Iphone

     In the New York Post they talked about how Verizon stocks have went up, but with a heavy price. The I phone was released a month ago for Verizon and boosted the amount of subscribers to almost 900,000 new ones. This triumphs the AT&T boost when they had the first I phone. The boost though came at a heavy price. Each I phone Verizon activates it costs Verizon a lot more than they sell the phone for. To activate all the I phones they have , its estimated to cost them roughly 880 million dollars. This caused the stocks in Verizon to go down over 2%, but the stocks have been increasing rapidly over the previous five months. 

     This shows how in economics that you have to pay a initial price to get a product going, but once you do you start then making the profit. Verizon's plans are 30 dollars a month for smart phones and soon enough they will turn at 880 million dollars around into a profit.

     Since Verizon released the Iphone 4 AT&T is now selling the Iphone 3 for 50 dollars to keep the same customers.   This is a amazing chain reaction that another company had to make a decision to sell a phone for less to keep customers in their service. Not only does AT&T sell the Iphone 4 for less than it costs them but they also now sell the Iphone 3 for a huge discount too. This subsidizing is just to keep customers in their service. This huge net loss though is a example of a substitute. If people want an Iphone but cant pay the 200$ that is needed for the Iphone 4 then they can get a Iphone 3 from AT&T for 50 dollars.  This is a amazing market strategy in y eyes for AT&T