Apple nails the service providers
It may not surprise you to know that Apple plays hardball when it negotiates with service providers over the iPhone. It may surprise you to know that Apple doesn't negotiate at all, at least according to an informal discussion I recently had with a representative from a mobile comms provider.
You know how it works. The reason you get a 'free' handset is because the mobile service provider cuts a deal with the handset manufacturer. They agree a figure that the service provider pays - enough to give both the hardware maker and mobile operator a profit on a given number of units. It's usually arrived at following a series of negotiations that vary company by company, country by country.
Not if the operator is dealing with Apple. Arrogant was a description of Apple that occurred often during the conversation. The Cupertino company doesn't negotiate: it sets terms and names its price -- which is apparently the same worldwide, irrespective of the market and end users' ability to pay. Somalia, Sweden, or Singapore, it's all the same to Apple, allegedly. And that price is -- naturally -- a lot higher than any other phone maker's.
If the operator doesn't like the price it has a choice: it can walk away. For the operator I spoke to, the astonishing thing was not even this but the way that Apple talks about and gives the appearance of dominating the handset market. In fact, the iPhone consists of under 10 percent of the handsets sold.
Nine out of ten mobile phones sold are not Apple iPhones. It's still a lot of iPhones, but it isn't the whole world.
Where does the money that Apple gouges from the operators come from? You. If you buy a iPhone, the operator might make a minuscule profit but hopes to make it back on other products and services you buy, such as data and apps. Some manage to make a bob or two, given a large enough volume of sales, others I suspect do not.
You might not care: it's hard to feel sympathy for a large faceless organisation such as Vodafone. But you would like to think that Apple could at least adjust its prices to suit the ability of local users to pay for their over-priced gewgaws.
And the fact that it doesn't and gets away with it is testament to the fact that enough people still demand them. Are you among them?