There's no doubt that at times, sales are simply to get rid of stock.
As I pointed out, though, BOGOs don't really give a "free" phone... not even close. It's just two phones, each at 1/2 of the usual UPFRONT downpayment.
Also, BOGOs require that BOTH lines have to be either new or ready for upgrade. So a line subsidy is being used for both, and both require a two year contract which will pay back the carrier far more than the small amount they gave up for the lower phone sale.
Here are some numbers just for fun, to get us thinking about what happens behind the scenes:
- iPhone = retail $650, or $200 with two year contract.
- Note = retail $700, or $300 with two year contract.
Right away, we see that people are willing to pay $100 more upfront for the Note 2, even though the retail difference is only $50. Now let's estimate what the carrier costs likely are:
- iPhone = wholesale $650 - user $200 = $450 carrier subsidy (20 months to recoup)
- Note = wholesale ~ $550 - user $300 = $250 carrier subsidy. (11 months to recoup)
Here the upfront cost is reversed. Carriers pay more out of pocket for the Apple product, because it brings in customers who are only willing to spend up to $200. (This high subsidy is why carriers want to push non-Apple products. This is also why analysts worry that if carriers drop the subsidy model, Apple might be in real trouble in the US.)
Now, if Verizon were to do a BOGO on the Note (which they haven't yet), it would be something like this (leaving out wholesale discounts for buying more than the usual number of devices):
- Note = wholesale $550 - user $150 = $400 carrier subsidy (17 months to recoup)
Still less to the carrier than the cost for an iPhone, AND they've locked in TWO subscribers for 24 months.
BOGO is more difficult for the iPhone, because with only $100 upfront, the carrier would not recoup their subsidy until right at, or slightly after, 24 months.
(Most phones wouldn't cost as much as the Note 2, btw, so BOGO would be even better a deal for the carrier.)
Source Notes: Sprint has said subsidies are 40% higher for Apple than other makers. AT&T has said it takes average 20 months to recoup subsidies for iPhone. More details can be found in this profit analysis, among others.