Originally Posted by cynic
No, but Apple needs to get three things in order in Europe:
1.) Work with carries in order to ensure better subsidy rates, similar to the US ones.
2.) Stop screwing European customers over and charge appropriate prices, similar to US ones.
3.) Ensure you got an attractive ecosystem within iTunes in all European countries.
Regarding point number two, let me clarify. In Europe, I paid 789 Euros for a 32GB iPhone 5, whereas it costs 749 Dollars in the US. The European price is therefore about 1026 Dollars. I'd be really curious to see how many of those Apple would sell in the US at that rate. It's just crazy.
You've already lost at number 1.).... The rest of the world is not a fan of subsidies at all- it is far more likely that the subsidy racket in the US will go away than the rest of world will convert to it.
Unless............... (doodeloo doodeloo doodeloo)....
Eddy Cue: Hello 5 largest carriers in Europe...
EC: We're Apple and we need high margins, but need you to sell more phones. So... My proposal is this. You continue to pay us $650 for our phones, but instead of selling them to consumers for $650 we want you to sell them to your customers for $200.
EC: So, who is on board?
Carriers:.... ummmm, Let me get this right, we'll be losing a ton of money in order to make you profits?.....
EC: No, you won't.
EC: You will change your rates to customers from $50/mo to $100/mo to more closely match US rates. That will change your gross on a 2 year contract from $1200 to $2400. That's $1200 more! Taking out the Apple subsidy of $450, you still make $750 more! Sure, the customers will end up paying more, but that's what we all want anyway, right?
Carriers: Wow! That sounds great! But no way will they go for it.
EC: They won't have a choice if you all agree to our plan. But first, let me show you this carefully crafted document from our legal team that states we have no interest in setting prices or any concern for what you charge for rates on our competitors products. So, ermm..... right, now that that's out of the way, where were we?
Carriers 1: If I raise my rates to $100/mo and everyone else stays at $50/mo nobody will buy my product.
EC: Well, you're right, and you are all not allowed to talk together to do that or it would be illegal. But you know our terms and you know your counterparts have been offered the same terms so if you all agree to it simultaneously individually..... <wink> <wink> <nudge> <nudge> Now this is important, we, Apple are not telling you the price to set, but if it is any more than $100/mo we're not doing it, and any less than that your fine, but you are still paying us the same amount of money- so you really can't afford any less than that.
Carriers: Wow, this is too good to be true.... But if Apple contracts go for $100/mo and Androids go for $50/mo all the business is going to go to Android.
EC: Well, we have this other clause in there... We can't TELL you to raise your Android contracts from $50/mo, but our clause says whatever price you sell their contracts you have to match that price for Apple.
Carriers: But if we do that and still have to pay you your guaranteed subsidy of $450 we'll lose our asses!
EC: Indeed, you will, so you are probably best off setting your Apple price to $100/mo
Carriers: But that means we would have to set our Android price to $100/mo
EC: You said that, not me! <wink>
Carrier Exec: Ahhhhhh..... I get it $$$$$$$! Ohhhh.... and we don't have to guarantee the Android vendors the subsidy, so the extra $1200 from them will be pure profit!!!!
EC: You are a revolutionary genius who is going to change the telecom industry, my friend!
Carriers: Well alright then!
EC: Who's in?
Carriers: Ummm, we really cant sign this until the others have signed it.
EC: I've got two in and two on the fence.
Fence sitter: Marching orders from HQ, can't sign it unless you get the other fence sitter to sign on as well....
EC: It would be shame for us all to lose this great deal even with 3 just because a 4th wouldn't sing..... Besides if you sign, I'm sure they will <whistles>
FS: Okay, we're in
Other FS: We're in too!!!!
That's pretty much what it would take to get subsidies in Europe, and that scenario would *never* happen in the real world
Edited by Frood - 6/28/13 at 3:33pm