Really? Source? I'm with Sprint and I know that they are seeing an increase in both new customers and upgrading customers, and they are on target to fulfill their commitment (in fact, they might fulfill it much sooner than anticipated).
OK. Here's an objective article that lays out the massive bet that Sprint is making:
http://online.wsj.com/article/SB10001424052970203405504576603053795839250.html Note the key line: Sprint has committed to buying 30.5 million iPhones over the 4-year term.
Here's a very recent article of CEO spin which includes some hard numbers:
http://www.bizjournals.com/kansascity/blog/2012/07/sprint-ceo-hesse-big-iphone-bet-is.html
Note the "great quarter" selling 1.5 million iPhones.
4 years = 16 quarters.
30.5 million units/16 quarters = 1.9 million iPhones per quarter.
1.5 million vs. 1.9 million does not seem like a "great quarter."
Here's another with good CEO spin:
http://appleinsider.com/articles/12...rying_apples_iphone_until_2015_has_no_regrets
talking about not making a profit on the iPhone until 2015 (on a 4-year deal started in 2011 and thus completed in 2015).
Note: I reference "spin" because these are the kinds of things Sprint has to say. They have to spin a "bet the company" obligation as favorably as possible else shareholders feel the pain if it is allowed to publicly look bad... and CEO's lose their jobs over decisions that cause too much pain.
Now within the spin, there is this recurring message of this big payoff... down the road. This last one offers 2015 as the year when this bet becomes profitable. It doesn't mean it will work out like that (just the spin says it will... much like Sprint's big bet on WIMAX a few years ago).
Contrast the underlying positives against AT&T and Verizon. Is their iPhone deal such that they won't show a profit on iPhone for 3-4 years out? If it was like that, would they really be pitching "lock in" contracts for only 2 years?
But it's not really about units, it's about revenues. Note:
https://www.macrumors.com/2012/08/1...ce-to-49-with-rebate-and-new-2-year-contract/ which implies that they are cutting price and then cutting price again soon after to try to move inventory. No surprise about cutting prices to clear out "4s" ahead of "5" but it's hard to make the necessary revenue when your "good quarter" of unit sales that falls well short of what it actually needs to be is accomplished by heavily discounting the revenues.
Of course, one might argue that it's much more about the service contract revenue than the unit sales- and it is- but for each discount on the unit, the subsidy that flows to Apple is larger (unless Apple is taking the financial hit with them- do we think that???). So, Sprint believes the bet will be profitable after the term of the bet is over on assumptions that all those Sprint iPhone users will stick with Sprint beyond the end of the (bet) term (rather than say, switching to AT&T or Verizon, or any of the cheaper contract regional or prepaid providers that will certainly be abundantly in place by 2015). Personally, I think 2015 will arrive with genuinely cheaper average contract tolls as the regionals & prepaid plans build pressure on the trio's current rates.
So what is Sprint paying Apple per unit? The Apple revenue side of the deal has been quoted at $20 billion and $15 billion. $20 billion/30.5 million units = $655.37 per unit. $15 billion/30.5 million units = $491.80 per unit. So whether it costs Sprint $491-$655 per unit, Apple is definitely getting theirs in all scenarios. Discounted handsets to try to move more units or to blow out older models just means it will take Sprint more contract revenue to mitigate the hard cost paid out to Apple... which it pays whether it can even sell it's quantity target or not.
We can buy the spin if we wish but read between the lines and/or just do the simple math. Sprint bet big on WIMAX being the "next big thing" too and had rosy revenue forecasts for how that would pay off... until it didn't.
Note: none of this is a put down to the iPhone or Apple at all. Apple will make out very, VERY well on the Sprint bet. They're on the right end of that bet. They got a third party partner to commit to a HUGE volume of units whether that third party can sell all of them or not. My original post was about why T-mobile doesn't have the iPhone (perhaps because they don't want to drink from that same precarious stall?).
All that said, you are right that they are seeing sales of iPhones and increases in subscribers attached to the iPhones they sell. As to the "in fact" part, unless you work at Sprint and are privy to the truth instead of the spin, it might be better to change that to "I believe" or similar.