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Apple's Business Model Vulnerability, Exposed by a French Upstart, Free Mobile

suraj.sun (1348507) writes | more than 2 years ago

Cellphones 0

suraj.sun (1348507) writes "Free Mobile is a company few Americans have heard of, yet it is up-ending Apple’s prospects in France. Analysts are blaming the firm for driving down iPhone sales by 10% in the past quarter alone. How? Free, a classic example of “disruptive innovation,” is offering unlimited domestic calls and texts, free calls to many international countries, 3 GB of data per month, and no contract commitment — all for $25 a month. Free doesn’t subsidize handsets at all. If you want a new phone, you buy one yourself without it being tied to any carrier. Free has won nearly 3 million subscribers in its first three months. While carriers around the world have resisted becoming a “dumb pipe” for communications, Free has demonstrated the latent demand for a cheap, reliable, dumb pipe. It seems only a matter of time before the model is replicated in country after country. And this is a major problem for Apple. The most basic iPhone 4S sells for €629 without the carrier subsidy, while entry-level Android and Windows phones are priced around €299. Unsurprisingly, people who have to pay the full price for a handset flock to the less expensive, and technically quite solid, Android and Windows offerings."
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