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Old November 28th, 2011, 10:14 PM   #52023 (permalink)
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Originally Posted by ebe3692 View Post
there are some that claim Verizon doesnt particularly care to sell many Galaxy Nexi either.
I've heard this before, and personally don't agree with it.

Verizon's primary concern is selling you a voice and data plan. They honestly don't care which smartphone you buy, just so you end up paying the fees. Thier business is service.

I'm going to try to boil this down as simply as possible. Some details are going to get omitted. When a carrier places an order for phones, they commit to sell X number. Let's say 100,000 for sake of argument. That's the agreement, but it's a LOT more complicated than that.

First off, the maker doesn't make 100,000 phones and ship them to Verizon warehouses. The releases are scheduled, and there are "guesses" as to the popularity of certain handsets. If the guess is right, then there are never any shortages, nor overages. Then there are certain contractural agreements such as the amount of advertising they will do, milestone payments, and penalties.

The most interesting of penalties is that when phones don't sell, the carrier isn't responsible for them. They discount them with agreement from the makers. They may BOGO the unwanted phones.

But at the end of the day, if a phone just doesn't sell, and Verizon has 90,000 of them sitting in warehouses, they get RETURNED to the makers. That's right, Verizon returns them, and is not stuck with them.

So I find it somewhat comical when I hear reports that the GNex was delayed due to poor RAZR and Rezound sales. If a phone doesn't sell, it gets returned. In other words, by all accounts I've seen, Verizon doesn't buy the phones, they enter a contract to sell them. Excess stock goes back. Honestly, that is a rare situation, because the manufacturers don't want them back, so they agree to fire sales and BOGO offers to clear inventory. However, there have been a few famous cases of returned items. Need not look further than the Palm Pre on Verizon and even more famous the Microsoft Kin debacle. Verizon tried to fire sale these handsets, and when they couldn't, they got sent back.

So as you can see, Verizon is the middleman who take thier cut, but isn't stuck holding the bag.
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