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Carrier subsidies crippling iPhone sales in parts of Europe

updated 10:50 am EST, Mon February 27, 2012

Android secures grip in Greece, Portugal

Apple's dependence on high carrier subsidies for the iPhone is giving Android devices an advantage in parts of Europe, especially the south, suggests research firm IDC. The group notes that Apple had over 20 percent of the US and UK smartphone markets last year. But in Greece and Portugal, two of the countries hardest hit by European economic problems, the iPhone claimed just 5 and 9 percent shares, respectively. Shipments of smartphones costing over $300 before subsidies dipped below 50 percent in those countries.

Android now controls over 50 percent of the Greek and Portugese smartphone markets. The platform's advantage is mainly price, since many Android phones cost less than $200 without a contract. In parts of southern Europe many customers don't sign contracts, and may be unwilling to pay the high prices associated with an off-contract iPhone. In Portugal an 8GB iPhone 4 can cost $680 through Vodafone, whereas the same carrier is selling Android phones for as little as $106. The Wall Street Journal comments that carriers in Greece, Portugal, and elsewhere don't subsidize most smartphones.

Carriers in nations like Denmark and Spain are said to be tiring of underwriting the cost of the iPhone. Apple is known to impose high subsidy demands; in the US, for instance, Sprint says it its iPhone subsidies are about 40 percent higher than average for other smartphones it sells, and it doesn't expect to turn a profit on the device until 2015. IDC nevertheless notes that 90 percent of US smartphone shipments during the part four years were for devices costing over $300, versus just 67 percent for Italy, and 40 percent in Greece and Portugal.



By Electronista Staff
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Comments

  1. pottymouth

    Forum Regular

    Joined: Nov 2003

    +3

    comment title

    Do carriers usually rely on profits from the phones themeselves? I was always under the impression that the phones were priced to break even and all the money was made from raping the customers monthly on their service plans.

  1. bleee

    Mac Enthusiast

    Joined: Mar 2002

    +1

    font-size:13px

    Until you see a line item cost break down when you sign up with a provider, they can say whatever they want. Which is just the way they like it :-p

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -1

    @pottymouth

    They lose money on the phones, from the subsidies they have to pay to get them. The only thing they can make money on is the contract. Which is why consumers are always whining about their contract's ETF and such, since they want their cheap phone and don't want to have to pay to cover the actual cost of it.

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