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Carrier subsidy ratios for Samsung handsets higher than Apple and HTC, study finds

The average implied subsidy for Samsung smartphones sold in the U.S. substantially higher than comparable product sold by Apple and HTC, says one study, suggesting the Korean company is heavily relying on aggressive pricing strategies to squeeze out the competition.

ABI


According to market intelligence firm ABI Research (via BGR), Samsung and its partner carriers lead the market in offering device subsidies at percentages substantially higher than their nearest competitors.

The latest research shows Samsung products are subsidized by an average of 84 percent, while Apple and HTC are at 74 percent and 80 percent, respectively.

“Samsung continues to squeeze its competitors at every turn," said ABI chief research officer Stuart Carlaw. "The Samsung Galaxy SIV is now considered on a par with Apple’s iPhone 5. Coupled with better subsidy, the breadth of its device portfolio, increasingly savvy marketing, and its excellence in channel execution, it is little wonder Samsung is dominating the mobile handset market from top to bottom.”

While the latest iPhone products average a higher absolute subsidy value that is $110 higher than Samsung's devices, most of the Korean tech giant's devices come at a cheaper initial cost.

Samsung's aggressive pricing strategies are reportedly hindering less well-established vendors from entering the market.

“The smartphone market in particular is entering a new phase focusing on execution and price, rather than innovation and value," said ABI's senior practice director for devices, Nick Spencer. "Samsung’s scale and supply chain excellence is allowing it to put its competitors under increasing price pressure and win market share. This is a major concern for the rest of the market, especially for smaller, less efficient vendors, as margins will be squeezed and overall market value reduced.”

A teardown of the latest Galaxy S4 model revealed a build cost higher than that of Apple's flagship iPhone 5. It should be noted, however, that the averages from ABI take into account Samsung's entire lineup, which is far more expansive than Apple's three offerings.