If you’re looking for a fantastic Black Friday deal to upgrade to a flagship smartphone, the pickings are pretty slim — unless you’re willing to add a new line or switch carriers.
The heyday of holiday mobile deals when Black Friday and the fourth quarter were battlegrounds for wooing (and keeping) customers with shiny, deeply discounted devices has given way to payment plans and buy-one-get-one-free offers that are contingent upon one line being a new addition, as operators protect their margins and leave existing customers largely on their own to upgrade to the latest and greatest smartphones, which run up to $1,000.
“You have a BOGO, but the underlying strategy is that they are adding a new line — that’s the condition,” said analyst Bill Ho of 556 Ventures. Financial analysts have dinged carriers for years for subsidizing devices, and now carriers appear to have finally achieved a place where they don’t feel the need to offer significant device discounts as a retention tool, but primarily as a way to bring on new subscribers. “I think they want to keep their margins high, and they’ve evaluated the risk that T-Mobile will continue its strength in switching,” Ho said.
A quick summary of offerings from the major carriers ahead of Black Friday:
-Verizon is offering a buy-one-get-one-half-off deal on Android devices, with one new line required; the same deal is available for the Google Pixel 2, which is exclusive to Verizon. Customers can also get $150 off an iPad when they buy an iPhone.
-AT&T has an offer that ultimately gives consumers a buy-one-get-one-free offer on the iPhone 8, but it’s in the form of device credits over the life of a 24- or 30-month payment plan rather than up-front. There’s a similar offering for the Samsung S8. At least one new line is required to qualify.
-Sprint is offering 50% off device payments for Galaxy devices and $350 off of iPhone 8 or iPhone X (one of the few carrier offers that includes the iPhone X) with an 18-month lease. The carrier is also playing up its services — its recent partnership with Hulu on content, for example, as well as a free unlimited service offer.
-T-Mobile US is slightly more conventional in its discount approach, putting up a BOGO free offer for iPhone 8 (with the device rebate issued via prepaid MasterCard rather than as bill credits). One new line is still required, though; T-Mo also has a similar offering for the Samsung Galaxy S8 and Note 8 as well as LG devices.
Deep discounts directly from device OEMs are a mixed bag, Ho added, because while Apple will do as it pleases (and does not appear to offering deep discounts), Samsung has such a deep relationship with the operators, including co-marketing, that it is unlikely to want to undercut them.
With device prices increasing, he noted, carriers have seen overall device upgrade rates drop significantly. This year, AT&T reported some of its lowest-ever device upgrade rates.
Device upgrade rates for the 4 national carriers (Courtesy 556 Research)
Big-box retailers such as Best Buy and Target are offering options that may be more attractive than those from the carriers themselves for some shoppers, Ho added. Target, for instance, is offering $300 store gift cards with the purchase of flagship Samsung Galaxy devices with either new line activations or upgrades.
Carriers are also encouraging online upgrades rather than lining up at stores, Ho noted. At the Competitive Carriers Association conference in Fort Worth, Tex., EVP of Customer Care Callie Field said that during the iPhone 8 release, T-Mobile US saw about 30% of its upgrades come via its application rather than in-store.
Electronics are still one of the biggest categories for holiday shopping, according to Bobby Stephens, digital retail expert with Deloitte Digital. According to Deloitte’s numbers, shoppers plan to spend about 16% of their holiday budgets in the electronics category, while 42% of people list electronics as their top wished-for gifts to receive — even beating out cash and gift cards. Holiday budgets are also up this year, so maybe shoppers will bite the bullet on those pricey new mobile devices.
The post Want a holiday discount on flagship smartphones? Bring a new line, carriers appeared first on RCR Wireless News.