There's Some Bad News Brewing For Apple And Samsung In China
REUTERS/Kim Kyung-Hoon
Like U.S. carriers, China Mobile pays subsidies to smartphone makers to make devices cheaper for consumers up front. In the U.S., that's why you're able to buy an iPhone 5S for as little as $200. It normally costs $650, but you pay the carrier back over time by agreeing to a two-year service contract or other payment plan. China Mobile works a similar way.
China Mobile said it will cut $2 billion from the subsidies it pays. That means customers will have to make up the costs up front.
And this is potentially bad news for high-end smartphone makers like Apple and Samsung in China. They make expensive phones that appear affordable because of carrier subsidies. But when China's biggest carrier decides to cut some subsidies, customers may turn to alternative devices that are pretty cheap even without a subsidy from the carrier.
For example, companies like Lenovo and the buzzy startup Xiaomi make very nice Android phones with high-end specs, but sell them for dirt cheap. Xiaomi's latest phone, the Mi4, has a large 5-inch screen, zippy specs, and other high-end features, but only costs about $320 U.S. Xiaomi sold more phones than Apple and Samsung last quarter.
These cheap-but-good smartphones are also to blame for Samsung's shrinking profits. They can do just about everything Samsung phones can do, but cost half as much, making them an attractive alternative.
- In second consecutive week of decline, forex kitty drops $2.28 bn to $640.33 bn
- SBI Life Q4 profit rises 4% to ₹811 crore
- IMD predicts severe heatwave conditions over East, South Peninsular India for next five days
- COVID lockdown-related school disruptions will continue to worsen students’ exam results into the 2030s: study
- India legend Yuvraj Singh named ICC Men's T20 World Cup 2024 ambassador