Prediction: the death of phone subsidies will be great for Windows Phone in the US

[Jas Holden]

I think that I've seen one or two articles that say that the new MS Lumia flagship phones will more expensive than Apple and Samsung's best phones.

If so, what is really needed is a phone that comes between the 640XL and the 950XL, or whatever it gets called. With a better screen than the 640XL, continuum and a few other upgrades and a cost around $400 USD.

That type of phone might be attractive to businesses that upgrade to Win10.

 

[Visa Declined]

Yes, people will still make a down payment and monthly payments, however, now the price of the phone will be "known" to the consumer.

You don't have to make a "down payment" at T-Mobile to get a phone. And you're acting like people don't already know that an iPhone costs $600+ before they buy it. Everyone in the U.S. knows that Apple phones are expensive, nobody flinches, nobodies shocked.

Whereas before, it was just, "Oh, you're on a contract. You can have this phone for $1 (or $99, or whatever)."

You're not getting it, this is exactly the way it still works. You pick out a phone, they tell you how much you will pay monthly on it, and then they explain that if you terminate your contract, the money owed on the device is due immediately. Nothing has changed.

Now people will see, "Oh, I'm paying $99, plus $59 per month for 2 years? Really?"

A flagship phone a T-Mobile is about $20 bucks tacked onto your monthly bill, and they do not charge you interest on the device. You're making this out to be something that it's really not, unfortunately.

It won't stop everyone from buying, but there are some people out there that will now say, "Okay, I'm going to shop around and see what I can find. It might be cheaper in the long run to pay one out on my Visa card at a 3rd party retailer, because will also double my warranty." Amazon.com, Best Buy, and others may see a slight uptick in phone sales from it in the long term.

The overwhelming majority of Americans are going to continue buying their phones from their carrier, I promise you.

 

[Keith Wallace]

Good thing the thread title didn't start with "FACT: ".

I think it's a given that many people will no longer "just get the next iPhone model" because it will be too obvious that it's expensive. If more people are looking for something else than their next iPhone, some of those will end up giving WP a look. How many I can't say. And second, the 'tiles' interface is gaining visibility with the tens of millions of Windows 10 users. So instead of that weird phone in the corner of the store, it will be that thing that looks the same as the home PC. Again, I don't know how much of an effect it will be. Maybe it will be great for WP (as I 'predict'), or maybe it will only be 'OK'. I doubt it will be 'bad' for WP, but I guess we'll find out soon enough!

Some other things that are helping: project astoria (quick ports of Android apps) project islandwood (quick ports of iOS apps), universal Windows apps (same apps on desktop and WP; some devs that jump on the Win10 market will also enable the WP version of their app), visibility of Cortana. I think all these things help WP being taken seriously as an option by consumers. Lots of chess pieces in play, so in my mind these are exciting times!

Again, most of this makes no sense. The iPhones really don't cost any more than the competition anymore. The flagships all pretty much start in the $600-650 range. The Lumia 920 was on-par with the competition (if not better) at launch. It was cheaper on-contract and off-contract. It didn't get the job done. My point is, you're basing your predictions on false assumptions. There's not going to be any sticker shock. People have been rolling with AT&T Next and Verizon Edge and T-Mobile Jump for a while. I know 4 people who have used it. 3 got iPhones, and one got a Lumia 1520 that he gave up for an Android-based One (M8). The tile familiarity's unlikely to matter, either. Windows 8 didn't sell like Microsoft hoped, but it was still on tens of millions of devices. If anything, the tile interface HURTS perception, in that respect, since people were so frustrated with Windows 8 (I wasn't). This is just some baseless speculation on the public perception of something.

I already mentioned the Astoria and Islandwood mess as well. Microsoft's go-to move is to half-*** everything nowadays. For starters, we don't know how "quick" the porting will ACTUALLY be. It might be a lot easier than native coding, but not easy enough to get smaller teams to bother. The important issue, and it's what my first sentence here was alluding to, is that Microsoft's going to shove out an unfinished Windows 10 Mobile that doesn't even have Astoria ready. Instead, it's got an aimless "2016" release date, and Islandwood might be the same. It's what repeatedly irritates me about Microsoft, that they half-heartedly stagger the W10 launch across PC, mobile, and console, and none of them are even complete at their individual launches.

Lastly, the Cortana thing. I don't see how it matters in the slightest. It's on iOS, Android, Windows, Windows Phone, and it's coming to Xbox. The visibility of Cortana doesn't matter because it's not exclusive to Windows. It's one of the things where Microsoft's short-sighted desire for visibility and profits is potentially going to hurt its long-term mobile efforts. They touted these special features on the platform, sent them out to the competing platforms, and now there's not much to entice people to switch. It's not going to be hardware prices, because they'll either be the same or be cheaper because of lesser parts (like the SD 808). It's not going to be app availability, at least not for a long time. It's not going to be the Microsoft app suite, because Microsoft shoved it all onto Android and iOS.

The sad fact is that Microsoft's going into its fifth year with the tiled interface. It's great when you experience it, but not many people have been given a real reason to try it. Updated weather and messages on the home screen isn't worth losing hundreds, even thousands, in paid apps. Oh, and don't forget how Microsoft keeps aiming to take steps back on W10, like with its nasty mail and music. There are times I love my Windows Phone, but then there are times I want to walk to Redmond and punch every member of their music team in the face, because Groove Music is worse than the last Xbox Music app, which was worse than the first Xbox Music app, which was worse than Zune.

 

[tgp]

You pick out a phone, they tell you how much you will pay monthly on it, and then they explain that if you terminate your contract, the money owed on the device is due immediately. Nothing has changed.

Exactly, and this is pretty much how it works on contract, especially after the carriers started prorating the ETF. Even if you wanted to buy a phone outright, for some flagships it was actually cheaper to sign a new 2 year contract, get the subsidized phone, cancel the contract, and pay the EFT, than to buy the phone outright. As long as consumers are going to continue walking into carrier stores, which I'm quite certain they will, they will not save any money this way.

As much as your entire post goes against how things "should" work, I agree with you 100% that this is how the carriers' plan changes will spin out. I do not think that habits are going to change at all, at least not measurably.

 

[AndyM72]

I thought the ruse the US carriers were doing, was charging the same monthly service charge (including subsidy), and the same up front cost, for both midrange and high end cost phones? Which is what drove US consumers to the high end, the likes of the iPhone, because it was seen as a better deal?

 

[ytrewq]

There's no question that, in the US until now, the subsidies gave customers strong incentives to (a) get a new phone every couple of years (because you were already paying for it through higher voice and data charges anyway), and (b) get a flagship phone (because the subsidies meant the flagship phones were only a couple hundred dollars more than the bottom-tier phones).

This system and its incentives have been a huge reason that the iPhone has had such a high market share. There have been numerous statistical analyses done that show that there is an extremely high correlation between the rate of subsidization in a country and iPhone's market share in that country. Eg., iPhone market share heavily depends on carrier subsidies Since the US has, until now, had a high rate of subsidies, Apple has had a high US market share.

So, as subsidies go away, iPhone market share takes a huge hit.

I don't think it necessarily follows that Windows Phones will get much of that market share. I would assume that Android would benefit the most, but it is the other big player in the market. At least in the short term.

I do see one scenario in which Windows Phones benefit significantly. As iPhones lose market share, most of that market may go to Android, but some will go to Windows Phones. As Windows Phones gradually inch up in market share, and as iPhones gradually inch down, developers have more of an incentive to make apps for Windows Phones. And if Microsoft does a decent job making it easy for developers to port Windows 10 apps to Windows 10 mobile, the app delta fades. Which is one of the main reasons people have stayed away from Windows Phones. That could have significant long term consequences.

 

[HillBillJr]

If you buy your phone outright, you pay less on the plan.

 

[rhapdog]

You don't have to make a "down payment" at T-Mobile to get a phone. And you're acting like people don't already know that an iPhone costs $600+ before they buy it. Everyone in the U.S. knows that Apple phones are expensive, nobody flinches, nobodies shocked.
You're not getting it, this is exactly the way it still works. You pick out a phone, they tell you how much you will pay monthly on it, and then they explain that if you terminate your contract, the money owed on the device is due immediately. Nothing has changed.
A flagship phone a T-Mobile is about $20 bucks tacked onto your monthly bill, and they do not charge you interest on the device. You're making this out to be something that it's really not, unfortunately.
The overwhelming majority of Americans are going to continue buying their phones from their carrier, I promise you.

This thread is about ending subsidies in the US. T-Mobile did that over 2 years ago, yet we're just now considering subsidies in the US to be going away. T-Mobile is still a minor player, though they have shaken up the industry somewhat.

The thing is, the number of T-Mobile subscribers is still very much a minority. With the big 2, Verizon and AT&T, many people will be making a down-payment on flagship phones, and they will have to pay the taxes for said phones up front, at least at AT&T. 7% tax on a $600 phone is $42. Some places tax is a bit lower, many places it is much higher. Add that to a $50 down-payment, and then a $20 per month added payment, and people who are in the low-income end of the spectrum (read, most Americans) will think long and hard about getting an iPhone.

People with better credit (read, those with more money to start with) usually don't have to make the down-payment. Those people "usually" can afford the iPhone anyway. It's not going to affect them even if they had to make the down-payment.

Exactly, and this is pretty much how it works on contract, especially after the carriers started prorating the ETF. Even if you wanted to buy a phone outright, for some flagships it was actually cheaper to sign a new 2 year contract, get the subsidized phone, cancel the contract, and pay the EFT, than to buy the phone outright. As long as consumers are going to continue walking into carrier stores, which I'm quite certain they will, they will not save any money this way.

You never save money and never have saved money buying a phone in a carrier store. Most people aren't good with their money. Look at the shape of the economy. Everyone seems to be in debt and can't get out.

I thought the ruse the US carriers were doing, was charging the same monthly service charge (including subsidy), and the same up front cost, for both midrange and high end cost phones? Which is what drove US consumers to the high end, the likes of the iPhone, because it was seen as a better deal?

Exactly.

One point people are missing is that with the contracts of the past, the carriers only listed the "monthly payment" as visible. They never listed the full price, and you had to outright ask or dig deep on the website to find it. It's been a bit more transparent for about the last year, but you still have to ask when you go into the store, at least at AT&T.

With full purchase now going to be one of the preferred options, along with Next, etc., more people are going to see the full price the carriers charge for the first time. Yes, many people already know. What a lot of people don't realize is that the full purchase cost at the carrier is in many cases higher than buying the unlocked version from another dealer.

Carriers are now having to adjust the prices of their phones. I remember looking at a particular smart phone a few years ago, and it when I inquired as to the full-purchase price with no contract at an AT&T store, I was told it was $699. I found the same one manufacturer unlocked, new on Amazon for $499. Such was the case with most all their phones.

Lumia 635 was $99.99 at the AT&T store, and $49 at Walmart. I bought one for $39.99 and one for $35.00, new. AT&T was over-charging.

Now, with the new plans in place, and with all the carriers ditching contracts, I see the the Lumia 640 selling for $79.84 at Walmart, and $79.99 at AT&T. Coincidence? I've never seen AT&T sell the same phone at a matching price before. Why is that? They know with the competition and with full price of phones being so highly visible that they will have to start pricing competitively. I believe with the "contracts hiding the price" by just telling them how much per month they will pay, they felt it was easy to gouge the public, and they were right.

I believe, whether great for Windows Phone or not, it will be great for the consumer, period. I think perhaps this in combination with a number of other factors that Microsoft has been working hard to put into place, the Windows Phone market will begin to improve in the US within about another year or so.

 

[tgp]

With the big 2, Verizon and AT&T, many people will be making a down-payment on flagship phones, and they will have to pay the taxes for said phones up front, at least at AT&T. 7% tax on a $600 phone is $42. Some places tax is a bit lower, many places it is much higher. Add that to a $50 down-payment, and then a $20 per month added payment, and people who are in the low-income end of the spectrum (read, most Americans) will think long and hard about getting an iPhone.

Agreed. This is how it SHOULD work, logically speaking, but somehow I don't see it changing much, if any. For one thing, carriers, including AT&T and Verizon, have been moving away from contracts for several years already. The only difference is that now a contract is not even an option. They certainly know the sales numbers on the phone sales by price level on Edge/Next vs. 2 year contract. Whether or not the level of phone goes down, I'm sure their profits go up. Of my friends/family/acquaintances that I've noticed, I haven't seen any move away from iPhones or flagship Androids since no longer using 2 year contracts.

It would be interesting to see the ratio of iPhone and flagship Android sales on contract vs Edge/Next. I'm sure the carriers know this.

You never save money and never have saved money buying a phone in a carrier store. Most people aren't good with their money. Look at the shape of the economy. Everyone seems to be in debt and can't get out.

Exactly. I don't think anybody is arguing this. But I still don't think anything is going to change. We will continue to not be good with our money, to be in debt, and not get out. :amaze:

I believe, whether great for Windows Phone or not, it will be great for the consumer, period.

I don't agree with this. If moving away from contracts was going to hurt the carriers, they wouldn't do it. Yes, T-Mobile has been shaking up the industry, but at the same time Verizon and AT&T are adding customers at record levels. They're not hurting in that regard.

I don't say all this to create a big argument. I fully agree with what you say in that it makes sense; it is how things SHOULD work out. But WILL it? That's what I don't believe will happen.

If the world were logical, men would ride side saddle instead of women.

 

[rhapdog]

Of my friends/family/acquaintances that I've noticed, I haven't seen any move away from iPhones or flagship Androids since no longer using 2 year contracts.

I have noticed several people, probably only about 1 in 10, who have indeed moved to lower-end phones, and about half of those went to Windows phone when deciding not to do contracts any longer. These numbers are only from the people I've noticed, and don't represent a proper cross-section of the American buying public, as I live in a small, remote area to start with.

I don't agree with this. If moving away from contracts was going to hurt the carriers, they wouldn't do it.

I didn't say it would hurt the carriers. I don't believe for one second it will hurt the carriers. I said it would help the consumer. I believe it can help both the carrier and the consumer. It helps the carrier by making things simpler. Having a more transparent, simpler method of selling phones and services, by separating the selling of the phone from the actual phone service, can help to lower the cost of operations for the carrier by making them more streamlined and efficient. Making the carrier more efficient will help the consumer once the carrier realizes the savings and passes those savings on to the consumer in order to be more competitive, which will increase their customer base.

It's going to help both consumer and carrier. That's the way capitalism is SUPPOSED to work.

If the world were logical, men would ride side saddle instead of women.

Yeah, got to agree with you on that one. Here's some free advice. Don't wear boxers while riding a horse. Especially at full gallop.

 

[Doohickie]

We'll see what WP10 brings in terms of hardware. I just switched phones and I was leaning toward an Android anyway (my last WP8 was my first smartphone and I just want to see what else is out there), but when I looked at phones available through my provider (AT&T), they aren't carrying anything that competes right now. The Microsoft/Nokia phones they offer are a lot closer spec-wise to my old HTC 8X than they are to any of the latest offerings for Android phones.

When I compared the WPs they had to similarly spec'ed Android phones, they were roughly the same.

So I'm not sure the assumption that WPs will stack up well against Androids cost-wise is a good one.

 

[Doohickie]

Exactly, and this is pretty much how it works on contract, especially after the carriers started prorating the ETF. Even if you wanted to buy a phone outright, for some flagships it was actually cheaper to sign a new 2 year contract, get the subsidized phone, cancel the contract, and pay the EFT, than to buy the phone outright. As long as consumers are going to continue walking into carrier stores, which I'm quite certain they will, they will not save any money this way.

As much as your entire post goes against how things "should" work, I agree with you 100% that this is how the carriers' plan changes will spin out. I do not think that habits are going to change at all, at least not measurably.

Not in the beginning, but I think eventually people will separate phone and carrier.

 

[tgp]

Not in the beginning, but I think eventually people will separate phone and carrier.

Possibly. I guess we'll find out!

Another possible benefit to consumers is that flagship prices may start falling. Apple depends entirely on high prices, and Android OEMs do too to a lesser extent. If sales start dropping, they'll be forced to drop their prices.

Sent from whatever device I happen to be using today using Tapatalk

 

[Doohickie]

Possibly. I guess we'll find out!

Another possible benefit to consumers is that flagship prices may start falling. Apple depends entirely on high prices, and Android OEMs do too to a lesser extent. If sales start dropping, they'll be forced to drop their prices.

Sent from whatever device I happen to be using today using Tapatalk

When I switch from my phone subsidize plan to my bring-your-own plan, I save $25/device (four in my family). My wife and sons are content with their phones. My phone, an LG G4 (their flagship) is $21/mo. Even with a flagship I'm paying less.

So when people switch from the subsidized plans I think they may actually opt for *more* flagships because they can get a better phone than they used to have for no additional money out of pocket every month compared to what they're already used to.

 

[Laura Knotek]

Possibly. I guess we'll find out!

Another possible benefit to consumers is that flagship prices may start falling. Apple depends entirely on high prices, and Android OEMs do too to a lesser extent. If sales start dropping, they'll be forced to drop their prices.

Sent from whatever device I happen to be using today using Tapatalk

It'll be interesting to see if this lowers the price of Samsung devices. There is a lot more competition in the Android world from Xiaomi, Huawei, ASUS, OnePlus, Moto, LG.

 

[Visa Declined]

Americans, whether rich or poor have always had access to high end phones, the carriers have enabled this. Nothing will change in the future, there will always be "Get an iPhone now for $0 down" plastered across the windows of carrier stores. That's really the bottom line here.

Americans who have destroyed their credit, or are really scraping to get by go to Cricket, Boost Mobile, etc. Those places sell a lot of cheap, unsubsidized phones.

 

[GreenScrew]

On Verizon today you can choose a Lumia 735 for $8/mo or an iPhone 6 for $27. $20/mo for 2 years. That will get some people thinking. Not all, but some... and particularly when getting a phone for our children I think. My wife is very content with her 735 (happier after I added a red back cover). Its quite adequate, and very affordable.

 

[tgp]

Ah, that reminds me of another factor that I forgot to list in my optimistic predictions: flashable WP10 ROMs for Android phones. It all adds up. Hopefully to a positive number.

Most people don't even know how to manually add or remove stuff from their home screens. Who, besides a few technically minded fans, are going to flash a WP ROM on their phones?

 

[tgp]

Millions! After an Android worm demonstrates that Andoid's update model is not sufficient. There, I found another reason. Sheesh, what will it take to bring you guys back to Team Positive?!

Positive? Sure. Delusional? Nope! You're being smart... and logical. Those 2 qualities don't necessarily apply to the general public.

Windows and Android are the 2 operating systems that come to mind when we talk about (lack of) security. This reputation has hurt them so much that they're at 95% and 85% market share respectively. :angel:

 

[Laura Knotek]

Most people don't even know how to manually add or remove stuff from their home screens. Who, besides a few technically minded fans, are going to flash a WP ROM on their phones?

Millions! After an Android worm demonstrates that Andoid's update model is not sufficient. There, I found another reason. Sheesh, what will it take to bring you guys back to Team Positive?!

More people would probably flash Cyanogen than anything else.