Originally Posted by jragosta
If you follow the first link, you'll get more detail:
So they are providing a subsidy to carriers who sell Android handsets. Note, however, the last sentence. If I'm reading that correctly, they're also paying the carriers a percentage of search revenue for iPhones, as well, since Google is the default search engine in iOS, so this would not incentivize carriers to sell Android handsets. One report says that they're also paying Apple $1 B per year for the privilege.
That's not really a subsidy since they're not asking them to suck up the cost- its actually a big part of Google's business model. Anyone who steers a 'hit' to Google via Google through their platform shares in the success. Apple users earned Apple $1billion from Google by choosing to use Google search on their iPhones. Carriers put their mandatory bloat on their own branded phones. Part of that usually includes Google search. Even though it is Googles platform (Android) they still share the wealth with the provider.
What I'm looking for is direct support of the claim that Google is providing kickbacks to either the carrier or salespeople themselves. To the carriers it would make little sense since they make the carriers pay a subsidy. What would be the point of "Hey for every one of my phones you sell, I'm going to give you $20, but I'm going to charge you $250 to sell it." Doesn't make much sense, no? But saying 'If you sell my phone I'm *only* going to charge you $250 instead of the $400 my competitor charges you- does make them want to sell your phone more than the other one- and it would be in their interests to incentivize their sales people to sell the one that makes them more money.
Originally Posted by stelligent
It depends on what you mean by initial kick. But I do believe carriers are paying upfront subsidies for some Android phones, just not as much as they do for the iPhone. Furthermore, Apple dictates iPhone pricing whereas there is a process of negotiation with other phone makers (or there used to be), with the carriers dominating the negotiations.
Yep. You've got it right. Apple dictates iPhone pricing.... and to their own advantage far more than Android handsets. That is great for their margins, but not so great for their unit sales.
What I mean by initial 'kick in the teeth'??!! Seriously? Did you see AT&T or Verizons earnings on their record iPhone sales last quarter?
They did sell a record number of phones and in particular iPhone 5's and 4's. (For the 4's Apple dictates the carriers have to give to users for free, but they still have to pay Apple a subsidy- so those are a 100% loss to the carrier as a direct sale). As a result of their record iPhone sales they had a record quarterly loss of over $4billion. Thats a pretty good kick in the teeth.
iPhones command that kind of premium because their users love them. No doubt about that :) But to say Android phones are only doing well because Android is bribing carriers or salespeople I think is probably innacurate. Android does have a pretty big competitive advantage with carriers- but that advantage is provided more by Apple than by Google.