Last updated: 9 December 2014
Looking at the bigger picture, purchasing of an iPhone is a relatively small part of the total cost of ownership in the USA, where the monthly service charge from the mobile operator is the most costly part of the ownership.
In Brazil it’s the other way around, purchasing of the device is the major expense, while the service charge from the mobile operators can be relatively low.
Brazil is known for selling some of the world’s most expensive iPhones. In this post we are looking beyond the sticker price and trying to establish the TCO of an iPhone in Brazil. Many articles have been written about the cost of electronics in Brazil, including "From Brazil Cost to Brazil Profit: Why are electronics so expensive in Brazil?" by Anna Heim. However, the electronics in Brazil and the iPhone in particular are more or less equally priced with what you find in the Nordic countries.
iPhone can be cheaper in Brazil than in USA!
Looking at the bigger picture, purchasing of an iPhone is a relatively small part of the total cost of ownership in the USA, where the monthly service charge from the mobile operator is the most costly part of the ownership. In Brazil it’s the other way around, purchasing of the device is the major expense, while the service charge from the mobile operators can be relatively low.
Scenario 1: Mobile computing
iPhone used elusively as mobile computer with the cheapest option of mobile data connection on an unlocked phone gives an interesting indication on the TCO difference between Brazil and USA.
In the US, we have used the unlocked version of iPhone available from Apple with the cheapest mobile data plan from Virgin. While in Brazil we have chosen the cheapest unlocked iPhone available in Buscapé with the cheapest data plan available from TIM. The graph clearly shows that after 6.8 months of ownership, the TCO in Brazil is lower than USA.
Scenario 2: Typical Scenario
Comparing a more typical mobile phone service with 60 minutes of voice, 100 SMS messages and 1 GB of mobile data gives us a different picture. As you can see, after 36 months the TCO in Brazil and USA is almost the same. This graph uses the subsidised or financed phones from both the mobile carriers in Brazil and USA. ARPU and beyond
At the end of the day, the only thing that mobile operators care about is the ARPU and although the price of an unlocked iPhone in Brazil is about 50% higher than in USA, the ARPU for mobile operators is 50% lower in Brazil than in USA. The lower ARPU results in a lower monthly service charge for Brazilian consumers. Unlike iPads and iPods, iPhones are a different product and cannot be judged by their sticker price alone, you also have to take service charges into account.
As we have covered before here in this site, mobile data in Brazil is cheap for the time being while the cost of voice is high. If my graphs had displayed service costs for 1000 minutes voice a month the Brazilian TCO would have been 10x higher than in the US. However, despite its name, iPhones are not phones but pocket computers that are more or less useless without a mobile data connection.
If you are interested in analyzing the data you can download the spreadsheet from my OneDrive account. I would also love to have your comments and feedback in the form below.