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Technology Stocks : NOK at $3.12 or AAPL at $565? Which is a buy?
AAPL 271.84-0.4%Dec 31 3:59 PM EST
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To: sylvester80 who wrote (30)5/18/2012 2:31:26 PM
From: ChrisGillette  Read Replies (3) of 163
 
<<If you remove the hidden subsidies and customers see the price they'll have to pay for the iPhone, Windows phone and Android, the iPhone will lose every time>>

Why isn't this already the case? I recall in the old days (10 years ago?), I could buy a phone for -$200. Basically, companies like T-Mobile were paying customers to sign up for a 12-month contract and to opt for a lower-priced phone.

Today, it seems to go something like this (actual numbers could be wrong....just trying to show concept):
* Full cost of iPhone: $600. Discounted price: $200 (i.e., carrier is offering $400 subsidy)
* Full cost of cheaper alternative: $300. Discounted price $100 (i.e., carrier is offering $200 subsidy)

If the carrier wanted to, it could offer a negatively-priced phone by offering the same $400 subsidy given to the iPhone. For whatever reason, carriers are opting not to do this. And to the extent that carriers continue to offer more generous subsidies for the iPhone, most consumers will likely choose the iPhone (If I'm paying essentially the same price after discount, I might as well get the iPhone since it has more apps, better brand name, etc)
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