In a comment to Seeking Alpha’s article, “NPD Claims Android’s Army Passes iPhone OS“, “SiliconValleyJoe” wrote the following on the practice of BOGOF (Buy One Get One Free):
You may be right but I do not recall ever seeing RIMM offering the berries in BOGOF programs prior to 2007.
I remember getting a “smart” Nokia phone while visiting our German office way back in early 2000′s. Its UI was so bad that not even the Germans wanted it. We ended up switching to Berries. It was a premiere business phones then and we paid the asking price.
Nokia did make a wide spectrum of phone ranging from cheap “throw-away” to “Smart” phones. For my family, we got free Nokia phone signing up with Cingular at the time. For the “Smart” phones, we had to pay out of pocket.
Motorola’s RAZR commanded premium pricing for a good long while before petering out. I do not remember seeing it being offered through BOGOF within weeks of introduction.
In those days, how many players could afford the cut-throat business? RIMM was considered the sole highest end player charging a premium. Nokia dominated the mid-end to the bottom-end. Everyone else was a bit player at best. It was not a sustainable business model for anyone less entrenched than the likes of RIMM and Nokia. Not even Motorola survived.
Something is different today. The HTC Incredible is already on sale and in BOGOF programs. So is the much hyped and much marketed Droid. How will HTC maintain its profit margins so that it can continue to pour money into its software effort? How will MOT do the same? May be they can rely on Google to do it for them?
How many players will be left if they continue to expend so much investment and resources into software engineering to catch up to Apple only to sell their ware at cut-throat low price? May be Verizon is paying a hefty price to subsidize the Incredible and Droid?
As Apple continues to innovate and improve its multi-faceted offering ranging from iPod Touch to iPhone to iPad to Macs to iTunes to AppStore to iBooks, how will HTC and MOT and even HP+Palm generate the revenue necessary to compete head to head against Apple if they must sell everything at cut-throat pricing? Again, may be Verizon is actually paying good money to the manufacturers?
Logic dictates that somewhere, something must eventually give. Time will tell.