Samsung‘s runaway success in the Android market is normally attributed to the company’s marketing and significant manufacturing capabilities. However, a new report shows that the Korean manufacturer’s aggressive pricing strategies could have just as much to do with it becoming Apple‘s number one competitor.
Analyst firm ABI Research today revealed that the average U.S. subsidy for Samsung devices in 84% of the cost of the devices themselves. This compares to Apple’s average subsidy of 74%. HTC is also mentioned as having an average subsidy of 80%. Though by percentage cost it’s clear that Samsung devices are being more aggressively subsidized, the higher initial prices of Apple devices means that, in absolute terms, Apple devices are being discounted more. As an example, the average subsidy for an Apple device is, according to ABI, $110 more than Samsung’s average subsidy.
“The smartphone market in particular is entering a new phase focusing on execution and price, rather than innovation and value,” said Nick Spencer, senior practice director for devices at ABI. “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.”