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France Telecom CEO Blames Poor iPhone Sales On "Frugal Customers"

Tyler Durden's picture





 

When wondering why AAPL disappoints once more on its next earnings release, please pull a Bill Gross and look in the mirror, dear broke consumer, because it is your fault. At least that is the spin by the CEO of France Telecom, who says that iPhone sales are now being threatened by, drumroll please, "frugal buyers." That's right: in France "frugal" is now a dirty word. Not socialism, not 75% taxes, not budget ministers charged with rooting out tax fraud and lying about their Swiss bank accounts, not movie legends who can't wait to get Russian passports - it's "frugality" that is at fault. Because how dare French consumers not load up on cheap, government subsidized credit card debt and splurge like good old Americans who can't wait to pledge their shotguns as collateral for clunkers, and who haven't paid their mortgage in years courtesy of pervasive debt forgiveness for deadbeats, spending on iCrap instead? The France Telecom CEO demands answers now!

From Bloomberg:

France Telecom SA Chief Executive Officer Stephane Richard, head of one of Europe’s largest wireless carriers, said the increasing frugality of customers is threatening sales of pricey phones such as Apple Inc.’s iPhone. “We are in a period of changing consumer behavior,” Richard said yesterday during an interview at Bloomberg’s headquarters in New York. There are fewer shoppers in search of the latest and greatest gadget, and more of them are seeking lower prices on wireless service, he said.

Unpossible: don't these good French socialists realize it is their sworn patriotic duty to fund the Chinese current account surplus using borrowed money they will most likely never repay?

The shift has been especially severe in Europe, where more customers are keeping the same phone when they switch carriers. Amid a slumping economy and mounting competition, France Telecom has seen prices drop 25 percent over the past three years, squeezing profit margins and its stock price. Its cheapest plan now provides unlimited calls and texting and 3 gigabytes of data for about 20 euros ($26) a month -- about half the price of T-Mobile USA Inc.’s $50 plan, which is touted as a U.S. bargain.

 

The persistent belt-tightening in France and elsewhere in Europe has decreased the number of consumers who buy the latest phones at top prices, Richard said. Without a carrier subsidy, the iPhone typically sells for about $600, making it too pricey for many shoppers, he said.

 

The change may be felt when Apple introduces its latest iPhone this year, Richard said. The product’s annual refresh has traditionally drawn long lines and a frenzy of anticipation since it first debuted in 2007.

 

“There are fewer early adopters, and probably with the next release of the iPhone this will be evident,” Richard said. “Selling a phone for $600 is getting more and more difficult.”

Maybe the French, like their American peers, should buy a home at a price far greater than they can ever possibly afford, and then demand it is their constitutional right to never pay even one mortgage payment? Because if one hopes that the mythical concept known as "cash flows" will ever go back to historical levels in a continent which as we reported earlier this week is now growing at brisk, 19th century growth levels, one will be waiting a long, long time.

In conclusion:

“Customers are more focused on price,” Richard said. “Except for a few hundred thousand people who will buy the latest iPhone -- except for that category of people -- the majority of the market will be difficult.”

That's ok. Apple has billions and billions in cash, which however will naturally dwindle to zero eventually from dividend payments, should the entire world suddenly be as evilly "frugal" as those non-cooperative French buyers.

In the meantime, just BTFD, because with Uncle Ben and his magic technicolor printer which just spews endless cash with which the Primary Dealers can buy the S&P, why bother with such trivia as math and the real world?

h/t Brian

 


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Wed, 04/03/2013 - 13:55 | Link to Comment nope-1004
nope-1004's picture

iPoor

 

Wed, 04/03/2013 - 14:01 | Link to Comment Abraxas
Abraxas's picture

You goddamn frugal customer, you... Ugh!

Wed, 04/03/2013 - 14:05 | Link to Comment redpill
redpill's picture

There's no reason to buy an iPhone anymore, the gap in the app world has narrowed considerably, competitor operating systems are just as good as iOS but without the clunky shackles of iTunes, the hardware competition out of Korea and Hong Kong is innovating far more quickly than Apple is, and there are better options for less money.  Good luck with AAPL, hedgies.

Wed, 04/03/2013 - 14:10 | Link to Comment camaro68ss
camaro68ss's picture

Savings accounts = Cash hording..... great

Wed, 04/03/2013 - 14:16 | Link to Comment redpill
redpill's picture

Savings accounts = bank recapitalization sources!

Wed, 04/03/2013 - 14:41 | Link to Comment NotApplicable
NotApplicable's picture

Funny how Mr. Telecom CEO fails to notice the fact that technology, as always, has overshot the needs of the market.

Wed, 04/03/2013 - 14:54 | Link to Comment krispkritter
krispkritter's picture

Raise the sales tax on all phones to 75%! Problem solved! Next!

Wed, 04/03/2013 - 15:27 | Link to Comment css1971
css1971's picture

Mr. Telecom CEO hasn't failed to notice it at all.

Mr. Telecom CEO has Nokia Asha smartphones waiting in the wings for Apple sales to tank before rolling out $50 - $130 smartphones with little to no subsidy and which also run hefty compression built in for those frugal customers who also want to save on their data plans. Particularly cos then they can run higher levels of overcommit on their networks as well.

http://www.nokia.com/gb-en/phones/asha/

(Yeah, long NOK)

Wed, 04/03/2013 - 14:11 | Link to Comment insanelysane
insanelysane's picture

Not to mention that 99% of the apps are useless.

Wed, 04/03/2013 - 14:49 | Link to Comment NotApplicable
NotApplicable's picture

It seems they do a nice job of spying on everyone (as does Android apps).

Wed, 04/03/2013 - 15:18 | Link to Comment css1971
css1971's picture

99.999%

Wed, 04/03/2013 - 14:06 | Link to Comment kliguy38
kliguy38's picture

Frugal??? BWAAAAAAAAAA so that's what flat ass busted is called in France.

Wed, 04/03/2013 - 14:09 | Link to Comment Skateboarder
Skateboarder's picture

iPril Fools!

Wed, 04/03/2013 - 16:31 | Link to Comment Bastiat
Bastiat's picture

Non-volitional frugality.

Wed, 04/03/2013 - 14:13 | Link to Comment Wile-E-Coyote
Wile-E-Coyote's picture

How's Samsung's sales?

Wed, 04/03/2013 - 14:17 | Link to Comment Groundhog Day
Groundhog Day's picture

You goddamn BROKE customers, you...UGH!

Fixed it

Wed, 04/03/2013 - 14:21 | Link to Comment augustusgloop
augustusgloop's picture

France don't know how to innovate like Americans..Make NINJA / Subprime iPhone loans to the poor at 20%APR, securitize them, then sell off the tranches... CF Reuters article on subprime autoloans. The best part of the article was the poor guy--2 jobs, American dreamer, spending his $15k a year on bourbon glazed chicken at Outback or Applebees or TGIF and lamenting that he had to buy anothe iPhone because he lost his other one. 

Wed, 04/03/2013 - 18:04 | Link to Comment W74
W74's picture

Only in America can you get a Section 8 check and an EBT card while leasing an Escalade with the works and spending other people's disposable (taxpayer) income on frivolous junk and one-time consumables.

Wed, 04/03/2013 - 14:09 | Link to Comment Flagit
Flagit's picture

if he needs a job, he should apply to be a contestant on The Running Man, er uh, i mean Survivor.

 

http://news.ino.com/headlines/?newsid=68655696807300

Wed, 04/03/2013 - 14:12 | Link to Comment nicoacademia
nicoacademia's picture

iPoorAss

Wed, 04/03/2013 - 13:52 | Link to Comment 101 years and c...
Wed, 04/03/2013 - 13:57 | Link to Comment ramacers
ramacers's picture

this stuff is smokin'. kudos.

Wed, 04/03/2013 - 13:56 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

I'm sure this is only transitory.

Wed, 04/03/2013 - 13:58 | Link to Comment Floodmaster
Floodmaster's picture

I am pretty happy and proud of my 10$ brand new samsung dumb phone.

Wed, 04/03/2013 - 14:07 | Link to Comment Cursive
Cursive's picture

@Floodmaster

Le Cell du Flambeux (Franglish for "Burner Phone")

Wed, 04/03/2013 - 15:16 | Link to Comment css1971
css1971's picture

Sure, you will be till it falls apart in 6 months. Try a Nokia instead, and if you want a smartphone for $50 try one of their Asha series, designed for developing markets.

Wed, 04/03/2013 - 13:59 | Link to Comment Clayton Bigsby
Clayton Bigsby's picture

Clearly they need a new tax on evil greedy rich people to pay for everyone's iFone's - everyone's entitled to one, ya'know???

Wed, 04/03/2013 - 14:01 | Link to Comment JustPrintMoreDuh
JustPrintMoreDuh's picture

Stick that up your Depardieu! 

Wed, 04/03/2013 - 14:04 | Link to Comment wee-weed up
wee-weed up's picture

Correction:  Depart-ieu.

Wed, 04/03/2013 - 14:02 | Link to Comment Longtermnotreally
Longtermnotreally's picture

The consumer society is about to collapse... gentlemen, prepare yourselves !!

Wed, 04/03/2013 - 14:03 | Link to Comment Abraxas
Abraxas's picture

It wouldn't have to collapse if we weren't so irrationally frugal. I feel guilty.

Wed, 04/03/2013 - 14:14 | Link to Comment Skateboarder
Skateboarder's picture

iWant... no iNeed it. iNeeeed it.

Wed, 04/03/2013 - 14:06 | Link to Comment McMolotov
McMolotov's picture

Who coulda seen that a consumer society would eventually consume itself, like a snake eating its tail?

Wed, 04/03/2013 - 14:12 | Link to Comment Longtermnotreally
Longtermnotreally's picture

Expiry date about to be reached, like for the fiat currencies,

wealth redistibution will be the outcome ==> from paper to assets

Wed, 04/03/2013 - 14:04 | Link to Comment sitenine
sitenine's picture

Sit! Beg! Now roll over, consumer!

Wed, 04/03/2013 - 14:09 | Link to Comment nicoacademia
nicoacademia's picture

Nien

Wed, 04/03/2013 - 14:04 | Link to Comment Pseudo Anonym
Pseudo Anonym's picture

adverse possession

like their American peers, should buy a home at a price far greater than they can ever possibly afford, and then demand it is their constitutional right to never pay even one mortgage payment?

Wed, 04/03/2013 - 14:11 | Link to Comment nicoacademia
nicoacademia's picture

nope. banksters constitutional rights to sell MBS CDO and earn off it and not have to worry about it.

you got it the wrong way round.

Wed, 04/03/2013 - 15:56 | Link to Comment MachoMan
MachoMan's picture

adverse possession is practically impossible to arise from permissive use...  rather, the bigger issue facing lenders is the statute of limitations.

Wed, 04/03/2013 - 14:04 | Link to Comment Cursive
Cursive's picture

I thought Frenchmen had a notority as cheap tippers throughout Europe.  Anyway, my frugal self still uses my 3G and no plans on changing.

Wed, 04/03/2013 - 14:08 | Link to Comment nicoacademia
nicoacademia's picture

4G is shite. ur battery burns out so fast it's just dumb.

Wed, 04/03/2013 - 15:59 | Link to Comment MachoMan
MachoMan's picture

4g makes internet usage on mobile devices bearable...  as far as I'm concerned, it's a game changer for mobile content.

That said, you can hit your data allotment in no time with it...

PS, you can get an upgraded battery.

Wed, 04/03/2013 - 14:04 | Link to Comment pashley1411
pashley1411's picture

Kind of hard to be short-tem bullish on any good you can't buy with a subsidy, like food stamps, or raton cards, or student loans, or Medicaid/Medicare, or whatever.     

In this brief interim phase betwen the parabollic rise in government subsidies, and "austerity",  subsidies are king, earnings are for chumps. 

The answer is obvious.   Apple should use its cash mountain to buy Congess and their lobbyist puppetmasters to subsidize the sale of I-Phone.   All American, in a Shenzhen-sort-of-way. 

Wed, 04/03/2013 - 14:07 | Link to Comment nicoacademia
nicoacademia's picture

at what point would the dividend AAPL gives be worth holding the share?

 

i say Jobs is dead and left us a huge treasure! LETS TEAR IT DOWN FOR OURSELVES(meanwhile we have in place someone who looks like him to take the fall)
:) 

Wed, 04/03/2013 - 17:52 | Link to Comment W74
W74's picture

That sounds like the premise for a good book.

Wed, 04/03/2013 - 14:09 | Link to Comment Dr. Venkman
Dr. Venkman's picture

Fuck Apple. I reactivated my StarTAC and eschew smartphones outside of work so that I may more righteously mock the zombies wandering around with those I-thingy's.

Wed, 04/03/2013 - 14:11 | Link to Comment CunnyFunt
CunnyFunt's picture

They're probably just tired of being ass raped by their 2-year contracts and concluded it isn't worth it.

Wed, 04/03/2013 - 14:11 | Link to Comment Bryan
Bryan's picture

We are heading to financial Armageddon at Ludicrous Speed.

Wed, 04/03/2013 - 14:14 | Link to Comment IamtheREALmario
IamtheREALmario's picture

It is as if the economic plan was designed by "Spaceballs"!

Wed, 04/03/2013 - 14:13 | Link to Comment IamtheREALmario
IamtheREALmario's picture

AAPL should sell their labor arbritraged crap and business plan in Asia where it belongs. If they want to suck off this country ...and Europe then they should contribute something to it too.

... and that goes for the horse you rode in on.

... trending ...

Wed, 04/03/2013 - 14:14 | Link to Comment insanelysane
insanelysane's picture

Need a law to force people to buy an iPhone and a Droid and ...

Wed, 04/03/2013 - 14:16 | Link to Comment timbo_em
timbo_em's picture

It has to be clear that in order to become CEO of a state owned enterprise in France (and probably in every other sinking country) one has to be part of the political system and in order to be part of this political system being a clueless liar and being a 110% keynesian are key requirements.

Wed, 04/03/2013 - 14:19 | Link to Comment Snoopy the Economist
Snoopy the Economist's picture

Why doesn't the gubmint just buy them for all the poor people? It works in USSA.

Wed, 04/03/2013 - 15:17 | Link to Comment Urban Redneck
Urban Redneck's picture

plus de fromage du gouvernement?

Moar! Moar! Moar! - Hollande

Wed, 04/03/2013 - 14:22 | Link to Comment cornflakesdisease
cornflakesdisease's picture

Spain has seen their cable Tv and cellphone use drop over the last few years.  When people are broke, they have no choice.

Wed, 04/03/2013 - 14:31 | Link to Comment saints51
saints51's picture

people should look into xbmc.

Wed, 04/03/2013 - 14:34 | Link to Comment Bam_Man
Bam_Man's picture

We can't have that here. How would they pay A-Rod his $25MM a year for not playing?

Wed, 04/03/2013 - 14:30 | Link to Comment Ban KKiller
Ban KKiller's picture

If it were not for the French and Benjamin Franklin we would never have been able to pull off the Revolution. Will we help the French or will they help us to bring down the NEW ruling class of Plutocrats? Don't know...can't call on these cheap ass Chinese phones. 

Wed, 04/03/2013 - 14:31 | Link to Comment Stockmonger
Stockmonger's picture

These frugal customers wouldn't be so frugal if we had hyperinflation to discipline them.

Wed, 04/03/2013 - 14:33 | Link to Comment Yen Cross
Yen Cross's picture

      i guess, misery doesn't love company...

Wed, 04/03/2013 - 14:35 | Link to Comment Bam_Man
Bam_Man's picture

The frugal Franch will cut back on everything else before they give up their gourmet meals and expensive wine.

Wed, 04/03/2013 - 17:45 | Link to Comment W74
W74's picture

Until the only thing left is cake.

Wed, 04/03/2013 - 14:47 | Link to Comment NotApplicable
NotApplicable's picture

Luckily for Apple, there's still plenty of clueless idiots buying phones they don't need.

Just today, I had lunch with my son, who works tech support for a local evil-do(good)er charity org. One of the executive directors had a new iPhone they were having trouble with and passed it off to him. Turns out she had never created an iTunes account after having an iPhone for over three years.

Talk about paying a premium for services never once utilized. Priceless!

Wed, 04/03/2013 - 15:00 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

so the EU message is clear:

 - SPEND YOUR MONEY OR WE WILL CONFISCATE IT! -

Wed, 04/03/2013 - 15:03 | Link to Comment nowhereman
nowhereman's picture

If it was just the price of the iphone I might be tempted.  It's the monthly fees required to use the thing that is totally rediculous.

It all started back with Cable.  I got rid of cable when they wouldn't let me pay a yearly fee in advance.  They don't want you to own it.  They want to own you.

Everything is monthly payments.  Take a look at your monthly bills, you'd be surprised what you can actually do without.  Instead of spending for your unnecessary divergences go outside for a walk, better yet spend some time with your kids.

Wed, 04/03/2013 - 15:16 | Link to Comment Shizzmoney
Shizzmoney's picture

"Selling a phone for $600 is getting more and more difficult"

Maybe because more people are realizing that your overpriced phone was made for $6 by a 15-year-old pimple faced Chinese boy at the end of a 14 hour shift?

Wed, 04/03/2013 - 15:27 | Link to Comment dolph9
dolph9's picture

I mean, isn't it clear they want you bankrupt, because once you're bankrupt you can be controlled like sheep?

Wed, 04/03/2013 - 15:36 | Link to Comment wonderatitall
wonderatitall's picture

or you can use it....i am not paying the banks mortgage or property taxes or anything anymore...i have seen the light of obama , king of kings...fuck them all and bring it  down i say andwish for....i am an new obamaite and laughing at everyone

Wed, 04/03/2013 - 19:01 | Link to Comment hairball48
hairball48's picture

The would be French iShit  customers aren't frugal. They're fuckin'  broke. Coming to America soon.

Thu, 04/04/2013 - 06:21 | Link to Comment Mark Urbo
Mark Urbo's picture

Exactly !   I thought the French/Euro quasi socialist model allowed for free iphones to be distributed or redistributed...

Wed, 04/03/2013 - 19:16 | Link to Comment Mototard at Large
Mototard at Large's picture

Frugal - fancy word for unemployed and broke at the same time. 

Methinks we will see the word frugal showing up a lot in Europe over the next few months.  Unilever’s European operations boss Jan Zijderveld has said that “poverty has returned to Europe.”  Univlever intends to use marketing techniques in Europe that they developed for poorer Asian markets. 

 

 

Thu, 04/04/2013 - 03:15 | Link to Comment dreadnaught
dreadnaught's picture

kind of idiotic to blame the iPhone-with 25%unemployment-nobody's buying nothing.....

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