Apple’s iPhone upgrade program might have made switching iPhones even easier for its ardent followers, but it has also changed something very fundamental about the U.S. mobile market.
The change, Android Founder Andy Rubin believes, has essentially shifted the power balance in favor of mobile manufacturers whose product success and popularity heavily depended on mobile carriers like AT&T and Verizon and has changed the dynamics of the U.S. mobile market to mimic China’s.
“That’s the biggest change in the last 10 years in mobile,” Rubin said at the Code/Mobile conference held in Half Moon Bay, CA. “It’s huge.”
Giving mobile manufacturers the keys to selling their products per their sales strategy provides for disintegration of the two-year contract format, he said, speaking of mobile carriers deciding which phone they would promote and what succeeds in the market.
“The carriers were hit-makers. They always have been hit-makers,” he said. But with the new program, which Apple has been working on “for years,” iPhone users can now upgrade their iPhone every year for a small monthly installment.
This, Rubin said, “makes the U.S. look a lot more like China. Eighty percent of phones in China are sold open market. We’re at the beginning, but the U.S. could look more like that.”
While the move means more power to consumers, it comes at a risk of fragmenting the U.S. market — just like China, where Android’s parent company, Google, has long struggled to build its presence.
“Consumers buying patterns change because of that. They don’t become as brand loyal. They are willing to try more things because it’s effortless for them to switch.”
But is fragmentation a price Apple — which is known for its fiercely loyal customer base — and other companies like Samsung and Google are willing to pay? Fragmentation has a negative connotation to it, Rubin said. He prefers to think of it as “consumer choice.”
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