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