So there’s been a lot of discussion lately about where subsidies are going for the current crop of smartphones. To put it in perspective, just today BGR ran a story (http://www.boygeniusreport.com/2009/05/12/att-blackberry-curve-8900-to-run-99-with-a-2-year/) that included a chart of AT&T list and subsidized pricing. As an example, the FUZE, an HTC device, runs $499.99 list and $299.99 under a two year plan with rebates. At the other end, the Palm Centro is only $279.99 list and just $49.99 under the same plan. Interestingly, the new Nokia E71x, a phone that received a great deal of publicity when launched at CTIA this year, is only $99.99 after rebates. In comparison to some of the Blackberry and Samsung models, it demonstrates how aggressive Nokia is in entering the US market.
Now, what would be interesting is a parallel to the (mostly) public price sheet. A yin and yang, if you would, of the smartphone world. But this sheet would outline the true cost to the operator of supporting the handset. For example, by model, it could outline how many calls they receive, the reasons for each call, and how long they take to resolve. The operator would know if working the subscriber through email settings is much more cumbersome on one OS platform or model than another. Although some of this analysis may currently go into what the operator is willing to offer as a subsidy or even what handsets they are willing to carry, I don’t think this is the case given the lack of good analytical tools.
Think of it as akin to a gas guzzler tax for cars, but in this case the consumable is tech support minutes. Operators would be more careful in inviting into their network devices with known support issues, would be more careful on the subsidy, and would be more open to devices that had a demonstrated support advantage. Here is where technologies such as over-the-air device management will come into play to help create a more efficient and therefore less costly support environment. A handset vendor delivering a phone to an operator with such management capabilities will have a financial advantage, able to demonstrate up-front lowered lifecycle support costs. This much like selling a more fuel-efficient car. Although at InnoPath we’ve done most of our ROI modeling with the operator in mind, the handset vendor’s perspective helps complete the picture. It not only takes millions off the cost of delivering frontline support by the operator, but results in additional handset sales to the operator as well. And it will help add another datapoint to answering the question we seem to ask all the time… just how do they calculate the subsidy?
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