Samsung found to have higher device subsidies than Apple, HTC


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.

source: ABI Research
via: BGR

About the Author: Jeff Causey

Raised in North Carolina, Jeff Causey is a licensed CPA in North Carolina. Jeff's past Android devices include an HTC EVO, a Samsung Note II, an LG G3, and a Motorola Moto X Pure Edition along with a Samsung Galaxy Tablet 10.1. He currently uses a Samsung Galaxy S8 and (very rarely) a Nexus 7 (2013). He is also using a Verizon-branded Motorola Moto Z Play Droid supplied by his job. Jeff used to have a pair of Google Glass and a Moto 360 Sport in his stable of gadgets. Unfortunately, his kids have all drunk the Apple Kool-Aid and have i-devices. Life at home often includes demonstrations of the superiority of his Android based devices. In his free time, Jeff is active an active runner usually training for his next marathon, owns a MINI Cooper, and plays Dungeons & Dragons. Jeff has three mostly grown kids and a golden retriever.

  • simpleas

    Samsung the King! Looking forward to the Note 3

  • IonyxIphone 5

    That’s because Samsung devices are cheap so they should sell for what there worth…. And that’s nothing. By the way phablets look stupid. Very very stupid. It’s like your playing with a pop tart and talking to it.

    • AeroSpacePlasticsCo

      Yeah I agree. High quality plastic was only cool and amazing on the iPhone 3G and S models just like glass was only awesome on the iPhone 4/S models. Oh and all the phones that were made pre-iPhone because they were all made from plastic. They surely have all fallen apart now-disintegrating into nothing in 3 months, because of course, plastic is cheap. My Mercedes has a lot of plastic engineered in and around it. I assume it will probably break down in the next couple months as plastic is so cheap. Man, I sure wish it was all aluminum, titanium, and adamantium.

      • IonyxIphone 5

        Silly rabbit. It’s not the plastic in question. It’s the software and hardware. Simply put go to xda and read plenty of forums on any where from help me to lags to how do I, and it becomes very clear just how cheap they are. Plastic has nothing to do with it. That just makes it funnier. Go on any site selling them used ad you tell me which on fetches more? I’ve seen iPad 1s sell for more used than a gs3 or 4 sells for new. Just saying.

  • ChuckN007

    I also read something several months ago that it costs more for Samsung to create each Galaxy S4 than it costs Apple to create each iPhone 5. So if it costs more to create a Samsung than an Apple, then it makes sense that Samsung would need a larger subsidy per phone to sell it at the same price as an iPhone. Those are basic financial business principles of things like cost of goods sold, cost per unit, price per unit, profit per unit, etc. It’s also interesting that more expense goes into a Galaxy than an iPhone, since that kind of undermines Apple’s argument that the iPhone is built better. Apple actually finds the cheapest way to build its devices, so that it can make the most profit, and this in fact results in Apple being the most profitable business around, at least until recently.

  • Rosani Masau

    Samsung’s and Apple success is about subsidies and distribution not really about features.