Cole Brodman, CMO of T-Mobile, speaks at the GeekWire Summit in Seattle (Karen Ducey Photography)

As mobile devices become more powerful, prices continue to fall. And while consumers now have more computing power in the palm of their hands than ever before, T-Mobile Chief Marketing Officer Cole Brodman said that the way carriers subsidize devices is hurting the industry.

“It actually distorts what devices actually cost and it causes OEMs, carriers — everybody to compete on different playing fields,” said Brodman, speaking at the GeekWire Summit in Seattle. “And I think it is really difficult, especially from a consumer perspective, because it causes consumers to devalue completely the hardware they are using…. It is amazing hardware, but it has become kind of throw away. So, it is unfortunate, you’ve got dual-core, multiprocessor devices with amazing HD screens that get thrown away at 18 months.”

Brodman added that if he were “king for a day” he would wave his wand and wipe out those subsidies, to which fellow panelist Mike McSherry of Swype quipped: “You are one of four kings in the country to do that, right?”

Brodman countered: “It’s hard when the other three don’t want to play along. It becomes difficult because consumers vote with their pocketbooks, and they will almost always pick a low device price oftentimes over a low rate plan price or a bundled rate plan price. We’ve experimented with that model more than anyone in the country.”

Brodman also was asked by GeekWire’s Todd Bishop whether the company — the only major carrier not carrying the iPhone — can survive without the popular device in its arsenal.

“Yes we can. We have fantastic alternate choices,” said Brodman, citing its lineup of Android, Windows Phone and BlackBerry phones. “And I think those devices — whether it is through the app experiences, through the network experiences or through the devices themselves — do things that rival the iPhone — and in many cases — do them better than the iPhone. So, I absolutely think we can be successful.”

He added: “I don’t think it is healthy, frankly, for there to be kind of a one OS industry dominance. And that’s why I think it is going to behoove us all to watch Windows and hopefully the application ecosystem will follow, and I think that will really help the overall industry balance.”

Other GeekWire Summit coverageQ&A: Ray Ozzie on startups, Microsoft, and what he’s dreaming up nextGeekWire Summit: How to stay innovative in a world of technological change… Mobile vets: Windows Phone is great, but it has a long way to go to catch Apple and Android

Here’s the entire discussion, which also features Rhapsody president Jon Irwin; Z2Live CEO David Bluhm; and Swype CEO Mike McSherry. The panelists start the discussion talking about the release of the new iPad.

[Thanks to the team at Bootstrapper Studios for the video].

Comments

  • http://www.LiveSide.net Kip Kniskern – LiveSide.net

    In order for consumers to treat our phones as they do any other pc or device, we need to have full control of updates, etc.   If I buy a pc at full price, I can update it, add software, etc.  With a phone, I’m limited by what the carriers allow.  It’s a 2 way street – if carriers want to give up subsidies, they have to give up OS update control, too.

    • http://pulse.yahoo.com/_U2H7S4MG6PLQUVOA2CFNMZ2QUQ Ric Desan

      This is exactly right! I will tell you something else, when one of these providers steps up to open up handsets to users like PC world, then you will find that provider will have an instant jump in market share and brand loyalty! There are many of us that are tired of the provider BS and would gladly jump on a new provider willing to break the norm!

      • philly8

        T-Mobile sells stock android rom phones with no bloatware such as the g2 and g2x. That means that they are the first to get ETA updates. Also Samsung lets you update the android software on their roms via Kies updates from their program. IMO i’m a pc world user and to me it doesn’t even matter if the updates are blocked or provider issues because I rooted my phone and have a custom rom from xda-developers.com. I will be the first to get ICS on board once they have it on their before the update shows up thru the provider. 

        • Anonymous

          I have a G2x and the stock ROM comes with almost a dozen bloatware apps. Also, it came out in May with 2.2 and didn’t get 2.3 until the end of July, with no word from LG on ICS. It’s ONLY the Nexus line that gets first dibs on updates, as they get them directly from Google.

  • Anonymous

    I’m willing to pay full price for a phone from T-Mobile in return for a cheaper rate plan (and warranty and support). Unfortunately, the phones available under pre-paid max out at the Exhibit II. Why can’t I buy a Galaxy S II? For that matter, why doesn’t T-Mobile offer unsubsidized Galaxy Nexus?

    • http://www.facebook.com/profile.php?id=1555151219 Brian Richards

      I have Even More. I *DO* have a cheaper plan in exchange for buying my phones outright. Do they not do that anymore? That was the best thing ever. A simple bit of math showed that the subsidized phones were actually MORE exepensive over the 48 months!!! No brainer when I did that. 

      • philly8

        check out the value plans. 

      • http://twitter.com/squirreludecker Jason Montgomery

        48 months?  Most other carriers contracts are only 18-24 months

    • Guest2012

      You can buy any subsidized phone from T-mobile without contract by paying the full retail price.

      • Kelrabi

        You can do that from any carrier.  The problem is that the rade plans are designed to recoup that subsidy over the length of the contract.  So if you do that, and stick around for 2 years  (negating savings from an early termination fee), you’re paying twice for the same thing.

    • philly8

      U can buy any phone you want on prepaid, plus you can buy an unlocked gsm phone online.

  • http://profile.yahoo.com/NCZERFB37EM4JAALGWUQLX7IKQ Gregory

    If you want to get rid of the the subsidized pricing model – what does the consumer get in return? I want control of my device.  Bloatware goodbye! I have 5 pages of applications that could probably be reduced to 2 or 3 pages of the applications I actually want and use. Give me more control, I’ll pay for that. Otherwise we’ll continue to plod along in this dysfunctional dance

    • http://de-kart.com Wagonist

      Currently the consumer gets $20 to $35 off the post-paid plan for getting a device unsubsidized on T-Mobile in form of the Monthly4G plan.

      I pay $60/Month as compared to ~$95 I used to pay on post-paid when I got a subsidized phone. Now I just buy my phones secondhand off craigslist.

      If you think about it $35 monthly saving  x 24 months (the length of a contract) works out to be $840, VS. the $400 subsidy you normally get on a high end phone.

      If you buy a low end feature feature phone on contract, YOU ARE RETARDED.

    • philly8

      you get a discount on your bill saving you about $50 dollars a month compared to competitors. Thats $1200 dollars in a 2 year agreement….

  • http://pulse.yahoo.com/_AWWIKW6MNPUHOC4OVSHWUDWAHM Fabio

    That means that the phones would have be UNLOCKED and work with ANY carrier world wide. 

    • No Just No

       That is a little absurd. There are still some competing technologies and different frequencies. Unlocked, yes. Working with all carriers? Pfft, good luck. At best you will have phones that kind of work if you stick to GSM. Like my Nokia n900 that comes unlocked, but will never get anything better than EDGE on ATT.

      • philly8

        you buy a pentra band phone that has all bands buddy!

  • Anonymous

    OK yeah that sounds like a sure thing to me dude, definetaly!
    Total-Privacy dot US

  • Jon T

    Easy to see why T Mobile are not going to get iPhone any time soon. They can whistle with those views…good luck to them, they’ll need it.

    It also occurred to me that Apple’s success makes CEO’s – have to – utter complete nonsense! Some of those views expressed could not have believed by the heads that uttered them!

    Lot’s of nice things said about Amazon… hmmm.

    • philly8

      All of Europe does unsubsidized phones.

  • Anonymous

    So, he’s saying consumers are stupid, to go for subsidized phones?

    ” It becomes difficult because consumers vote with their pocketbooks, and they will almost always pick a low device price oftentimes over a low rate plan price or a bundled rate plan price.”

    • Guy above me is dense

       Yes, because it is the truth.

      Just like buying a car, you see the sticker price. You don’t see the loan you are getting that may mean you pay more for the car over its lifetime than it was ever worth.

      Majority of people are bad at math. Film at 11.

      • Anonymous

        Sorry, but it’s not at all like your example, unless the sticker price was subsidized, with the subsidy built into the loan.

        You’d have been far better off saying that it’s like a car lease. A lease takes the emphasis off the sticker price and onto the monthly lease payment. The amount being financed is obscured as is the finance rate.

  • Kevin Pedraja

    You just wouldn’t have the explosive growth in smartphone ownership and usage if consumers had to pay unsubsidized prices – $500-$700 in many cases — for their devices. Sure, subsidies cost consumers more money in the long run, but that’s how most people buy cars, houses and other large ticket items as well. Killing subsidies would make smartphones a toy for the rich. 

    • philly8

      thats why you have down payments and installment plans

    • Anonymous

      If people knew how to save money, they could use the hundreds they save over the course of two years with the lower rate plan to upgrade their phone and have some left over.

  • http://www.thegraphicmac.com/ JimD

    Wait. They charge me the same amount per month (a lot!) whether I bring
    my own phone, or take a subsidized phone, and I’M THE IDIOT? Who in
    their right mind would pay $400-$800 for a really nice smartphone when
    they can get it for $200-$300?

    I’ll gladly pay $600+ for my iPhone if AT&T/Verizon lower their
    monthly fees to a more reasonable $40 or so, with NO CONTRACT… But as
    long as my bill is approaching $100 per month, I’m going to continue to
    abuse them by getting a new phone the second I’m eligible.

    • philly8

      with the T-Mobile value plan you pay $60 a month for unlimited talk text and web. Thats $40 in savings X 24 months. You save $960 a year! You can buy an unlocked IPhone for $600 at the apple store and still save $360. How do people not see that T-Mobile has a point! 

      • http://www.thegraphicmac.com/ JimD

        Your math is a bit off. You save 960 in TWO years, not one. And since the iPhone doesn’t run on T-Mobile, and their network is slower than AT&T, it really doesn’t matter what T-Mobile costs.

        • http://www.facebook.com/people/Sean-Mcintier/1146574107 Sean Mcintier

           I almost always max out at 21mbps, and when I’m slowed to 2g, I still get 150-200kbps. Also T-Mobile just slows you down unlike AT&T which just charges you extra per MB.

        • Anonymous

          T-Mobile is refarming some of their 1900MHz spectrum (which AT&T uses for 3g/”4g”) for their own 3g/”4g”, so the iPhone will soon be compatible with T-Mobile’s 3g.

      • http://www.facebook.com/people/Sean-Mcintier/1146574107 Sean Mcintier

         $50 also gets you unlimited talk text and web, it’s just that the $60 gets you 2GB of 3G, while $50 gets you 100mb. Doesn’t matter because Facebook, Reddit, and any other mostly text sites(this included) all load within a few seconds on 2G anyways. Also you get free tethering, I’m not rooted either.
        Tethering costs what, $20-30 on plans? So throwing that into consideration you’re saving $600 or so a year.

        Cost of my phone: $450, Cost had I bought subsidized: $150. , so over 2 years I save $900. I dunno about anyone else, but that’s a huge chunk of money.

  • http://twitter.com/bennash Ben Nash

    Free money makes things really expensive. Get rid of the subsides and prices will fall. Give people discounts and the prices with rise. 

  • http://twitter.com/bennash Ben Nash

    Free money makes things really expensive. Get rid of the subsides and prices will fall. Give people discounts and the prices with rise. 

    • Dennycranium

      I doubt prices would fall. North America has been trained to buy on price not value. You’d just see a lot of low end smart phones flood the market.

  • Juto03

    Create a new plan, Give us  the choice to use old phones and give us a good discount.

  • Anonymous

    I am totally fine with this idea for an unlocked phone without the telecoms crap-ware on it. Leave the pressure of lowering prices of phones up to the hardware manufactures. In return lower the price of the service and remove the long term contracts.

    So do we have a deal?

  • Dennycranium

    I’m all for it- if they are going to subsidize the phones do it with LOW END phones.
    As a reseller of hardware I’m always frustrated at people who “can’t afford” 200.00 to 400.00 for a smart phone but who pay 100.00 plus every month for a smart phone plan

  • English-jackie

    Mr. Brodman if you want to stop churn offer BETTER VALUE to your consumers. Why is Simple Mobile (a prepaid TMo MVNO) offering better value than your post paid plans?
    Give me UNLIMITED 4G speeds (no throttling) let me use my mobile hotspot without charging me a tethering fee. Also give me true UNLIMITED BANDWITH not an eyedroppers worth at 2GB or 4GB. Business will flock to TMO and I’d be a customer for life. Quit worrying about ARPU (Average Revenue Per User) and worry about HOW MANY CUSTOMERS you can attract with VALUE

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