HTC and Samsung smartphones have higher subsidy ratios than the iPhone

June 29, 2013
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An ABI Research report has revealed that Samsung and HTC smartphones have higher subsidy ratios than the iPhone.

samsung galaxy s4 vs htc one backs aa

It’s not a big secret that the carriers dislike the iPhone. Thanks to high subsidies and the conditions Apple sets for carriers just to sell the iPhone, the carriers have been known to push other smartphones ahead of the iPhone. However, according to an ABI Research report both Samsung and HTC smartphones have higher subsidy ratios than the iPhone.

On average, carriers have to cover 84% of the costs of Samsung smartphones when selling them for the subsidized price, while carriers have to cover the costs for 80% and 74% of HTC smartphones and iPhones respectively.

Samsung HTC iPhone carrier prices

Even though the absolute value of subsidy for the iPhone is $110 higher than the average price for a Samsung smartphone, carriers are still left to cover 84% of Samsung smartphones.

So why is this the case? Well the obvious reason is that Samsung has a lot of smartphones, which cover almost every sector of the market. 

Samsung has a larger portfolio of devices and its smartphones go on sale more often than the iPhone.

The iPhone 5 costs (on average) $199, the iPhone 4S costs $99 and the iPhone 4 is free on most carriers, however the iPhone 5 is by far Apple’s most popular smartphone. Samsung on the other hand, has many smartphones available for sub-$100, and its smartphones go on sale much more often than the iPhone, meaning carriers must bare the brunt of the costs for the smartphone. The same can be said for HTC smartphones.

galaxy-note-2-verizon-home-button

The poor Galaxy Note 2 was stamped with a Verizon logo on its home button.

Carriers most likely carry this burden thanks to the freedom that Android smartphones offer them. Unlike the iPhone, Samsung and HTC smartphones are often stamped with carrier logos (the Galaxy Note 2 on Verizon is a fine example).

While Samsung’s share prices have taken a dip due to concern over Galaxy S4 sales, the fact that it can create smartphones almost completely in-house and that it’s portfolio of devices is so broad, it looks like Samsung will continue its dominance of the smartphone market, albeit at a lesser extent.

Samsung’s scale and supply chain excellence is allowing it to put its competitors under increasing price pressure and win market share. This is a major concern for the rest of the market, especially for smaller, less efficient vendors, as margins will be squeezed and overall market value reduced.
Senior practice director for devices, Nick Spencer
ABI Research

Other Android OEMs have been producing brilliant smartphones that have been catching the eye’s of consumers and the press alike, so Samsung will need to continue to press forward with innovative steps and a slam dunk Galaxy Note 3 could do just that.

Do you think Samsung can continue its dominance of the smartphone market? Can HTC make up some ground?

Comments

  • Mike Bastable

    no and no to your question at the end. The OEMs from China are coming….

  • Angel Angelov

    HTC Can’t do anything to Samsung! The only player that can at least try is SONY! The main difference between Samsung and HTC is that HTC is only a Smartphone manufacturer and Samsung is one of the biggest corporations on the planet! Even if they don’t come up with a good phone for an year or two, they won’t suffer too much! For HTC, it will be the end of them!

    • David

      wat a load of balls, i have been hearing htc are coming to the end for years now. and wat did htc do this year……..DESTROY THE S4 WITH THE HTC ONE. …FACT

      • Mike Palmer

        Seems like the HTC One did well but your wrong about destroying the S4 as the S4 has out sold the One. And Angel made a good point about HTC because they do have to keep selling phones to stay in the green.

        • David

          just because the s4 has sold more does not mean its better, if people think that then woww, 9 outa 10 websites say the one is better and thats experts who get paid. if people think selling more means the best then my liverpool team should be in the top 5 in the world because we sell that many tops. i wish it did mean that tho haha., this is the 1st time in a while that htc are top of the tree 4 a change, and lots of people dont like it.. so well done htc and sony are starting to make good shit 2, dont think im sum, htc fan boy coz i buy there phones i just want all the phone company’s to get there fair share each without samsung and apple getting most of it.

          • S2556

            “Destroy the S4 with the HTC One…Fact”

            That is an opinion. A fact is something that is indisputably the case. the HTC One and S4 are quite similar. the main differences being the One has the aluminium body unishell + front facing speakers. and the Samsung S4 has removable battery + SD card slot. Many people prefer the removable battery and SD slot, my self included. You don’t look like a HTC fanboy but you do look like someone who blindly hates Samsung products because of their market share. I did not buy either of these phones though. Dont let websites make your decision for you. They are great for learning about the product but you should still make your own decisions instead of taking what ever majority the tech blogs take.

          • David

            i really dont hate samsung, i had an s2 and s3, and id buy samsung again if they would make there phones better, my s3 felt so cheap and it was like a child’s toy, the way a phone feels in my hand is a huge selling point 2 me thats why i even had a sony xperia z, and thats why i wrote the htc destroys the s4. in my opinion and lots others 2, who does not want there phone to feel solid and great 2 hold because my phone is never outa my hand.i dont let websites decide what im buying because i already had my phone b4 most of the reviews were out, it was just a pleasant feeling knowing that most of the websites agree with me that the one is the best phone out at the min………..until something is out next month ;]

          • M Bassam Diwan

            Yeah man LFC all the way.
            We’re still the best team
            YNWA

          • Mike Palmer

            Well I’d say what the consumer buys is what constitutes a win not what a few hipsters say as all they care about is how their phone looks and not what works for the consumer. But I think it’s good that HTC is selling phones but I don’t have a blind hate for Samsung just because they have been selling the most phones and killing the competition.

      • ♠™

        In my opinion, is not like HTC One caused that, all due to Samsung itself spamming too much Galaxy S series, it confusing their consumers, in the end they chose other OEMs instead of S4.

      • MariaxXT

        HTC one killed the s4 it out shine the s4 not only that HTC one is 0% laggy. the s4 sales are damn down hill

        • Abdullah Qaraeen

          “the s4 sales are damn down hill”

          WHAT ? Are you stupid ? haven’t you seen the number of units sold of the GS4 ??? :O

      • Cristi13

        They are both the best phones on the market. It’s a tie, end of story….

        • phreezerburn

          Both are good for each other in that competition is between rival innovators and not one innovator and an iCopycat truly results in novel inventions and not merely novel use.

    • Patato Hsieh

      why Samsung fanboys getting so anxious. I don’t think HTC is going to destroy Samsung. Never. But they released HTC One, and Samsung FBz jumps out like frogs in boiled water.

      HTC got their own problem but someone is simply drama queen.

      • Mike Palmer

        HTC will probably destroy their own success like always and is a shame because they are capable of making good phones “not just making a aluminum phone because just a phone made from a particular material doesn’t make it any good”. It seems like they really haven’t changed after all, look at the One has taken a while for HTC to update it to 4.2.

  • Trent Richards

    Perhaps I am reading this chart wrong, but based on what I get from the chart and the numbers stated in this article carriers are paying the most per iPhone than the others. Sure they might pay the lowest percentage, but 74% of 510 is 377(Apple). 80% of 450 is 360(HTC) and 84% of 400 is 336(Samsung). So that would mean the iPhone is costing the carriers the most. Am I looking at this info incorrectly?

    • Lisandro O Oocks

      you’re doing it correctly. good job!

    • phreezerburn

      Sure, you’re leaving out minimum order contracts. Apple’s are the largest of any tech company in existence and they do not credit for dead inventory which is why they never truly go on firesale. The depreciation is worth more than the margin on the handset.

    • Adam Koueider

      You’re correct. Updated the article to reflect this. But you’re not taking into account the costs that carriers have to put up with when they are negotiating contracts for the iPhone. For example Sprint bet its future when it pledged to buy 30 million iPhones for a total cost of $20 billion, meaning it won’t see a dime off of iPhone sales till at least 2014. But you are still correct, and as such I owe you a virtual beer:

      ___
      | |
      |__|/

  • amanda

    Don’t think it costs carriers more. The amount of money carriers make in a 3 year length (even if the customer isn’t in a 3yr term) is ridiculous and will possibly cover the rest of the cost in a span of months.

  • amanda

    Oh and about 80% of people now-a-days buy out their phone, the rest of the percentage of people get it on tabs. Either way, a lot of people end up paying out the full cost of the phone so technically the cost is covered.

  • michael interbartolo

    Don’t the carriers make up some of the subsidy for Samsung and HTC by adding all that carrier bloat. surely they get some kick back money for filling the phones with apps that can’t be uninstalled.

    • phreezerburn

      No they make up for it in not having to commit to insane numbers of handsets to assure supply.

  • Lisandro O Oocks

    Lets remember that the iPhone 5 is 8 months old.

  • NOBUMMER!

    Sound like Obummer charts and balances.