When most people buy a new smartphone, part of the equation that helps make it affordable to put a small computer in their pocket is the subsidy provided by the carrier. A new analysis of device subsidies by ABI Research shows that Samsung was the highest in terms of percentage when compared to HTC and Apple. Clocking in at 84%, Samsung topped HTC’s implied rate of 80% and Apple’s 74%. This may be surprising to some who have heard carriers are not especially enamored with Apple’s devices due to the squeeze Apple puts on their profits. While Samsung and HTC are worse for carriers from a percentage standpoint, Apple still leads the way with a higher $110 average subsidy cost in actual value.
Subsidies are used by manufacturers and carriers to ensure devices are competitive from a price point perspective. By spreading the “profit” out over the life of a two-year contract, carriers are able to entice more buyers by offering relatively low-cost devices.
This new information provides an additional data point as to why Samsung is continuing a slow march to domination in the mobile handset market. By achieving these better subsidy ratios, Samsung is able to ensure its devices are extremely competitive on price, even offering a better value in some cases. Samsung also has a broad portfolio of devices to meet the demands of several market segments. ABI Research notes this ability to compete on price will be important going forward as the smartphone market moves away from innovation as it matures. Samsung appears to be leading the way in assembling the pieces that will be needed for smartphone markets of the future.