January 2, 2013
The iPhone's status as the most in-demand smartphone has allowed it to collect selling prices far above rival high-end smartphones. That's crimped margins for carriers like AT&T, Verizon, and Sprint. With T-Mobile making noise over reducing carrier subsidies, the natural next step is to think about whether other carriers will attempt to eliminate subsidies or curb their costs. Will carriers fight the heavy subsidies enriching Apple (NASDAQ: AAPL ) and pinching their bottom lines?
In the video below, Motley Fool technology analyst Eric Bleeker explains why pushing back on phone subsidies is easier said than done. As Eric explains, as we've seen in other markets, companies that continue subsidizing phones tend to begin gaining large chunks of market share. That means in a market like the United States, even if two larger players like AT&T and Verizon were to push back on subsidizing phones, it'd create an opportunity for Sprint to promote cheaper phones as a means of gaining share. To see Eric's full thoughts, make sure to watch the video.
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