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Comment by Touche | Hacker News Reader

> There is perhaps no idea this blog has litigated against more fiercely than the idea of low-end disruption and the inevitable doom of the iPhone.

They have been disrupted in markets where phones compete on price. Their most successful market, by a wide margin, is the one where phones are capped at $200. The comparison to BMW that is often made is laughable. If only BMW sold to dealerships who then turned around and sold the car for the same price as a Toyota. It's a droll-worthy position to be in, that's for sure.

It would be interesting to see how the U.S. market changed if there were no subsidies. My guess is that payment plans would be more common so it wouldn't be such a tremendous blow. But I always wonder if "good enough" Nexus style devices would become more popular and the Galaxy Ses and iPhones a little bit less.

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Carriers in the US are already moving away from the subsidized model. Verizon has the Edge program where you make monthly payments on the phone for the duration of your contract, but interest-free. Your payments are setup to last the full length of the contract, if you would like to leave the contract, all you have to do is pay the rest of the balance you owe on the phone.

T-Mobile does the same thing.

You can also buy unlocked iPhones directly from Apple. I've done it 4 times - 3G, 4S, 5C and now the 6. I bet Apple sells millions of them at full price, even in countries where subsidies are available.

One of our networks in Switzerland (Sunrise) has a really innovative subscription model: They give you a cheapish subscription that's completely independent of the phone (~25-40$/m depending on whether you need unlimited free calls etc.) and which you can cancel/modify with every month. Then they offer you a leasing contract for your phone where you choose yourself how many monthly payments you'd like to make (payment per month inverse proportionate to the contract duration). At the end you can have about the same total cost of ownership as before, but you're much more flexible. The leasing contract amounts to ~5-8% interest on the upfront price for the whole duration and it's not dependent on how you set it up.

So, I wonder how many people will opt to just buy it up front now, when the subsidy isn't hidden anymore. It could also have a negative impact because some people will find it too complicated, however the widely trusted consumer review and comparison sites all give it a big thumbs up, so I think many will figure out why it's better.

T-Mobile in the US is pretty similar. The service plan is no-contract and can be changed every month (perhaps intra-month, I have done some dynamic changes and it seems to take effect in the middle of billing cycles). The hardware payment is separate with a fixed no-interest cost spread over 2 years. The hardware is the same cost if you buy it up front or spread payments out over the 2 year period.

"Free Mobile" in France works the same way; but I don't know the proportion of iPhones on their network.

Finnish telecoms have mostly abandoned tying the phone to a mobile plan, just a few years after they were given that right by law. My personal guess as to why, is that they want to offer longer financing plans than the maximum of 24 months allowed for carrier-locked phones – with plans up to 36 months common.

Apparently the seller of an expensive phone like iPhone gets a decent chunk of money at market prices, because it's common for carriers not to take any interest with their financing plans – i.e. the phones costs the same bought upfront as they do over 36 monthly payments. The phone itself is in no way locked to any specific network.

> They have been disrupted in markets where phones compete on price.

Just not true.. Here's how they're doing in China: http://i.imgur.com/cVKCJmO.png

And their global marketshare is dramatically increasing in spite of nearly ubiquitous dirt-cheap android competition: http://i.imgur.com/QbUmJkk.png

(From Benedict Evans' excellent blog: http://ben-evans.com/benedictevans/2015/1/27/chart-dump-appl...)

This link(http://www.reuters.com/article/2014/01/17/us-apple-chinamobi...) indicates subsidy model is present in China. In India we don't have any subsidy, i think Apple is share is less then 5%. They even tried to sell few year models at cheap rates to increase share. IPhone6 cost around $900 here. At those rates would it be a big hit anywhere without subsidies?

That link is outdated, Chinese subsidies were significantly cut for Apple's strongest quarter last year (Q4). Additionally, Tim Cook specifically called out that 80% of iPhones in China aren't subsidized:

http://www.patentlyapple.com/patently-apple/2014/10/apples-c...

Most of Europe doesn't subsidize cellphones, and Apple is doing phenomenally in nearly all of Europe:

http://www.dailytech.com/iPhone+6+Drives+Apple+Market+Share+...

It's debatable if there are any real subsidies. My last but one iphone I bought for £99 plus 24 contacted payments of £38 each over the next couple of years = £1011. The next I bought for £529 cash. Thinking the first payment plan is a subsidy only really works if you don't understand maths.

That £38 included voice and data service, I hope... In principle it should be possible for the operators to offer you a better deal this way, though in practice they don't really have to, it seems.

Where have they been disrupted? There are places they've always done worse at but they aren't making 90% of industry profits last quarter just becuase of one region.

We've heard the tired argument before that Apple won't be able to sell in places like China that don't have a subsidized market. How's that prediction actually working out?

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