[the_duke]

So Apple invented carrier subsidies for cell phone purchases just for the iPhone, and that's why the iPhone worked?

Yeah. Solid reasoning there, Ballmer...

They were a thing long before the iPhone.

But then again, hugely successful people almost never say: "yeah, I was an idiot who just didn't see it".

And he was very successful in terms of increasing revenue and working the markets.

[syntheticnature]

Came here to say exactly this -- of course, at his level of wealth, he probably never noticed that the phones were subsidized as a matter of course (unless you broke your phone) in the US.

[ryandrake]

My guess is that he had assistants to do those mundane things for him like purchasing his personal phone and making sure the bills were paid.

I'm reminded of the time back in the early 90s when president Bush (Sr.) was amazed at grocery store technology, having likely never shopped for his own groceries for decades [1]. It was really embarrassing and highlighted how he struggled with relating to common people. Executives who live lives of privilege like this need to recognize that their lifestyle is a potential blind spot. Anyone who has worked in a company where the rich top brass made all the product decisions (instead of the lower-level normals) knows what I'm talking about.

1: http://www.nytimes.com/1992/02/05/us/bush-encounters-the-sup...

[no_wave]

The Bush thing is almost certainly a fake story. He was playing along with being impressed by some new UPC code reader technology that was being demonstrated that could read damaged UPCs.

http://www.snopes.com/history/american/bushscanner.asp

[flubert]

Snopes rates that story as false:

http://www.snopes.com/history/american/bushscanner.asp

[ryandrake]

Hmm, interesting read, thanks. Fooled me. I still stick to the overarching point about it being a potential blind spot. Even if the Bush example is false I've known lower-profile wealthy/privileged people who were totally out of touch with the needs of regular people.

[no_wave]

“Anybody gone into Whole Foods lately? See what they charge for arugula?”

[ghaff]

I gather, as someone else noted, the Bush thing may have been a fake story. But I remember at least one other time when some presidential candidate or other (maybe a Bush) didn't really know the price of a dozen eggs or a gallon on milk. Why would they?

And, over the years, I've seen companies make various decisions with respect to paycheck timing and other similar administrative details for various reasons including greater consistency across the company. And there's often a hue and cry, some of it from lower paid employees who are genuinely inconvenienced by the change. And I'd be willing to bet that, in just about every case, the execs who made the decision didn't even stop to think that someone might care about minor cash flow changes.

[herge]

The more fun article is "When the elves leave middle-earth".

(Which is the HN equivalent of saying "Darmok and Jalad at Tanagra")

[michaelbuckbee]

I'm never going to be in that kind of billion dollar bet situation, so I'm always trying to think of how to relate these experiences to my level of execution. To that end I do see a thread of matching product to pricing model:

- While I hate it, it's extremely clear that if you're in the mobile space you'll make more money doing free+IAP than charging up front. While some things could change this structure (built in support for time limited or account trials, and better paths to upgrade), it seems like it's here to stay on the consumer side.

- Kind of similarly, the innovation of SAAS+PAAS is in many ways that its cheaper + easier to pay by the month than to hire people in house and or sign them up for a six figure bill and 20% support+maintenance in perpetuity.

[kohanz]

That said, it still blows me away when I see my friends taking these "subsidies" without understanding that they are basically paying full price for the phone, if not more.

[the_duke]

Where I live there is very high competition in the mobile carrier market, and subscriptions are incredibly cheap.

I'm always amazed at how many are actually throwing away money by accepting a 'subsidied' phone which forces you to take a contract 2-3 times as expensive as you would actually need it.

Even if you see it as 0% financing, in my quick calculations it always worked out to be more expensive than just buying the phone outright.

[kohanz]

Here in Canada, prices are not cheap yet, but getting better slowly due to increasing competition. What I see is that the subsidized plan makes sense in the moment, in that it's the regular plan + the cost of the phone divided over 24 months, but the problem with that is that cost of a regular plan, or the features (e.g. amount of data, minutes) that are provided by it, are going to improve substantially over the next 6 month and even moreso over the next 12-24 months. If you can afford it, you're much better off buying the phone outright and then going month-to-month with the cheapest plan you can find. The problem is, most of the people doing this can't fathom affording buying the phone outright, but it's easier to stomach as a hidden cost.

[croon]

This. It's in the same way that I don't understand people living pay check to pay check. Live really poor for 3 months, then keep your income/costs above 1, and you'll be able to plan better and never pay for anything through the nose. It got me through college without any help from parents nor loans, and it worked when I was unemployed, and obviously works now that I make a lot more.

[xeromal]

T-Mobile is interest free. I'm not sure about the others. T-mobile does charge an insurance fee though.

[HeyLaughingBoy]

For many, many people, cash flow is far more important than total amount paid.

Even ignoring personal anecdotes, a perfect example is SaaS: many corporations happily pay a monthly fee even though in total it's far more than it would have been to purchase a similar package outright.

[knd775]

Carrier subsidies are all but dead nowadays. Carriers are mostly just offering phone leasing or payment plans now.

[kohanz]

Yes, but locking you into a plan in a time when plan features and pricing are almost constantly improving.

[legitster]

They did not line item phones into monthly bills to the extent they do now. And they especially did not for smart phones. I remembered freeby phones, and high end phones you purchased with rebates attached. But the high end consumer phones were certainly not being attached like this.

[jalfresi]

In the states maybe but in the rest of the entire freakin world, thats how we paid for phones.

[0xCMP]

Not what he said obviously. He meant you could actually target that price point because people would accept it with carrier subsidies. He thought that direction would fail because it'd be sold like any other computer/tablet/smart phone was sold then.

[addicted]

Carrier subsidies were a huge thing in the US market. It was why lay people were able to buy Blackberries in mass before the iPhone in the US. It was also why Nokia had no standing in the US market at all, despite being the biggest seller outside, with phones that were pretty much unparalleled (until BB). They did not want to give carriers the control the carriers wanted (such as gimping features and stuff), which meant they were not subsidized by the carriers, which meant their phones didn't sell int he US.

[mc32]

One of the other poorly executed things he did was the Danger acquisition. It was a dead-end. Didn't contribute to anything and distracted them in mobile, to some extent.