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?

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