iPhone Sales Impacted by High Carrier Subsidies in Europe

According to a recent Wall Street Journal report, Apple is encountering challenges with its iPhone sales in certain European markets. The issue does not stem from the device’s quality or availability but rather from its pricing strategy and the lack of carrier subsidies.

In the United States, the iPhone is relatively affordable for many consumers because carriers typically absorb part of the cost.

For instance, the entry-level 16 GB iPhone 4S is available for just $199 with a two-year contract, whereas its full price without a contract is $649.

This significant price difference is covered by carriers like Sprint, which reportedly committed around US$15.5 billion for the iPhone, anticipating a return on this investment by 2015.

Conversely, in Europe, many carriers opt not to subsidize the cost of phones, offering them instead on a prepaid basis. This results in significantly higher prices for iPhones compared to their competitors.

For example, Vodafone Portugal offers the iPhone 4 at $680, whereas its entry-level Android devices are priced below $200.

This pricing disparity clearly affects consumer choices. In economically struggling Greece, only 5 percent of potential buyers opt for the iPhone, with the majority preferring more affordable alternatives like Symbian and Android devices.

Apple recognizes the challenges in these prepaid markets and is counting on the appeal of its older, less expensive iPhone models to remain competitive.

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Anthony is a dedicated writer for TUAW, bringing readers the latest news and insights about Apple products. With a keen eye for detail, Anthony covers everything from the newest iPhone releases to the latest updates on the MacBook Pro and Apple Watch. His articles are known for their clarity and depth, making complex tech topics accessible to everyone. When he’s not writing, Anthony enjoys exploring new features on his iPad and staying ahead of the curve in the ever-evolving world of Apple technology.