling almost three iPhones to every one and ont even get me started on tablets as apple has shown time and time again the only game in town is the iPad. So again how is apple's progress slowing?

Dark_Blu says:

Just as the article says, Apple is having trouble signing up new carriers OUTSIDE OF THE USA. So, all of those "record sales" you speak of are happening in the USA. In Europe and China, that simply isn't happening, as Apple is having trouble signing up new carriers. So while YOU may think that "Samsung isn't even close to Apple", you might want to pay attention and look outside the USA to notice that Apple is making progress HERE, NOT in THE REST OF THE WORLD.

drnggaj13 says:

andriod have 64% of the overseas market think its the u.s.a thats behide they follow ...this is why apple trying to update its ios because its the same stuff over and over and over again im just saying andriod can go to carrier or company like lg,sam,htc,hp, and on this is why andriod wins again

StuartV says:

Not only what Dark_Blu said, but add in the fact that Samsung all by themselves are selling WAY more smartphones than Apple - worldwide.

pappy53 says:

"Dont even get me started on tablets as apple has shown time and time again the only game in town is the iPad. "

That is quickly changing. I think that the iPad is the best, but numbers don't lie. It is losing some luster.

http://www.nytimes.com/2013/03/14/technology/14iht-android14.html?_r=0

rogifan says:

What numbers? Who besides Apple reports tablet shipments?

GeniusUnleashed says:

Encroach? Samsung is pulverizing Apple in every single county except the US. This is serious bad news when the biggest carriers of two countries don't care about the iPhone. They're already the biggest carriers without it, why would they blink?

iSRS says:

Well, they are different markets than the US, but here? The carriers. See Sprint, T-Mobile, US Cellular

SockRolid says:

Apple should thank Samsung for wiping out all other Android handsets.
Good luck to the Motorolas, HTCs, LGs, and other no-hopers out there.

Superjudge says:

Yeah Samsung can enjoy some of the blowback from being on top. You can already see that with the S4 reviews when saying it isn't huge upgrade from the S3. Similar stuff that has been said about the 4S and 5. Some of it justified. Google does have a problem on its hand as Samsung moves Android further away from its core and brand. You won't find an Android or Google logo on the phone.

richard451 says:

Every company on the planet wishes they had that problem.

GeniusUnleashed says:

It's just the market equalizing. Look at cars, been around forever and now we get incremental updates. Then we'll get a big swing, like with electric and hybrid, then it all equalizes and we're back to incremental updates. Once Google glass goes big, we'll start to see huge increases again, but for now, what more can you feasibly do with a phone?

pappy53 says:

With the backing of Google, I think that call Motorola a "no-hoper" is a little far-fetched.

Dev from tipb says:

Apple's trump card has always been customer demand, but that only flies if there is enough demand for the iPhone vs other handsets to create a competitive advantage for a carrier to have it (or disadvantage to not have it). That (dis)advantage has to be enough to sway users to switch (or stay) with a carrier, and enough to counterbalance Apple's subsidy and control difference.

As Android/Windows phones get better, that demand gap may shrink or disappear, but I sincerely hope if Apple makes any changes, they go the way of cheaper models, and *not* cede any more control to carriers. Bloatware and logos are non-issues for me, but Apple does not get enough credit for simple things like insisting that users aren't trapped by 54 seconds of "...to leave a fax, press 5..." messages just to increase chargeable carrier air time.

GeniusUnleashed says:

As a guy who's sick and tired of iOS and it's lack of progressiveness compared to Android, I don't think Apple needs to worry too much. This whole being on the tp thing is still relatively new for them. Remember, with regards to computers, they're still less than 20% market share and ridiculously profitable. In essence they are the BMW and Mercedes of phones, they only need to cater to the wealthy few and keep their prices high. Can you imagine how quickly Mercedes' and BMW's cache would drop if they started making a $12K hatchback? The Mercedes A series in Europe is still pretty expensive and only rich people own it.

rogifan says:

Key word here is "reportedly".