Select the directory option from the above "Directory" header!

U.S. businesses jump on trend to buy unlocked smartphones

U.S. businesses jump on trend to buy unlocked smartphones

Unlocked sales are growing exponentially; total costs can be reduced 20% or more

Cost-conscious businesses are increasingly buying unlocked smartphones for their workers, instead of more expensive smartphones with two-year service plans that are locked to a certain wireless U.S. carrier.

"Unlocked makes more sense," said Craig Riegelhaupt, direct of product marketing for mobile at Tangoe, an IT and telecom expense management software and services vendor that functions as a consultant to thousands of large businesses.

There's a "definite" trend among Tangoe customers toward buying unlocked smartphones, as more procurement officers and managers for lines of business vie to reduce costs, he added. "They are always cost-conscious."

Buying unlocked phones means a business can "easily save 10% to 20%," over buying locked phones that commit a business to a two-year contract, Riegelhaupt added.

Unlike consumer sales -- where two-year contracts have widely been eliminated by carriers -- enterprise customers still encounter service contracts tied to phone purchases with carriers. An expensive flagship phone like a Galaxy S8 or iPhone 7 could sell for only $200 to $300 with a requirement to commit to two years of service that can run to thousands of dollars, he said.

Tangoe's customer data has shown the average total cost of ownership (TCO) for a locked phone used by a worker is $3,800. Based on Tango's estimate that an unlocked phone without a contract could save 20%, the TCO would be reduced to $3,040.

Many high-end flagship smartphones sell unlocked for $700 to $850. The savings by going unlocked is accrued through more flexible and cheaper data plans rather than a fixed two-year service contract.

Unlike in other countries, consumers and businesses in the U.S. have for years primarily bought their smartphones through various wireless carriers, the biggest being Verizon and AT&T. That trend is changing and carriers are increasingly trying to get out of the business of selling phones, hoping to concentrate on selling wireless service, analysts said.

Tangoe already offers unlocked versions of the Samsung Galaxy S7 and recent iPhone models to its enterprise customers. Samsung is expected to offer its latest Galaxy S8 and S8+ as well through Tangoe's Mobility-as-a-Service portal.

With that service, a large company can tell its workers to pick a phone from a prescribed list that includes unlocked phones. If the phone is unlocked, an enterprise can reap savings by buying a large bucket of data from any of several carriers that is then used by many workers, with its data costs well below what it would pay for two-year plans with locked phones, Riegelhaupt said.

Riegelhaupt also said some employees on a two-year contract might continue using the same phone for three years or so. By doing so, the company would pay an even larger TCO for monthly service charges past the first two years.

The savings via an unlocked phone can be earned by a company or its workers by using either a "corporate-liable" plan, where the company owns the phone outright, or a bring your own device (BYOD) plan where the employee owns the phone and may or may not be reimbursed for the phone or monthly service, Reigelhaupt said.

Manufacturers like Samsung increasingly want to sell unlocked phones. "There are a lot of reasons why manufacturers want to deliver more unlocked phones and one is that the demand is there from users," said Kevin Burden, an analyst at 451 Research.

451 Research recently found in a survey of 302 smartphone users who plan to buy a new smartphone in 90 days that 41% plan to buy an unlocked phone, while 36% said they don't know and 22% favored a locked phone.

Of the 1.5 billion smartphones sold globally in 2016, about 12% were unlocked, according to Samsung and several analysts. While some analysts said the estimate of 12% is too high, others still see a big surge in the trend in the next two years.

"The unlocked market is growing," said Jack Gold, an analyst at J. Gold Associates. "I estimate that it will be 20% to 25% of sales in the next one to two years."

Mike Coleman, head of mobile channel sales for Samsung Electronics America, recently told CRN that the unlocked phone business is "growing exponentially." Unlocked phones offer an opportunity for channel sales by Samsung partners like Tangoe and others to offer phones that come with services like damage protection and break-fix guarantees or mobility management software, he added.

Gold and Tangoe agreed that unlocked phones can give workers and their companies more flexibility. For workers who travel, a SIM card in an unlocked phone can be removed and replaced with a country-specific or international SIM to lower service costs. In the U.S., a worker who relocates can replace a SIM card with another from a carrier that provides better wireless service in the area near the new home.

Some unlocked phones also stand a better chance of getting faster software upgrades from the manufacturers than they would through a carrier, analysts said. That's because carriers take more time because they want to test an upgrade to see if it has an impact on software or apps or services that a carrier has added.

A side benefit of an unlocked phone is that it won't have the bloatware added by a carrier, which can slow down processing and be less efficient, Riegelhaupt said.

Google's unlocked Android devices like the Pixel and Pixel XL get quick upgrades, but several other phone makers take longer, sometimes months, to provide upgrades, whether the phones are locked or unlocked. JR Raphael, contributing editor to Computerworld, released an Android Upgrade Report Card in February that grades manufacturers on their Android 7.0 Nougat upgrades. Several got failing grades, including Samsung, Motorola (Lenovo), LG and BlackBerry.

Samsung wouldn't confirm reports that its Samsung Galaxy S8 and S8+ phones will begin selling unlocked in June, following locked sales through stores on April 21.

The Verge reported last week that pre-orders for the latest unlocked Galaxies will start May 9 from Best Buy. That article put the price for the unlocked S8 with 64 GB at $725 and for the unlocked S8+ with 64 GB at $825 based on information from a Best Buy web page, but Best Buy seems to have removed those promotions from its web site.

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments