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Apple's iPhone 5s and 5c to receive significant subsidies from Chinese carriers

post #1 of 57
Thread Starter 
Newly-released rate cards from China Unicom and China Telecom reveal that Apple's newest handsets will hit the street for significantly less than their sticker prices.

13.09.10-iPhone_5c-1.jpg


As the Chinese market becomes increasingly important for Apple, the company's carrier partners in the middle kingdom have advertised steep subsidies on the new flagship iPhone 5s and 5c, according to information obtained by ISI and reported by Fortune's Apple 2.0 blog.

China Unicom and China Telecom, the nation's second- and third-largest wireless carriers, will each offer multiple plans in which customers can receive an iPhone 5s or 5c for free in exchange for signing a long-term contract. In typical fashion for Chinese handset subsidies, customers will pay the full price of the device up front and receive a prorated portion of the cost back each month in the form of a discount on their wireless bill.

Japanese carriers NTT DoCoMo ? Apple's newest carrier partner in Asia ? KDDI and Softbank similarly offer plans that give customers a new iPhone for free when signing a long-term contract.

The subsidies may help to assuage investors' fears that the lower-cost iPhone 5c is not inexpensive enough for the still-developing Chinese market. The relatively high cost of the new iPhone, coupled with Apple's lack of transparency about preorder numbers, has caused analysts to downgrade Apple's stock outlook and triggered a steep decline in shares of the Cupertino company.
post #2 of 57
But wait...I thought both WSJ and Bloomberg reported the Chinese carriers were cutting their subsidies making people pay more up front. Which is correct?
post #3 of 57
CU and CT are doing some preemptive pricing here. A sure sign that China Mobile is on its way.
post #4 of 57
Quote:
Originally Posted by anantksundaram View Post

CU and CT are doing some preemptive pricing here. A sure sign that China Mobile is on its way.

http://www.marketwatch.com/story/techs-rally-but-apple-falls-on-china-news-2013-09-16
post #5 of 57
Lack of transparency about pre-order numbers? Do they ever downgrade every other phone manufacturer in the world for the same thing? It is hard to imagine analysts can get more ridiculous, but I bet they can.
post #6 of 57
iphone is expensive , they said /s
post #7 of 57
Quote:
Originally Posted by Rogifan View Post

Quote:
Originally Posted by anantksundaram View Post

CU and CT are doing some preemptive pricing here. A sure sign that China Mobile is on its way.

http://www.marketwatch.com/story/techs-rally-but-apple-falls-on-china-news-2013-09-16

Not sure what your link has to do with the post you responded to. I will point out that that story was based on speculation (and blatant market manipulation) and has been contradicted since CT released their rate card...
post #8 of 57
Quote:
Originally Posted by Palstreet View Post

iphone is expensive , they said /s

 



It is, that's why the carriers are subsidizing it lol. They know that their customers really want it, so they're locking them into long-term contracts in exchange for the subsidy.
post #9 of 57
So Apple knew more about their business than the analysts?? Yeah right.

/s
post #10 of 57
Quote:
will each offer multiple plans in which customers can receive an iPhone 5s or 5c for free in exchange for signing a long-term contract. In typical fashion for Chinese handset subsidies, customers will pay the full price of the device up front and receive a prorated portion of the cost back each month in the form of a discount on their wireless bill.

WTF is that crap? Paying full price and getting lower monthly plan is the textbook definition of NO subsidies... This is exactly what I do with a unlock phone here in Canada. If they have to pay full price up front a lower cost phone would do much better. This doesnt make any sense to me.

edit: From what I see on other sites, they get a much lower monthly plan with a high price phone than if they get a $99 phone. This is one wierd system, its subsidies in reverse... I like it... I would do that actually because in the end you pay less than american plans, but you need to have cash up front.
Edited by herbapou - 9/17/13 at 7:08am
post #11 of 57
Quote:
Originally Posted by Wovel View Post

Not sure what your link has to do with the post you responded to. I will point out that that story was based on speculation (and blatant market manipulation) and has been contradicted since CT released their rate card...
Ah, well if WSJ was wrong then that's good. I do wish Apple would do a better job of responding to this stuff. Yeah I get not responding to rumors about new products/services but if the WSJ claims a carrier is cutting their subsidy and that information is false I wish Apple would say so. The stock was down over 3% yesterday in part because of this story from the WSJ.
post #12 of 57
Quote:
Originally Posted by Freshmaker View Post

Quote:
Originally Posted by Palstreet View Post

iphone is expensive , they said /s

 



It is, that's why the carriers are subsidizing it lol. They know that their customers really want it, so they're locking them into long-term contracts in exchange for the subsidy.
And it seems Apple is doubling down on the subsidy model. I wish they weren't as I think the trend going forward is not to be tied to long term carrier contracts.
post #13 of 57
I hope Peter Misek of Jefferies chokes on a bone. That dude spread far too much anti-Apple FUD for his own good. That's OK as long as Apple has been buying back shares since this $50 drop in Apple share price. Guys like Peter Misek should be investigated for suspicious of Apple's share price manipulation by giving out erroneous information to investors. The SEC really should investigate the motives of analysts who make up numbers to fit their own conclusions before any actual product sales take place. I feel that these brokers should at least be fined once the information they've given out proves to be incorrect. At least they wouldn't be so frivolous about making quick judgment calls and would be required to take some responsibility for their actions.
post #14 of 57

The iPhone 5s is sold out in China.

post #15 of 57

Year over year, we read that Apple had dropped in popularity in China, so this news sounds pretty awesome.

post #16 of 57
Quote:
Originally Posted by Constable Odo View Post

I hope Peter Misek of Jefferies chokes on a bone. That dude spread far too much anti-Apple FUD for his own good. That's OK as long as Apple has been buying back shares since this $50 drop in Apple share price. Guys like Peter Misek should be investigated for suspicious of Apple's share price manipulation by giving out erroneous information to investors. The SEC really should investigate the motives of analysts who make up numbers to fit their own conclusions before any actual product sales take place. I feel that these brokers should at least be fined once the information they've given out proves to be incorrect. At least they wouldn't be so frivolous about making quick judgment calls and would be required to take some responsibility for their actions.

So if someone could summarize all of the what this t_urd has been doing, we could all inundate the SEC with emails asking for an investigation. If enough people do so, I bet someone would pay attention.
post #17 of 57
Quote:
Originally Posted by Wovel View Post


Not sure what your link has to do with the post you responded to. I will point out that that story was based on speculation (and blatant market manipulation) and has been contradicted since CT released their rate card...

 

Rogifan is deliberately spreading doom and gloom FUD. Almost every story about the 5s or 5c contain FUD posts from him.

post #18 of 57

But… but… APPLE IS DOOMED!

post #19 of 57
Wow. The WSJ Bloomberg Matketwatch Seeking Alpha Mötley Fool LA Times didn't just get it wrong they loudly trumpeted that the iPhones were an overpriced flop DOA in both China and the USA.

Apple should sue them for slanderously tanking their share price.

Analysts should be fired. News organizations should contritely apologize and institute improvements in their shoddy muckraking slash so called journalism.

Crickets.
post #20 of 57
Quote:
Originally Posted by Rogifan View Post

But wait...I thought both WSJ and Bloomberg reported the Chinese carriers were cutting their subsidies making people pay more up front. Which is correct?

I thought analysts are never wrong. Just goes to show you that you can't trust every thing you read unless it came from the horse's mouth. And we know Apple doesn't comment in rumors.
post #21 of 57
Quote:
Originally Posted by 512ke View Post

Wow. The WSJ Bloomberg Matketwatch Seeking Alpha Mötley Fool LA Times didn't just get it wrong they loudly trumpeted that the iPhones were an overpriced flop DOA in both China and the USA.

Apple should sue them for slanderously tanking their share price.

Analysts should be fired. News organizations should contritely apologize and institute improvements in their shoddy muckraking slash so called journalism.

Crickets.

You know, if you have an estimate of AAPL's actual value, these analysts might actually be helping you. They're pushing the stock down. Now's the chance to buy before the next wave.

post #22 of 57
Quote:
Originally Posted by MikeJones View Post

Rogifan is deliberately spreading doom and gloom FUD. Almost every story about the 5s or 5c contain FUD posts from him.
Call it FUD if you want, I don't care. $550 off contract for a plastic phone is too expensive IMO. But if Apple is content keeping a sliver of the market at the high end and not expanding iOS ecosystem, then fine, that's their choice. But I don't know if its a good move long term....same thing with doubling down on carrier subsidies when more and more people are looking to get out of being tied to long term carrier contracts.
post #23 of 57
Quote:
Originally Posted by jungmark View Post

I thought analysts are never wrong. Just goes to show you that you can't trust every thing you read unless it came from the horse's mouth. And we know Apple doesn't comment in rumors.
To me this is the exact kind of thing Apple should be commenting on. If WSJ and Bloomberg are flat out wrong on pricing Apple should say so. Stock dropped over 3% in part on these stories about reduced subsidies. Unless these pricing schemes were some big secret that Apple couldn't comment on?
post #24 of 57
Quote:
Originally Posted by Rogifan View Post


Call it FUD if you want, I don't care. $550 off contract for a plastic phone is too expensive IMO. But if Apple is content keeping a sliver of the market at the high end and not expanding iOS ecosystem, then fine, that's their choice. But I don't know if its a good move long term....same thing with doubling down on carrier subsidies when more and more people are looking to get out of being tied to long term carrier contracts.

 

Again show me a SINGLE phone that gives the total package of the 5C at $400.  Show me one.  Even the $700 Galaxy S4 is slower than the 5C because it lags big time.

 

Show me one phone with 5C's ecosystem, stable AND guaranteed updated OS, awesome build quality, retail stores that will give you excellent customer service, and awesome re-sale value.  Show me ONE?  There is NONE.

post #25 of 57
Quote:
Originally Posted by sog35 View Post

 

Again show me a SINGLE phone that gives the total package of the 5C at $400.  Show me one.  Even the $700 Galaxy S4 is slower than the 5C because it lags big time.

 

Show me one phone with 5C's ecosystem, stable AND guaranteed updated OS, awesome build quality, retail stores that will give you excellent customer service, and awesome re-sale value.  Show me ONE?  There is NONE.

 



It's not a question of value, it's a question of whether or not Apple has priced the phone well enough to sell into the middle-class smartphone market. They already own the premium market. The 5c will sell VERY well, I don't think anyone is really disputing that. The question is if they are going to cannibalize 5s sales in the process. It will be some time before we're able to answer that question. At $549, it is still a premium phone. If you can't afford it, you can't afford it. $400 is what a lot of people were hoping for.
post #26 of 57
In case you can read Chinese, you can check the package offered by China Unicom.

They offer 10 different plans from monthly fee of US$11 to US$270 for contract period of 12 to 30 months. Each plan will have certain amount of rebate.

Another option is to sign up 36 myths contract with monthly fee of US$62, then you will have a 16g 5S for free.




http://www.chinareviewnews.com/doc/1027/4/2/8/102742883.html?coluid=0&kindid=0&docid=102742883&mdate=0916113536
post #27 of 57
Quote:
Originally Posted by Freshmaker View Post
 
Quote:
Originally Posted by sog35 View Post
 

 

Again show me a SINGLE phone that gives the total package of the 5C at $400.  Show me one.  Even the $700 Galaxy S4 is slower than the 5C because it lags big time.

 

Show me one phone with 5C's ecosystem, stable AND guaranteed updated OS, awesome build quality, retail stores that will give you excellent customer service, and awesome re-sale value.  Show me ONE?  There is NONE.

 



It's not a question of value, it's a question of whether or not Apple has priced the phone well enough to sell into the middle-class smartphone market. They already own the premium market. The 5c will sell VERY well, I don't think anyone is really disputing that. The question is if they are going to cannibalize 5s sales in the process. It will be some time before we're able to answer that question. At $549, it is still a premium phone. If you can't afford it, you can't afford it. $400 is what a lot of people were hoping for.

 

Name me a SINGLE phone maker who makes significant money selling $400 phones.  There is NONE.  There is only money to make at the $500-$600 for now until tech catches up.  Its the same thing happening to PC builders now.  Only Apple makes money, everyone else is in race to sell the cheapest PC.  A losers game.

 

Analysis estimate that Apple would get 20% gross margins selling the 5C for $400.  But then you need to take out advertising, OS development, OS updates, retail stores, overhead, and of course R&D.  Once you take all those out you are basically at $0.  That's why Nokia/LG and all the other guys who sell $400 MAKE NO MONEY AT ALL.  Why would Apple want to do that?  Not to mention the 5C at $400 would cause MASSIVE canibalization to the 5S.

 

Hate to be blunt but if $6.25 more a month (difference between $550 and $400 divided by 24 months) is going to kill a person than apple is not interested in that consumer for now.  It's not just about buying phones.  Its buying into the eco-system.  If a person can't afford the extra $6.25 a month do you think they will buy much on itunes?

 

People hope for a lot of things.  I though the 5C was going to be $400 because I believe all the BS by these analysis.  Now I'm going to buy the 5S.  Mission accomplished for Apple.  I also hope Ferrari sells a $50,000 car.  You can HOPE for many things. 

 

Merc Benz's sells about 1 million cars a year.  The entire industry sells over 15 million.  Do you think they are fretting about the $20k car buyer?

post #28 of 57
Quote:
Originally Posted by Rogifan View Post
 
Quote:
Originally Posted by anantksundaram View Post

CU and CT are doing some preemptive pricing here. A sure sign that China Mobile is on its way.

http://www.marketwatch.com/story/techs-rally-but-apple-falls-on-china-news-2013-09-16

Silly, pointless story. And obviously FUD.

post #29 of 57
Quote:
Originally Posted by AdonisSMU View Post
 

The iPhone 5s is sold out in China.

All of it, or only unlocked? Cite?

post #30 of 57
Quote:
Originally Posted by Rogifan View Post

Call it FUD if you want, I don't care. $550 off contract for a plastic phone is too expensive IMO. But if Apple is content keeping a sliver of the market at the high end and not expanding iOS ecosystem, then fine, that's their choice. But I don't know if its a good move long term....same thing with doubling down on carrier subsidies when more and more people are looking to get out of being tied to long term carrier contracts.

The iPad expands the iOS market share. The C will do the same. Apple makes money on the high-end. Other than Sammy, what other Android vendor makes money? iOS users spend more $$$ and use the Internet more.
Quote:
Originally Posted by Rogifan View Post

To me this is the exact kind of thing Apple should be commenting on. If WSJ and Bloomberg are flat out wrong on pricing Apple should say so. Stock dropped over 3% in part on these stories about reduced subsidies. Unless these pricing schemes were some big secret that Apple couldn't comment on?

Pricing is always secret that's why contracts aren't public.
post #31 of 57
Quote:
Originally Posted by jungmark View Post


The iPad expands the iOS market share. The C will do the same. Apple makes money on the high-end. Other than Sammy, what other Android vendor makes money? iOS users spend more $$$ and use the Internet more.
Pricing is always secret that's why contracts aren't public.

 

Even Samsung makes no money on $400 phones.

Notice how their profits only went up once they sold the $600 Galaxy S3. 

 

You can expect a premium product ( excellent customer service, stable and updated OS, strong eco-system, great trade-in value, awesome build quality) at a non-premium price.  Even Google who sells phones at cost can't produce a true premium phone for $400.

post #32 of 57
Quote:
Originally Posted by sog35 View Post

Name me a SINGLE phone maker who makes significant money selling $400 phones.  There is NONE.  There is only money to make at the $500-$600 for now until tech catches up.  Its the same thing happening to PC builders now.  Only Apple makes money, everyone else is in race to sell the cheapest PC.  A losers game.

Analysis estimate that Apple would get 20% gross margins selling the 5C for $400.  But then you need to take out advertising, OS development, OS updates, retail stores, overhead, and of course R&D.  Once you take all those out you are basically at $0.  That's why Nokia/LG and all the other guys who sell $400 MAKE NO MONEY AT ALL.  Why would Apple want to do that?  Not to mention the 5C at $400 would cause MASSIVE canibalization to the 5S.

Hate to be blunt but if $6.25 more a month (difference between $550 and $400 divided by 24 months) is going to kill a person than apple is not interested in that consumer for now.  It's not just about buying phones.  Its buying into the eco-system.  If a person can't afford the extra $6.25 a month do you think they will buy much on itunes?

People hope for a lot of things.  I though the 5C was going to be $400 because I believe all the BS by these analysis.  Now I'm going to buy the 5S.  Mission accomplished for Apple.  I also hope Ferrari sells a $50,000 car.  You can HOPE for many things. 

Merc Benz's sells about 1 million cars a year.  The entire industry sells over 15 million.  Do you think they are fretting about the $20k car buyer?

So you're saying the only way Apple can make any profit off the 5C is to sell it for $550 off contract? Oh and btw, I can afford to buy the 5S but I can't remember the last time I spent money in the iTunes Store. I have Spotify where I get all my music and DirecTV where I get most of my TV and movies. I do use the HBO Go app on my Apple TV but that's tied to my DirecTV account so again, not spending money in iTunes. OK maybe I'm the exception to the norm but I still think its a mistake for Apple to only market iPhone to people with lots of disposable income (assuming that's what they're doing). There are middle class people who would love to own iPhone but $550 is expensive. To me this attitude of 'Sorry if you can't afford what Apple charges than you don't deserve to be their customer' is really off putting.
post #33 of 57
Quote:
Originally Posted by Rogifan View Post

To me this is the exact kind of thing Apple should be commenting on. If WSJ and Bloomberg are flat out wrong on pricing Apple should say so. Stock dropped over 3% in part on these stories about reduced subsidies. Unless these pricing schemes were some big secret that Apple couldn't comment on?

Couldn't agree more. Information voids always get filled, only question being whether with useful or useless info.

 

Consider this:

# non-earnings-related press releases put out by AMZN's IR in 2013? 125.

# non-earnings-related press releases put out by AAPL's IR in 2013? Zero.

AMZN's P/E? Ridiculously stratospheric.

AAPL's P/E? Ridiculously subterranean.

 

I am sure the truth lies somewhere between zero and 125. A lot of the suckiness in the stock price is of Apple's own making.

 

 

(Edited typos).


Edited by anantksundaram - 9/17/13 at 8:40am
post #34 of 57
Quote:
Originally Posted by sog35 View Post

Even Samsung makes no money on $400 phones.
Notice how their profits only went up once they sold the $600 Galaxy S3. 

You can expect a premium product ( excellent customer service, stable and updated OS, strong eco-system, great trade-in value, awesome build quality) at a non-premium price.  Even Google who sells phones at cost can't produce a true premium phone for $400.
Do you have sources for this or are you just guessing? I haven't used a Moto X but it got good reviews. Maybe it's not a "premium phone" but maybe people don't care. And maybe there are some people who will never consider plastic (no matter how great the build quality) to be "premium". Just saying...
post #35 of 57
Quote:
Originally Posted by anantksundaram View Post

Couldn't agree more. Information voids always get filled, only question being whether with useful or useless info.

Consider this:
# non-earning-related press releases by AMZN in 2013? 125.
# non-earning-related press releases by AAPL in 2013? Zero.
AMZN's P/E? Ridiculously stratospheric.
AAPL's P/E? Ridiculous subterranean.

I am sure the truth lies somewhere between zero and 125. A lot of the suckiness in price is of Apple's own making.
I don't get it. Amazon is one of the most secretive companies around but when a story started making the rounds that they were building a smartphone and were going to sell it for free with no contract it didn't take them long to deny it. I think there are times when it would be beneficial to Apple to NOT be silent.
post #36 of 57
Quote:
Originally Posted by Rogifan View Post


Do you have sources for this or are you just guessing? I haven't used a Moto X but it got good reviews. Maybe it's not a "premium phone" but maybe people don't care. And maybe there are some people who will never consider plastic (no matter how great the build quality) to be "premium". Just saying...

 

Look at Samsungs profits.  It only exploded AFTER they started selling a ton of $600 phones.  And why aren't  other phone makers who sell a large quantity of <$450 phones making any money?  Like LG/Nokia/Chinese brands?  None of them make money.  Only the two companies that sell $600 in large quantities make money.

 

The MotoX is $199 with contract.  That's more than the 5C at $99.  Plus we all know Google does not mind selling hardware at cost.

post #37 of 57
Quote:
Originally Posted by Rogifan View Post


So you're saying the only way Apple can make any profit off the 5C is to sell it for $550 off contract? Oh and btw, I can afford to buy the 5S but I can't remember the last time I spent money in the iTunes Store. I have Spotify where I get all my music and DirecTV where I get most of my TV and movies. I do use the HBO Go app on my Apple TV but that's tied to my DirecTV account so again, not spending money in iTunes. OK maybe I'm the exception to the norm but I still think its a mistake for Apple to only market iPhone to people with lots of disposable income (assuming that's what they're doing). There are middle class people who would love to own iPhone but $550 is expensive. To me this attitude of 'Sorry if you can't afford what Apple charges than you don't deserve to be their customer' is really off putting.

 

Don't forget the resale value:

 

2 year old iPhone4S on Gazzelle sells for $190 in good condition.

2 year old Samsung Galaxy S2 sells for $60 in good condition.

2 year old iPhone4S - BROKEN! BROKEN condition. $75. LOL!

 

You will basically re-coup the price difference with resale.  I'd bet the 5C will sale for about $150-$200 in two years.  So you will be only paying $400 if you resale. 

post #38 of 57
Quote:
Originally Posted by sog35 View Post

Look at Samsungs profits.  It only exploded AFTER they started selling a ton of $600 phones.  And why aren't  other phone makers who sell a large quantity of <$450 phones making any money?  Like LG/Nokia/Chinese brands?  None of them make money.  Only the two companies that sell $600 in large quantities make money.

The MotoX is $199 with contract.  That's more than the 5C at $99.  Plus we all know Google does not mind selling hardware at cost.

Google does appear to sell some smartphones and tablets at close to cost, for example the Google-branded Nexus 4 phone and Nexus 7 tablet along with the HDTV product Chromecast. The MotoX is not a Google product but instead built by Motorola Mobility, a separately operated company. I believe MM sets it's own pricing and they chose to position this one as higher end.

Noteworthy that Google has yet to have MM build a Google-branded device which probably says there's other companies building a better product than MM at the moment.
Edited by Gatorguy - 9/17/13 at 8:53am
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post #39 of 57
Quote:
Originally Posted by sog35 View Post
 

Look at Samsungs profits.  It only exploded AFTER they started selling a ton of $600 phones.  

It may also have something to do with the fact that they started selling better phones. Just saying....

post #40 of 57
Quote:
Originally Posted by anantksundaram View Post
 

It may also have something to do with the fact that they started selling better phones. Just saying....

 

fine.  Look at the major players in the mid-range market <$400

 

LG - sold 50,000,000 smart phones - zero profits

Leveno - sold 40,000,000 - very little profits

ZTE - sold 40,000,000 - very little

 

Nokia sold 50,000,000 and BROKE EVEN!

http://video.foxbusiness.com/v/2647243301001/microsoft-nokia-unit-breaks-even-at-50m-smart-phone-sales-a-year/

 

LOL!

Even if Apple sells an additional 100,000,000 5C's at $400 it won't bring in any profits.

 

Show me a single manufacter who makes GREAT money on $400 phones.  Then Apple will bring out a $400 5C.

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