Moto X : What is the argument behind the exclusivity in this industry?

TheBlueCrayon

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Someone more familiar with the economics of this industry please explain how an exclusivity deal is more profitable than selling a product outright to anyone willing to buy it. Even if it's only a few months, I would think the potential loss in sales through other major carriers would be abysmal compared to any amount AT&T could have possibly offered for these rights, yet this happens time and time again. These deals are great for the carriers, but I just don't see how it's smart business on the part of manufacturers.

So why do these deals continue to happen? It seems like the OEMs are slaves to the carriers when in fact it should be the other way around. I don't see this happening in any other major market but the U.S. Why is that when the world's carriers are all owned by the same telecom corporations? Imagine if grocery store chains worked this way: Coca-Cola products are now only available at Safeway stores. Why would Coca-Cola ever agree to that? Ridiculous.
 

Woosh

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Someone more familiar with the economics of this industry please explain how an exclusivity deal is more profitable than selling a product outright to anyone willing to buy it. Even if it's only a few months, I would think the potential loss in sales through other major carriers would be abysmal compared to any amount AT&T could have possibly offered for these rights, yet this happens time and time again. These deals are great for the carriers, but I just don't see how it's smart business on the part of manufacturers.

So why do these deals continue to happen? It seems like the OEMs are slaves to the carriers when in fact it should be the other way around. I don't see this happening in any other major market but the U.S. Why is that when the world's carriers are all owned by the same telecom corporations? Imagine if grocery store chains worked this way: Coca-Cola products are now only available at Safeway stores. Why would Coca-Cola ever agree to that? Ridiculous.

Well if I had to guess......AT&T is paying for the right to be exclusive for x amount of time. That''s free money right there when you think of all the phones that have flopped in the past. If someone said to you that you can have $1000 right now or gamble that in a month you could either end up with $5 or $5000, would you take the free money right away or would you gamble to see if you have a hit or not?
 

jbruha

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It's just money. AT&T paid Motorola a sum of money attractive enough to have a lock on these features for a stupidly small amount of time under the assumption that it would increase subscriber growth for them during that time frame. Motorola wins, kinda, AT&T probably won't, and we lose. Only the segment of interested customers already on AT&T win, which shoots Motorola in the foot, regardless of how much money they were paid.
 

NoYankees44

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In the US, this is what is expected. The percentage of phone buyers that purchase off contract is incredibly low that oems dont even consider it.

And I still say that if it were not for the first Iphone being exclusive to ATT that ATT would have gone out of business. At that time ATT(or cingular) was sanonamous with "im sorry" it was so terrible.

Sent from my ASUS Transformer Pad TF300T
 

tech_head

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It's just money. AT&T paid Motorola a sum of money attractive enough to have a lock on these features for a stupidly small amount of time under the assumption that it would increase subscriber growth for them during that time frame. Motorola wins, kinda, AT&T probably won't, and we lose. Only the segment of interested customers already on AT&T win, which shoots Motorola in the foot, regardless of how much money they were paid.

We don't know how much they were paid.
It might be a win, might not.
Think about it. How many people are going to jump ship for a phone these days??
It's not the new "messiah" phone anymore.
iPhone available every where. HTC One available every where soon. GS4 available everywhere.
Motorola X on AT&T only for now. But the equivalent is on Verizon in the form of multiple Droid variants.
It will be on T-Mobile and Sprint in a few weeks/months. Most people will just wait if they really want it.
The worst for them, is people jut buying something else. That, with the price, might be what happens.

Price is still too dang high.
 

philly

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Someone more familiar with the economics of this industry please explain how an exclusivity deal is more profitable than selling a product outright to anyone willing to buy it. Even if it's only a few months, I would think the potential loss in sales through other major carriers would be abysmal compared to any amount AT&T could have possibly offered for these rights, yet this happens time and time again. These deals are great for the carriers, but I just don't see how it's smart business on the part of manufacturers.

So why do these deals continue to happen? It seems like the OEMs are slaves to the carriers when in fact it should be the other way around. I don't see this happening in any other major market but the U.S. Why is that when the world's carriers are all owned by the same telecom corporations? Imagine if grocery store chains worked this way: Coca-Cola products are now only available at Safeway stores. Why would Coca-Cola ever agree to that? Ridiculous.

exclusivity is worth it because they probably can treat it as a "soft-launch" or "beta" whatever you want to call it.
 

NoYankees44

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O and just to add:

Moto has been taking it up the rear from Verizon for a decade now. Why would they not ***** out to ATT when they got the chance?

Sent from my ASUS Transformer Pad TF300T
 

Farish

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In the US, this is what is expected. The percentage of phone buyers that purchase off contract is incredibly low that oems dont even consider it.

And I still say that if it were not for the first Iphone being exclusive to ATT that ATT would have gone out of business. At that time ATT(or cingular) was sanonamous with "im sorry" it was so terrible.

Sent from my ASUS Transformer Pad TF300T

ATT was the largest carrier at the time, they weren't even close to going out of business. Sprint in 2007 was considered the worst carrier with regards to customer service and spent the last 5 years rebuilding that reputation while at the same time bungling their Nextel acquisition, screwing up with Lightsquared and WiMax and building a data network on 3g that is slower than dial up.

Or T-Mobile who the only reason why they are expanding and surviving is because the government block their merger with ATT, that resulted in them getting 4 billion in cash and wireless spectrum they needed to grow. T-Mobile was losing marketshare before that and their parent company wanted to offload them.

Here are the numbers before the iPhone

wireless+competition+before+the+iphone.JPG
 

lostaggie

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I have a different take on the customization being exclusive to start...

During the ramp up they will only be able to handle so much and rather than make a bunch of carriers unhappy with production they start with AT&T and then adjust. Yes AT&T probably when after it but why would Verizon spend the money to do so with the Droid line. Sprint and Tmob are not really premium players for volume.
 

Kayone73

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Someone more familiar with the economics of this industry please explain how an exclusivity deal is more profitable than selling a product outright to anyone willing to buy it. Even if it's only a few months, I would think the potential loss in sales through other major carriers would be abysmal compared to any amount AT&T could have possibly offered for these rights, yet this happens time and time again. These deals are great for the carriers, but I just don't see how it's smart business on the part of manufacturers.

So why do these deals continue to happen? It seems like the OEMs are slaves to the carriers when in fact it should be the other way around. I don't see this happening in any other major market but the U.S. Why is that when the world's carriers are all owned by the same telecom corporations? Imagine if grocery store chains worked this way: Coca-Cola products are now only available at Safeway stores. Why would Coca-Cola ever agree to that? Ridiculous.

A really simple arguement, bending to the wills of a carrier means benefiting from their locked in buyer markets, their distribution chains and their own separate promotion and advertisement efforts. This defrays some of the costs of setting uo one's own storefronts and means of selling & distribution.

Remember the vast majority of phone buyers aren't hardcore Internet nerds like us. Our minority share dollars don't speak as loudly as those millions who are with an existing provider and likely sticks w them because of multiple real world factors.

Talk to anyone not into this whole tech scene, most are unaware of the concept of buying a phone froma direct distributor like the Google Play Store, and $199 is a great price to them. You can quote comparative specs to them until you're blue in the face amd their response is "whatever.... nerd..."

Sent from my HTC One Sinless ver 2.7 Google Edition rom
 

jbruha

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We don't know how much they were paid.
It might be a win, might not.
Think about it. How many people are going to jump ship for a phone these days??
It's not the new "messiah" phone anymore.
iPhone available every where. HTC One available every where soon. GS4 available everywhere.
Motorola X on AT&T only for now. But the equivalent is on Verizon in the form of multiple Droid variants.
It will be on T-Mobile and Sprint in a few weeks/months. Most people will just wait if they really want it.
The worst for them, is people jut buying something else. That, with the price, might be what happens.

Price is still too dang high.

That's the worst part. If they just did the simultaneous release, there wouldn't have been nearly as many issues as we saw today. Only a handful of very confused people will even consider switching to AT&T for this phone, if they're even interested, or if they've even heard of it.

And even worse? Imagine the gap this leaves for Apple. They'll wait. Won't say anything. Come September/October? Boom. New, fairly priced iPhone, new colors outside of black and white, available on all carriers on this hard date. Motorola opened themselves up for the hit and Apple will be able to take it easily.
 

robertopod1968

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The real problem is that Verizon doesn't want the 32gb version and they don't want the customization yet. They don't want this phone to steal sales from there beloved "exclusive" DROID line up. They don't like phones with bigger storage. They want you to use the cloud..and there data. So Moto can't force a Verizon to buy anything. AT&T is giving you way more choices in phones, storage sizes and bringing them out first. Don't you think that the DROID deal between Moto and Verizon would carry a ton of weight? Like if Verizon really wanted to give you these options and customization Moto would be very compelled to take care of there number one customer. Fault lies with Verizon on this phone and all the others lately that they either haven't gotten at all, have gotten months later, or haven't offered up the bigger storage.
 

TheBlueCrayon

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So the recurring opinion that I'm seeing here is that the carriers call the shots and somehow that's good for the manufacturers. Yes and no. Sure, they can cut down on the marketing budget and let the retailer do the legwork, and they get paid large sums of money upfront for exclusivity. Nice. On the flip side, they limit sales of their product to a relatively small portion of the market for a definite or indefinite amount of time. In that time, the casual VZW user who saw the Moto X ad waltzed into the store and looked at all his options. "Well, the Moto X is available, but you can't customize it like you saw in that ad. Oh, and we don't have the 32GB model, sorry. Here's the Galaxy S4, and over here's the HTC One," and so on. "...I'll take an <insert competitor phone here>, please." Now multiply that times all the carriers - all their new customers and upgrades in that one or two month timeframe. Oops. How much revenue did you just lose by focusing sales on just ~30% of your consumer base? All those other people are now contractually bound for 1-2 years and won't be buying your product anytime soon. Good thing you let that one carrier strong arm you into that sweet exclusivity deal, though, huh?

The relationship between OEM and retailer is one of codependency. The carrier needs Samsung and HTC and Motorola just as much as those companies rely on the carrier, but somehow that seems to have been forgotten. These OEMs should focus on making cutting-edge, top quality products that the public demands, then sell those products to the carriers. That's it. Too damn bad if you want it to say DROID on the back and have red buttons, Verizon. EVO-what? Nope. Buy it or don't. If the carriers pass on a device, that's their loss or gain. The market will decide that though, won't it? Watch how quickly they cut all the bull**** when their bottom line falls through the floor because they don't offer anything worth buying. My point is this: the manufacturers need to sack up and lay down some ground rules. It will be better for them, and better for us, the consumers.
 

fightcrazy

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It's just money. AT&T paid Motorola a sum of money attractive enough to have a lock on these features for a stupidly small amount of time under the assumption that it would increase subscriber growth for them during that time frame. Motorola wins, kinda, AT&T probably won't, and we lose. Only the segment of interested customers already on AT&T win, which shoots Motorola in the foot, regardless of how much money they were paid.

Pretty stupid move by Motorola/Google because the most sales of this phone will be in the first 2 months, after that time length the big deal of this phone will be gone, if the exclusive deal runs out by then other better phones will be out including the new iPhone and Motorola will loose many possible sales. When will Google learn how to sell a ******* phone, they continue to **** up every phone they send to market, IMO they could learn allot from Samsung and Apple, all Carriers get all versions at the same time. End of story. All the negative bull **** about internal storage and they once again push out a phone with 16gb of int memory, no sd-card support, which everyone knew wasn't going to happen anyways, but there is no ******* way I will ever buy a new phone with only 16gb of int memory, I don't care how much drop box memory they give me. Try putting your large games and apps in your drop box account. Total failure on Motorola/Google.
 

gone down south

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Exclusive deals are in return for the carrier throwing their marketing muscle behind a particular phone.

You can have a given phone be one of a couple dozen buried on your website. Or have that phone be front and center on every page, have it be on every shelf in your stores and have big cardboard displays right by the front door and cash register.

That's the deal carriers and OEM's make.

Sent from my Nexus 4 using AC Forums mobile app
 

Kayone73

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Pretty stupid move by Motorola/Google because the most sales of this phone will be in the first 2 months, after that time length the big deal of this phone will be gone, if the exclusive deal runs out by then other better phones will be out including the new iPhone and Motorola will loose many possible sales. When will Google learn how to sell a ******* phone, they continue to **** up every phone they send to market, IMO they could learn allot from Samsung and Apple, all Carriers get all versions at the same time. End of story. All the negative bull **** about internal storage and they once again push out a phone with 16gb of int memory, no sd-card support, which everyone knew wasn't going to happen anyways, but there is no ******* way I will ever buy a new phone with only 16gb of int memory, I don't care how much drop box memory they give me. Try putting your large games and apps in your drop box account. Total failure on Motorola/Google.

Since you obviously know what to do, please take over Google and run the company so you can set them straight, and then provide us with a running feed of how the whole process works from behind the scenes.

Sent from my Nexus 7 using Tapatalk 2
 

Honestabebread

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Its the same reason Verizon lets Straight Talk and MiSpot use their network. As a former sales rep for Verizon, I thought it was ridiculous I would have to convince customers to sign up or stay with us when they could get better deals and still be on the network. Its all about money. Straight Talk and MiSpot pay Verizon a ton of guaranteed revenue as opposed to relying on corporate store sales reps.

Moto made a ton of money upfront to let AT&T have Moto Maker first. Same way Nokia made a ton letting AT&T have the 920 first.

Thank God its not an exclusive phone and will be out on VZW around the same time. I can deal with an all white one.




Posted via Android Central App
 

JHBThree

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In the US, this is what is expected. The percentage of phone buyers that purchase off contract is incredibly low that oems dont even consider it.

And I still say that if it were not for the first Iphone being exclusive to ATT that ATT would have gone out of business. At that time ATT(or cingular) was sanonamous with "im sorry" it was so terrible.

Sent from my ASUS Transformer Pad TF300T

Actually, Cingular didn't start sucking until the iPhone launched and crippled their network.
 

jephanie

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I have a different take on the customization being exclusive to start...

During the ramp up they will only be able to handle so much and rather than make a bunch of carriers unhappy with production they start with AT&T and then adjust. Yes AT&T probably when after it but why would Verizon spend the money to do so with the Droid line. Sprint and Tmob are not really premium players for volume.

This is exactly what I was thinking.
 

SteelGator

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ATT was the largest carrier at the time, they weren't even close to going out of business. Sprint in 2007 was considered the worst carrier with regards to customer service and spent the last 5 years rebuilding that reputation while at the same time bungling their Nextel acquisition, screwing up with Lightsquared and WiMax and building a data network on 3g that is slower than dial up.

Or T-Mobile who the only reason why they are expanding and surviving is because the government block their merger with ATT, that resulted in them getting 4 billion in cash and wireless spectrum they needed to grow. T-Mobile was losing marketshare before that and their parent company wanted to offload them.

Here are the numbers before the iPhone

http://3.bp.blogspot.com/-B_bVbmkuA...00/wireless+competition+before+the+iphone.JPG

You had to go and ruin a perfectly good argument with facts. Get of the internet, you don't belong here. :p
 

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