Seven Predictions for Mobility, IT, and Cloud in 2016 (2nd in a series)
PREDICTION 2: CARRIERS PUSH ENTERPRISES TO MOVE AWAY FROM A SUBSIDIZED DEVICE MODEL
Consumers and businesses in the US have grown accustomed to the subsidized device model where carriers absorb a large portion of the upfront device cost to provide low- to no-cost equipment to end users in exchange for a 24-month contract term. Increasing smartphone device costs and compressing service revenue have motivated carriers to remove themselves from the subsidized device model. Carriers are replacing subsidy with Equipment Installment Plans (EIP) or device leasing.
This change opens up opportunities for businesses to buy or lease devices from alternate channels and to implement more traditional device refresh programs. As this shift becomes reality, companies need to change their mindset on how devices are purchased. The net effect on Total Cost of Ownership (TCO) is neutral to positive as long as carriers reduce recurring access charges in accordance with the device subsidy they are no longer funding. A significant saving opportunity exists for users that remain on their device after it has been fully paid for. T-Mobile has not offered subsidized devices in the consumer or business markets for some time now. Sprint’s main business offering, Mobility as a Service (MaaS), bundles device leasing, wireless service, and account support into a single access point. Verizon and AT&T dominate business market share but have yet to make the shift away from subsidized devices in the enterprise market.
It’s already happening to some degree, but in 2016 we expect more carriers to place the full burden of device cost onto the enterprise. As Verizon and AT&T remove subsidized devices from their enterprise offering, businesses need to update their mobile policies and accounting practices to account for this change.
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