vivekpreddy asked:

If your wish comes true and T-mobile's way (no phone subsidies) becomes the norm, won't that severely cut into Apple's profits for the iPhone? The Nexus 4, a comparable phone in most regards is literally HALF the price of an iPhone5 without subsidies. Is there any way that Apple (Samsung, HTC and the others as well) won't suffer a huge cut in profits if the unsubsidized plan becomes the norm?

Well if the phone was sold at the full price, profits should be about the same (with the money coming directly from the customers, rather than the carriers). Same is true if it were financed (not sure if T-Mobile would pay that difference to Apple up front, but I assume so).

But you’re right that a move to this non-subsidized model could force prices to come down from that full price. And yes, that could severely cut Apple’s profits were that the case.

If I were an Apple shareholder, this hypothetical would probably worry me. But I’m not, so I’m all for it. The U.S. carriers have held everyone hostage with the subsidies and long, expensive contracts for far too long.

  1. parislemon posted this