Apple Inc. (AAPL)’s Tougher Terms Discourages Carriers Globally

Apple Inc. (AAPL)’s Tougher Terms Discourages Carriers Globally
<a href="">ElisaRiva</a> / Pixabay

Apple Inc. (NASDAQ:AAPL) is losing out on the opportunity to sell its iPhone to as many as 2.8 billion new smartphones customers, which are primarily located in Asia, because many of the wireless service providers are withdrawing from selling the iPhone’s due to various conditions imposed by the iPhone maker, reports Bloomberg.

Apple Inc. (AAPL)'s Tougher Terms Discourages Carriers Globally

Since September 2011, Apple Inc. (NASDAQ:AAPL) has made agreements with less than a dozen new wireless service providers to sell the devices. The total wireless service providers stand at around 240.

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The subscribers who are not able to get access to the iPhone’s are in billions based in countries like China, Japan, India and Russia, according to Horace Dediu who is a market analyst with In contrary to Apple,  Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) who is a neck to neck fighter of Apple Inc. (NASDAQ:AAPL) sells its phones and devices with mostly all of the 800 world’s carriers, according to Asymco.

Two big mobile network carriers China Mobile Ltd and NTT DoCoMo Inc of Japan have agreed upon selling iPhone’s. These network carriers are finding the subsidies required as too high as well as there are other terms that are not acceptable.

The new carriers should analyze their capabilities before agreeing to sell iPhone’s. The carriers should be in line with the requirements of Apple Inc. (NASDAQ:AAPL) like guaranteeing a minimum sales tally along with the cost of the phone, which at present is at $600 before subsidies.

Apple’s Dilemma

Apple Inc. (NASDAQ:AAPL) is facing a slowdown in its sales growth due to lack of new partners, which is sharply benefiting the rival Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930). Apple must therefore, bring in the market some cheaper device or make various concessions to gain on the demand, but such measure will affect the margin of the company.

 “The narrative has been focused on the consumer demand, and the narrative needs to shift to the operator,” said Dediu, a former in-house analyst for Nokia Oyj (HEL:NOK1V). “Apple has run out of the kinds of operators that will say yes to them.”

The sales of iPhone’s have declined, and there has been more sales of the less profitable product of iPhone due to which the gross margin of the company has come down to 37.5 percent  in the previous quarter from 47.4 percent in the previous year.

The market in the United States and Europe are becoming drenched with the smartphones, which at present stands for more than half of global handset shipments. Regions such as China and India are the lucrative market for the company. According to the sources, Apple Inc. (NASDAQ:AAPL) is in the process of making the cheaper handset, which is expected to roll out this year.

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