This is a little off topic, but maybe some of the excellent minds and experiences, here, can 'splain this to me:How does the reseller channel work for "Free" phones?
I was reading an article at All Things D that reports that the new Nokia Lumina 710 is being sold at CostCo for $0.01 and at WalMart for $0:Nokia Lumia 710 Now Cheaper Than Cheap
That got me to thinking -- How does the reseller channel work for "Free" phones?
For simplicity sake, let's use Apple as they have a single "free" phone tied to a single carrier.
Let's assume Apple, the OEM, gets $200 for an iPhone 3GS
The carriers and resellers sell the 3GS for $0 with ATT contract
Let's assume Apple, the OEM, gets paid 30 days after shipment.
1) Apple ships 100 3GS iPhones to ATT
-- ATT assumes a $20,000 obligation to Apple
2) Apple ships 100 3GS iPhones to BestBuy
-- Does ATT or BestBuy assume a $20,000 obligation to Apple?
3) What happens if ATT cannot "sell" its "free" phones
-- ATT cannot reduce the price-- ATT reduces contract terms?
-- ATT returns unsold phones to Apple, the OEM, with restocking charge?
4) What happens if BestBuy cannot "sell" its "free" phones
-- BestBuy cannot reduce the price-- BestBuy negotiates with ATT to reduce contract terms?
-- BestBuy returns unsold phones to ATT with restocking charge?
-- BestBuy returns unsold phones to Apple, the OEM, with restocking charge?
It would be very interesting to know how these "free" devices are accounted and paid for.