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Apple CEO downplays talk of declining iPhone subsidies

updated 05:50 pm EDT, Tue April 24, 2012

Exec points to low churn rate, iPhone status

In a conference call following Apple's fiscal Q2 financial disclosures, CEO Tim Cook downplayed talk of declining subsidies for the iPhone. The executive argued that iPhone subsidies are "not large" relative to the sum of service subscriptions spread across a 24-month period, while the iPhone still has a number of "distinct advantages" over competing products.

Many carriers are said to have told Cook that Apple's iconic smartphone brings the lowest "churn rate," a reference to the tendency for some subscribers to float around between different carriers when their contract term expires.

The CEO further describes the handset as the "best smartphone on the market" to entice customers to upgrade from basic phones to a smartphone with a data package. A great experience for the customer is said to help the carrier, and the executive suggests that some of these factors have been missed in the recent public discussion.

The comments come in response to warnings from several analysts who expect carriers to begin pushing for lower iPhone subsidies, which would have a negative impact on Apple's revenues. Other analysts point out, however, that Apple has likely established multi-year agreements with most carriers, ensuring that subsidy rates are maintained in the near future.

Although Apple does not disclose its iPhone subsidy terms, the device is said to carry much higher subsidies than competing smartphones. The fiscal Q2 results show that iPhone sales have yet to slow, reaching 35.1 million units during the winter and marking an 88 percent gain from the same period last year.

by MacNN Staff



  1. Arne_Saknussemm

    Joined: Dec 1969


    Bah! these are just numbers...

    What about the "User experience",
    or the wonderful Apple "Ecosystem",
    or the walled garden of the "App Store"...

    Samesung is just playing the "specs game",
    and do I have to remind you where that lead them before?

  1. Arne_Saknussemm

    Joined: Dec 1969


    Oops! soory for droping this but

    It seemed soooo appropriate...

    Truth is the iPhone's rival ARE catching up,
    some would say EXCEEDING Apple's offering,
    and no matter how nice the "retina" display is,
    it's a DIMINUTIVE 3.5 inches,
    in a world where "4.something inches" IS the norm,
    and as much an advance as Siri is,
    it is STILL a beta product barely now inching it's way into even other English speaking countries like the UK...

  1. Arne_Saknussemm

    Joined: Dec 1969


    One more thing -

    The next iPhone better be THE PHONE,
    bigger screen & better display (4.5" - high refresh speed color eInk?),
    tactile feedback (Senseg’s ? where are you),
    quad processor,
    A grown up Siri that works in all major languages,
    and a long ETC.

    Otherwise the "ecosystem" bullcaca,
    will not do it any more.

    Ah, and removable batteries, would not hurt it a bit!

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