By Lisa Johnston
New products on display at the American International Toy Fair, held in N
TWICE: Do you expect other U.S. carriers to join TMobile in dropping handset subsidies? If they did, how do you think that will affect the pace of smartphone sales?
Lam: While it’s hard to predict the business model for other operators in the wake of the T-Mobile announcement in dropping handset subsidies, we do believe that as smartphone penetration is approaching saturation, other programs such as smartphone trade-in will continue to help drive the sale of new smartphones. This does not change our existing strategy of B to B to C, so we continue to work with operators to understand and respond to their needs.
Walls: Other carriers will join if T-Mobile is successful. However, it makes sense for most carriers to offer a variety of plans. Consumers respect a business that provides options for greater flexibility. If those [business] models grow in popularity, there is no question that the smartphone sales cycle will slow. The biggest impact will be felt by manufacturers in the premium tier. Statistically, for premium-tier devices, sales volume in unsubsidized markets (vs. subsidized) can decline by up to 40 percent.
Cistulli: T-Mobile has certainly disrupted the market as the new “un-carrier,” influencing major operators in the U.S. and abroad to provide customers with more handset-payment options. Additionally, carriers including MetroPCS, Virgin Mobile and Leap Wireless have also begun offering handset-financing programs since late last year.
Device financing and no-contract options have been making headlines recently, but in these early stages it is difficult to predict how these factors will affect the pace of smartphone sales for those companies. Success could largely depend on how operators communicate the advantages to their customers. The Alcatel One Touch portfolio strategy is to provide high-value products at reasonable prices to allow those carriers that do adopt the “un-carrier” model to realize the benefits of the business model.
DiCarlo: T-Mobile’s recent announcement and business-model transition represents mobile service industry innovation because their new strategy translates to more consumer choice in the mobile phone marketplace. The move complements Samsung’s commitment to offering choices of devices, prices and features.
Rasinski: As subsidy-free handset sales are still relatively young among the nation’s top four carriers, the effect on sales still remains to be seen in the long run.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.