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 | 3404254 nope-1004
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Wed, 04/03/2013 - 14:01 | 3404298 Abraxas
Abraxas's picture

You goddamn frugal customer, you... Ugh!

Wed, 04/03/2013 - 14:05 | 3404322 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 | 3404345 camaro68ss
camaro68ss's picture

Savings accounts = Cash hording..... great

Wed, 04/03/2013 - 14:16 | 3404388 redpill
redpill's picture

Savings accounts = bank recapitalization sources!

Wed, 04/03/2013 - 14:41 | 3404532 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 | 3404617 krispkritter
krispkritter's picture

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

Wed, 04/03/2013 - 15:27 | 3404773 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.

(Yeah, long NOK)

Wed, 04/03/2013 - 14:11 | 3404362 insanelysane
insanelysane's picture

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

Wed, 04/03/2013 - 14:49 | 3404584 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 | 3404731 css1971
css1971's picture


Wed, 04/03/2013 - 14:06 | 3404329 kliguy38
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Frugal??? BWAAAAAAAAAA so that's what flat ass busted is called in France.

Wed, 04/03/2013 - 14:09 | 3404346 Skateboarder
Skateboarder's picture

iPril Fools!

Wed, 04/03/2013 - 16:31 | 3405270 Bastiat
Bastiat's picture

Non-volitional frugality.

Wed, 04/03/2013 - 14:13 | 3404376 Wile-E-Coyote
Wile-E-Coyote's picture

How's Samsung's sales?

Wed, 04/03/2013 - 14:17 | 3404389 Groundhog Day
Groundhog Day's picture

You goddamn BROKE customers, you...UGH!

Fixed it

Wed, 04/03/2013 - 14:21 | 3404401 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 | 3405747 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 | 3404343 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.

Wed, 04/03/2013 - 14:12 | 3404359 nicoacademia
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Wed, 04/03/2013 - 13:52 | 3404255 101 years and c...
Wed, 04/03/2013 - 13:57 | 3404269 ramacers
ramacers's picture

this stuff is smokin'. kudos.

Wed, 04/03/2013 - 13:56 | 3404270 ParkAveFlasher
ParkAveFlasher's picture

I'm sure this is only transitory.

Wed, 04/03/2013 - 13:58 | 3404278 Floodmaster
Floodmaster's picture

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

Wed, 04/03/2013 - 14:07 | 3404330 Cursive
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Le Cell du Flambeux (Franglish for "Burner Phone")

Wed, 04/03/2013 - 15:16 | 3404721 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 | 3404280 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 | 3404288 JustPrintMoreDuh
JustPrintMoreDuh's picture

Stick that up your Depardieu! 

Wed, 04/03/2013 - 14:04 | 3404308 wee-weed up
wee-weed up's picture

Correction:  Depart-ieu.

Wed, 04/03/2013 - 14:02 | 3404299 Longtermnotreally
Longtermnotreally's picture

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

Wed, 04/03/2013 - 14:03 | 3404314 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 | 3404378 Skateboarder
Skateboarder's picture

iWant... no iNeed it. iNeeeed it.

Wed, 04/03/2013 - 14:06 | 3404327 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 | 3404369 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 | 3404300 sitenine
sitenine's picture

Sit! Beg! Now roll over, consumer!

Wed, 04/03/2013 - 14:09 | 3404344 nicoacademia
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Wed, 04/03/2013 - 14:04 | 3404311 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 | 3404352 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 | 3404974 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 | 3404317 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 | 3404341 nicoacademia
nicoacademia's picture

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

Wed, 04/03/2013 - 15:59 | 3404990 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 | 3404318 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 | 3404337 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 | 3405697 W74
W74's picture

That sounds like the premise for a good book.

Wed, 04/03/2013 - 14:09 | 3404342 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 | 3404348 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 | 3404349 Bryan
Bryan's picture

We are heading to financial Armageddon at Ludicrous Speed.

Wed, 04/03/2013 - 14:14 | 3404373 IamtheREALmario
IamtheREALmario's picture

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

Wed, 04/03/2013 - 14:13 | 3404363 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 ...

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