This change in the carriers’ strategies needs to be taken into consideration for any company that plans to deploy tablets or smartphones to their workforce.
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An end of an era draws near as Verizon Wireless announces plans to phase out subsidies for smartphones and tablets. Verizon Wireless recently announced that it will put an end to most all device subsidies for consumers joining the ranks of nearly all global carriers, including T-Mobile in the U.S., which has already implemented the practice.
Mobile carriers many times use the consumer segment to test programs before adopting them for the enterprise segments. The U.S. enterprise marketplace should take note because this is the clear indication that device subsidies are going away at some point in the near future from all U.S. carriers.
Let’s examine the key indicators in the shifting landscape of the U.S. enterprise mobility marketplace:
T-Mobile US has instituted a hard line approach for its enterprise customers. The carrier completely stopped offering mobile device subsidies to the enterprise. Now all enterprises must purchase a mobile device at full retail price upfront or make 24 equal monthly payments to purchase the device. Either path, the enterprise is still paying 100% of the cost of the device.
AT&T Mobility has also signaled its desire to get out of the device subsidy game but has taken a slightly softer approach to the enterprise mobile device purchasing model. AT&T Mobility is providing an incentive for enterprises to purchase their devices upfront or pay for them over the course of 24 months through rate plan discounts off of their Mobile Select Rate Plans. These discounts are up to $25 per month per device over the course of 24 months, which totals $600 – the exact amount that AT&T Mobility was traditionally buying down the devices through subsidies.
While Verizon Wireless’ desire to get out of the device subsidy game applies to consumers today, enterprise mobile device subsidy modifications are surely coming within the next quarter or so.
What does this mean for mid-to-large enterprise mobile customers? It’s time to revisit your mobile policy and strategy and plan for the shifting market. This change in the carriers’ strategies needs to be taken into consideration for any company that plans to deploy tablets or smartphones to their workforce in the United States.
What if a mid- to large-sized company wants to seize on a business opportunity or process improvement and quickly deploy 2,000 tablets at a manufacturer’s price of $829 each? In a carrier-subsidized world, the cost of those tablets would have been calculated into the carrier’s monthly bill and the zero upfront cost recorded as an operating expense by the company. But in a nonsubsidized world, that purchase of 2,000 tablets suddenly becomes a $1.6 million upfront capital expense. Has the company budgeted for that?
Scenarios like these are why companies should be planning today. There are high-quality outsourcing organizations that offer managed mobility services to a wide variety of enterprises and can take on the task of reassessing mobility policies and strategies. Some even offer leasing programs of 24 to 36 months that help lower monthly costs.
Likewise, it’s expected that many enterprises will reconsider their policies that may have refreshed their mobile device supplies every year. As the differences between newer versions of the iPhones and iPads have diminished over the past few years, more organizations (and consumers) are opting to keep them for longer periods of time. In some organizations, senior level executives want new devices every year. In that case, a mobility policy should include shorter contract terms for them.
Finally, enterprises looking to manage the leasing and/or financing of mobile devices should consider outsourcing companies that provide everything under one roof – leasing, procurement, logistics, application loading, staging, break/fix and device disposal – because the costs will be lower and the service levels will be higher. Returning a device for repair or replacement with a manufacturer or a carrier can be an arduous process. MMS companies can reduce that burden.
