Carriers Cut?

[extravagant]

hey anyone know what the carriers usually get when they make a deal to distribute a handset? like do they get a percentage of the selling price or just the fact they get a 2 year term with the customer is good enough.. thx

[Sven Johannsen]

It's not quite as simple as Cingular selling you a phone for Samsung, and getting a cut. Nor is it that Cingular buys phones and re-sells them to you with a markup. There is a very complex business relationship betwen carriers and device manufacurers. The carrier conract with the device manufacturer to build them a device, sometimes to their specifications, sometimes choosing a new or existing device and adding heir own requirements. The carrier wants something that will attract customers, and if a device manufacturer has that he can leverage that for more money and pit carriers against each other. The carriers also have an interest in being the exclusive provider of a cool new device, and that plays into the hands of the manufactures. The carriers have control of the consumer via spectrum licensing/network, and the power of branding and advertising to entice the device manufacturer into courting particular carriers.

With all that, the reality is that the carrier and manufacturer enter into a contract to provide devices, possibly exclusively to the carrier. The carrier then needs to set some suggested price for the device, and decide what they really want to, or need to get for it, associated with some sort of contract. You can rest assured that the device manufacturer is making a profit on the devices. It is not always a given that the carrier also does. Even if the hardware transfer runs at a loss, you have to look at the overall goal. Say Cingular losses $10 on every 3125 they sell, but they average $100 per unit in increased data plan revenue. They net $90 bucks on each unit, on the average then.

It's a business, and way more intricate than just buy 100 somethings from this guy for $10 a piece and sell them individually for $15.


P.S. Microsofts place in this mess is selling an OS for the Device to Samsung, that Samsung thinks it can convince Cingular to use. So MS isn't trying to create something the consumer will like, they are trying to create something that Cingular thinks the consumer will like, to be able to sell it to Samsung. The whole thing hurts my head.

[Kris Kumar]

The whole thing hurts my head.

:lol:

[Mike Temporale]

Nice job Sven, That's a great summary of the whole messy situation.