Carrier subsidy ratios for Samsung handsets higher than Apple and HTC, study finds

Posted:
in iPhone edited January 2014
The average implied subsidy for Samsung smartphones sold in the U.S. substantially higher than comparable product sold by Apple and HTC, says one study, suggesting the Korean company is heavily relying on aggressive pricing strategies to squeeze out the competition.

ABI


According to market intelligence firm ABI Research (via BGR), Samsung and its partner carriers lead the market in offering device subsidies at percentages substantially higher than their nearest competitors.

The latest research shows Samsung products are subsidized by an average of 84 percent, while Apple and HTC are at 74 percent and 80 percent, respectively.

?Samsung continues to squeeze its competitors at every turn," said ABI chief research officer Stuart Carlaw. "The Samsung Galaxy SIV is now considered on a par with Apple?s iPhone 5. Coupled with better subsidy, the breadth of its device portfolio, increasingly savvy marketing, and its excellence in channel execution, it is little wonder Samsung is dominating the mobile handset market from top to bottom.?

While the latest iPhone products average a higher absolute subsidy value that is $110 higher than Samsung's devices, most of the Korean tech giant's devices come at a cheaper initial cost.

Samsung's aggressive pricing strategies are reportedly hindering less well-established vendors from entering the market.

?The smartphone market in particular is entering a new phase focusing on execution and price, rather than innovation and value," said ABI's senior practice director for devices, Nick Spencer. "Samsung?s scale and supply chain excellence is allowing it to put its competitors under increasing price pressure and win market share. This is a major concern for the rest of the market, especially for smaller, less efficient vendors, as margins will be squeezed and overall market value reduced.?

A teardown of the latest Galaxy S4 model revealed a build cost higher than that of Apple's flagship iPhone 5. It should be noted, however, that the averages from ABI take into account Samsung's entire lineup, which is far more expansive than Apple's three offerings.
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Comments

  • Reply 1 of 38
    ealvarezealvarez Posts: 88member
    Is anyone surprised?
  • Reply 2 of 38
    pedromartinspedromartins Posts: 1,333member


    how is it more expensive? It's plastic, the phone itself does everything slower, they do not have to build their own OS, the screen is amoled pentile crap, the processor is a generic qualcomm (there's no "tweaks" in that model), they do not take into account Apple's "bigger" muscle at securing and getting components, plus the excellence of well trained and efficient manufacturing... 


     


    I don't get these analysts. As long as samsung pays them, they post anything.

  • Reply 3 of 38
    robin huberrobin huber Posts: 3,959member
    Where's the DOJ when you really need them?Oh, that's right, protecting the Amazon monopoly from those pesky competitors like iBooks.
  • Reply 4 of 38
    droidftwdroidftw Posts: 1,009member

    Quote:

    Originally Posted by AppleInsider View Post



    Samsung continues to squeeze its competitors at every turn," said ABI chief research officer Stuart Carlaw. "The Samsung Galaxy SIV is now considered on a par with Apple?s iPhone 5.


     


    Sounds like Stewie may have mispoken or is not in tune with the leap frogging that takes place.  The iPhone 5 was Apple's answer to the Galaxy S3.  The S4 was Samsung's answer to the iPhone 5.  The next iPhone (5S?) will be the phone to compare to the S4.

  • Reply 5 of 38
    yojimbo007yojimbo007 Posts: 1,165member
    Ditto to all above posts!
  • Reply 6 of 38
    froodfrood Posts: 771member

    Quote:

    Originally Posted by DroidFTW View Post


     


    Sounds like Stewie may have mispoken or is not in tune with the leap frogging that takes place.  The iPhone 5 was Apple's answer to the Galaxy S3.  The S4 was Samsung's answer to the iPhone 5.  The next iPhone (5S?) will be the phone to compare to the S4.



     


    Well that can''t be right, because it would mean Samsung releases its product, and then Apple releases a product to compare to it afterwords....  Clearly its the other way around, the S4 has to be compared to the iPhone 5 because that is the Apple product it copied.


     


    The source article referenced is another clever play on numbers.  'Percentage subsidy per phone'......   ???  Why not just talk about total subsidy $?

  • Reply 7 of 38
    LOL no surprise there. Samsung's phones almost always have pretty big markdowns on them compared to the iPhone.
  • Reply 8 of 38
    constable odoconstable odo Posts: 1,041member
    It's a pretty sad year for Apple loyalists and shareholders. Timid Cook just let Samsung up and steal their whole smartphone empire away in just half a year. I doubt Samsung will be able to hold on to their gains for another six months, though. It costs lots of money to run blitz campaigns quarter after quarter. Apple has the long-term advantage with its retail stores and good customer service.

    I don't know what's going on internally at Apple, but from the outside it looks like Apple just threw up its hands and gave up the smartphone industry to Samsung. I hope that isn't the case. I think that Apple only needs a well-made smartphone with long battery life and an easy to use interface. I don't think most consumers are looking for whiz-bang features that the GS4 offers. No point in crying over spilt milk. Maybe Apple will have something up its sleeve to attract a lot of iPhone buyers. I wanna believe.
  • Reply 9 of 38
    sessamoidsessamoid Posts: 182member


    Apple holds 39% of US smartphone market, far ahead of Samsung's 23%

  • Reply 10 of 38
    spicedspiced Posts: 98member
    Let them internal haemorrhaging to stay number one all they like! And they also have to compete with their rival siblings, HTC, Sony, LG, big fat GooMot... That will help dries their piggy bank and go belly up.....yaaaa
  • Reply 11 of 38


    This is such a silly article.  If there's any complaining to be done, it's that Apple's absolute subsidy is more than $100 higher than Samsung's.  The carriers shoot for a subsidized price of $200 to $300 for high-end models.  The ratio of subsidy to MSRP does not matter.

  • Reply 12 of 38
    pendergastpendergast Posts: 1,358member
    Who's footing the bill for the $50 gift card you get for buying an S4 at Best Buy?

    Why does such a popular phone have to be pimped so soon after its launch?
  • Reply 13 of 38
    tallest skiltallest skil Posts: 43,388member
    pendergast wrote: »
    Why does such a popular phone have to be pimped so soon after its launch?

    A phrase just popped into my head that I think describes Samsung's lineup:

    Whore of the Month Club.
  • Reply 14 of 38
    pendergastpendergast Posts: 1,358member
    A phrase just popped into my head that I think describes Samsung's lineup:

    Whore of the Month Club.

    Maybe Samsung should just do a subscription service, where you get the latest version of the S4 each month.
  • Reply 15 of 38
    This is no surprise especially sinse the galaxy 4 looks like $$$$ for buyer but Samsung pays $ and makes your $$$. These specs look like a way to add money more than experience.
  • Reply 16 of 38
    steven n.steven n. Posts: 1,229member
    If you look at the report, the absolute subsidies are the same.
  • Reply 17 of 38
    rcfarcfa Posts: 1,124member
    I don't get these analysts. As long as samsung pays them, they post anything.

    Samsung doesn't play analysts. Analysts play the stock market and Apple's stock price because they know too many ppl who don't understand Apple and its products bought the stock and are therefore easily scared.
    As a result the play Jojo with the stock price, making money on the up and down as they please.
  • Reply 18 of 38
    The issue here is really for android folks. The people that want "open" and choices are going to end up with 30 choices from Samsung, 2 choices from HTC, one X-phone from Google/Mototrola, and a few by each of the smaller players, Sony,LG etc....

    How is this good for an industry? It's like cheering that HP is going to run Dell out of business. That's not good for competition or consumers. Samsung has a huge advantage as both a component maker and smartphone maker.

    Samsung is the new Sony, and the old Sony is almost dead in HDTVs and smartphone.
    How long until ZTE or Huwai, with the massive financial backing of the Chinese Government, become the new Samsung? What if the Chinse government declare that it 's citizens can only buy smartphone from Chinese owned businesses? How long until Chinese companies can provide all of their own components and not rely on Samsung?

    Food for thought?
  • Reply 19 of 38
    When I am eligible to upgrade my phone I will be able to sell my iPhone for more than $200 and Samsung GS4 owners are mad when the get $50. This whole thread will show how a phone made by 6 year olds in China WAFFLESTOMPED a phone that the govt of Korea backed so earnestly. Galaxy phones are crap. All of the "smart gestures" are some crap people will jack around for a week tops. And your bigger screan is amoled... Wtf? Didn't Apple just contract sharp for their next screens? Quattron > Samsung ALLL DAYY!!
  • Reply 20 of 38
    It's a pretty sad year for Apple loyalists and shareholders. Timid Cook just let Samsung up and steal their whole smartphone empire away in just half a year. I doubt Samsung will be able to hold on to their gains for another six months, though. It costs lots of money to run blitz campaigns quarter after quarter. Apple has the long-term advantage with its retail stores and good customer service.

    I don't know what's going on internally at Apple, but from the outside it looks like Apple just threw up its hands and gave up the smartphone industry to Samsung. I hope that isn't the case. I think that Apple only needs a well-made smartphone with long battery life and an easy to use interface. I don't think most consumers are looking for whiz-bang features that the GS4 offers. No point in crying over spilt milk. Maybe Apple will have something up its sleeve to attract a lot of iPhone buyers. I wanna believe.

    Nope: Apple says they want to make the best product. You want Apple to make the most. Because you're afraid to be seen with an unpopular product, even if it is the best.
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