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Why wireless carriers in the U.S are discounting Windows Phones

Matt Hamblen | Oct. 28, 2013
Sales of Windows Phone are weak because of a shortage of apps, but carriers also need to move inventory to make room for a crush of new iPhones and other devices.

Analysts theorized that Samsung could be reaching out to AT&T for sales of the ATIV S Neo by offering the carrier some sort of discounted wholesale price to reduce Samsung inventory.

Meanwhile, Sprint's discount on the same phone could be Sprint's way to quickly reduce its own ATIV S Neo inventory. Sprint offered an explanation on Thursday for its Neo discount of 66%, indicating concern for its cost-conscious customers. "Sprint is regularly reviewing our product pricing to be sure our offerings are as accessible as possible for our customers," a spokesman said.

Nokia Lumia 1020 smartphone
The Nokia Lumia 1020 smartphone has a 41-megapixel camera.

Because AT&T is selling other Nokia phones running Windows Phone 8, the carrier might also want to sell phones on the same platform but from other manufacturers (including the Neo) in a show of support for the platform and, hence, for Microsoft. AT&T might also want to show its customers that it has more variety across device makers than its competitors.

Even if carriers are satisfied with Windows Phone 8 phone sales, there is still demand to sell phones on all platforms to clear the shelves for other newer models. The pace of turnover of models is faster and more aggressive than ever in the six years since the first iPhone appeared.

"I wonder if what's going on with the ATIV S Neo is more a stock-reduction issue to get rid of units," said Gartner analyst Carolina Milanesi. She said it's not necessarily an instance where Samsung or the carriers or even Microsoft are willing to take a financial hit in the long run in order to increase sales.

Device makers try to find the right price that will help them win market share, but that doesn't necessarily explain what Samsung may be doing. Samsung leads the market in smartphone sales, mainly due to its Android devices — not Windows Phone 8.

What may be most telling about the recent discounts is that even nine weeks on the market, as for the ATIV S Neo and the Nokia Lumia 1020 have been, can be a long time for a smartphone.

Nine weeks on sale "is starting to be a pretty old product in smartphone market terms," Milanesi said. That's nine weeks of actual sales, but the image the public sees of any single phone model can be much older, considering the phones are announced and promoted weeks or months before going on sale.

Patrick Moorhead, an analyst at Moor Insights & Strategy, and others said that discounting prices at the appropriate time for Windows Phone 8 can be critical because of the platform's reputation. Otherwise, they would sit in inventory.

 

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