Go Back   MacRumors Forums > Mac Community > Community Discussion > Apple, Industry and Internet Discussion

Reply
 
Thread Tools Search this Thread Display Modes
Old Feb 9, 2012, 02:50 AM   #1
AppleScruff1
macrumors 604
 
AppleScruff1's Avatar
 
Join Date: Feb 2011
The iPhone is a nightmare for carriers

Why do the carriers fight to have the iPhone when it hurts their bottom line? Sprint will lose billions in the next few years just for the privilege of selling the iPhone. It has hurt all of their bottom lines. Why do they even bother subsidizing the phone? Why not let Apple sell the phone and the carriers sell service? Is this good long term business sense?

Quote:
NEW YORK (CNNMoney) -- The iPhone may be great for consumers, but takes a nasty toll on wireless carriers' bottom line.
The price of Apple's (AAPL, Fortune 500) iconic smartphone is heavily discounted by carriers. Those subsidies almost single-handedly devastate profit margins for Verizon, AT&T and Sprint.

Since Apple's iPhone debuted on Verizon's network in February 2011, Verizon's "EBITDA service margin" -- a closely watched metric that carriers use to measure their core profit as a percentage of their sales -- has tumbled.
Between 2009 and 2010, Verizon (VZ, Fortune 500) averaged EBITDA service margin of 46.4% per quarter. In the first quarter that the iPhone went on sale, that fell to 43.7%. Last quarter, when Verizon sold a record 4.2 million iPhones, its margin plunged to 42.2%.

Verizon had just one "good" stretch this year: The third quarter, when its margin bounced back up to a record 47.8%. That's the same quarter in which iPhone sales stalled, as customers waited for Apple to unveil its heavily anticipated new model.

AT&T (T, Fortune 500) and Sprint suffered an even worse fate. AT&T posted a stunning 28.7% EBITDA service margin last quarter, compared with 37.6% a year earlier. One contributing factor: AT&T sold nearly twice as many iPhones as Verizon last quarter.

After selling nearly 2 million iPhones last quarter, Sprint's adjusted wireless margin fell to 9.5%, down from 16% a year ago. The company said Wednesday morning that its margin was significantly lower than it would have been without the iPhone subsidy.
Full article: http://money.cnn.com/2012/02/08/tech....htm?iid=HP_LN

Last edited by AppleScruff1; Feb 9, 2012 at 02:56 AM.
AppleScruff1 is offline   -5 Reply With Quote
Old Feb 9, 2012, 03:04 AM   #2
mrsir2009
macrumors 604
 
mrsir2009's Avatar
 
Join Date: Sep 2009
Location: Melbourne, Australia
Sure, the iPhone is subsidized, but doesn't the carrier make that money back by the customer paying their bill every month for two years (or however long they're lock into their contract)? I'm confused
mrsir2009 is offline   8 Reply With Quote
Old Feb 9, 2012, 03:45 AM   #3
thewitt
macrumors 68000
 
thewitt's Avatar
 
Join Date: Sep 2011
This has nothing to do with the iPhone and everything to do with being competitive.

If these carriers want to sell their services, they need to be competitive, which means lower margins... When AT&T had a monopoly, they could get away with higher prices. Now that there are options, everyone has to run leaner.
thewitt is offline   5 Reply With Quote
Old Feb 9, 2012, 06:21 AM   #4
*LTD*
Banned
 
Join Date: Feb 2009
Location: Canada
And yet, carriers are falling all over themselves to get it. The iPhone makes them relevant.
*LTD* is offline   2 Reply With Quote
Old Feb 9, 2012, 06:33 AM   #5
wpotere
Guest
 
Join Date: Oct 2010
They just got it and are just now finding out what it is doing to them. I think the "fighting" is over.

Some will likely try to steer others towards different phones. Also, saying Verizon wasn't "relevant" before the iPhone is a little ridiculous. I know a lot of people that were not willing to move to AT&T from Verizon because they like the service.
wpotere is offline   4 Reply With Quote
Old Feb 9, 2012, 06:39 AM   #6
SuperCachetes
macrumors 6502a
 
SuperCachetes's Avatar
 
Join Date: Nov 2010
Location: Away from you
That is a very misleading article. Their margin may have fallen percentage-wise, but I suspect they did not lose the income they would've had they not had the iPhone, and they obviously got new subscribers because of the iPhone.

Take my example, which isn't uncommon - I was on Verizon in 2007 and only switched to AT&T for the iPhone. Since joining AT&T, they may have subsidized a couple of phones, but I have also bought at least one at full-price. Over 4+ years I have paid well over $4000 for monthly service. That counts for something to AT&T, regardless of what % of it is profit.
SuperCachetes is offline   5 Reply With Quote
Old Feb 9, 2012, 06:42 AM   #7
*LTD*
Banned
 
Join Date: Feb 2009
Location: Canada
Quote:
Originally Posted by wpotere View Post
They just got it and are just now finding out what it is doing to them. I think the "fighting" is over.

Some will likely try to steer others towards different phones. Also, saying Verizon wasn't "relevant" before the iPhone is a little ridiculous. I know a lot of people that were not willing to move to AT&T from Verizon because they like the service.
Consumers want iPhones. Demand is sky-high. That's all there is to it.
*LTD* is offline   0 Reply With Quote
Old Feb 9, 2012, 07:00 AM   #8
roadbloc
macrumors 604
 
roadbloc's Avatar
 
Join Date: Aug 2009
Location: UK
Quote:
Originally Posted by *LTD* View Post
Consumers want iPhones. Demand is sky-high. That's all there is to it.
Consumers can want all they want, if companies don't see them as a decent profit maker, they won't bother with them.
__________________
roadbloc is offline   0 Reply With Quote
Old Feb 9, 2012, 07:21 AM   #9
*LTD*
Banned
 
Join Date: Feb 2009
Location: Canada
A losing proposition, or an investment?

Quote:

http://www.kansascity.com/2012/02/08...tract-new.html

iPhone sales attract new customers, balloon Sprint’s losses

Subsidies for iPhone, improving wireless network hurt bottom line, CEO says, but will pay off later. Analysts remain cautious.

After four struggling years, Sprint Nextel Corp. says it has reached a turning point in the wireless carrier’s long turnaround.

The Overland Park-based company boasted Wednesday in its year-end report that it is gaining customers and revenues.


And the $1.3 billion in losses it reported — the worst quarterly hit since 2008 — came from weighty investments in the company’s future, not from the customer satisfaction and wireless service miscues of its past.

Sprint began to spend heavily to provide iPhones, which it offered for the first time in October. And it opened its wallet to begin a two-year upgrade of its wireless communications network.

Although analysts have concerns about Sprint’s plan, chief executive Dan Hesse declared the company fundamentally fit and ready for investment after four years of laboring to end its problems.

“It’s (been about) getting the company healthy again,” Hesse said. “It’s being healthy enough to take on these two big investments.”

In Sprint’s calculations, the payoff from its growth plans won’t come for a couple more years. Sprint is counting on the network changes to cut in half its cost of providing service even as its customer count and revenues continue to grow. More money then would end up in Sprint’s pockets.

“That’s the tailwind going into future years,” Hesse said.

Analysts weren’t sure of the company’s chances for reaching such a distant horizon, given the plan’s complexity and the industry’s intense competition.

“This year and next are going to be unattractive financially. I think people who own Sprint might be looking more toward the prospects in 2014,” Barclays Capital analyst James Ratcliffe told Bloomberg News.

Sprint shares shed 4 cents Wednesday and closed at $2.41.

Last year saw unprecedented competition among the big three carriers for customers in a slow-growing market. The industry reeled first at the news that No. 2 wireless operator AT&T Inc. would buy No. 4 T-Mobile USA, and again when regulators killed the deal.

“Welcome to the wireless industry,” Hesse said. “It’s the wild west.”

Sprint said iPhones helped it add 1.6 million subscribers in the final three months of 2011.

It now serves a record 55 million customers, in part because 40 percent of those iPhones went to new subscribers rather than to upgrade existing customers’ phones. Sprint heavily promotes its unlimited data plans for smartphones.

Revenues got a boost from a biggest-ever jump in the average customer’s bill. At $8.7 billion, Sprint’s revenues were up 5 percent over the same quarter last year and the highest they’ve been since summer 2008.

Sprint’s $1.3 billion loss jumped 40 percent from a year ago.


Blame that second phase of Sprint’s plan — investing for the future.

Every one of those iPhones cost Sprint hundreds of dollars because, like other carriers, it charges customers less for the phones than it pays Apple Inc.

But Sprint sees each iPhone subsidy as a down payment on the even greater amount of revenue those customers will deliver in coming years. The company expects to attract more customers with the iPhone and to keep them longer — adding revenues it otherwise would not collect.

Earnings also suffered from the early costs of rolling out Sprint’s advanced wireless network of towers, radios and other equipment. Network Vision, as Sprint calls the upgrade, has advanced on schedule and on budget but will take two more years of heavy spending to complete.

Network Vision, however, allows Sprint to start shutting down its Nextel network that has kept its costs to provide service much higher than the costs of rival carriers. For example, Sprint will be able to shed 30,000 of the 68,000 cellular towers it currently uses.

Ending Nextel also means each of its remaining 6.25 million customers — most subscribing through business plans — will find new service as their employers seek bids from several carriers. Sprint is likely to attract a disproportionate share to its growing Sprint network, but it won’t keep them all, Hesse said.

By then, Hesse said, Sprint’s network upgrade will have cut in half the cost of each gigabyte of wireless capacity it provides to customers. And the company will continue to build revenues with more customers and higher average bills.

Sprint’s new phase, its investment in growth, marks a sharp break from its previous four years.

The company — badly damaged by its 2005 merger with Nextel Partners — struggled to restore its brand name, slashed costs and scrimped on investments in its two networks.

Hesse said the company “saved” $10 billion it might have spent in the last four years until now — when the network technology it wanted became available.

Sprint had been trimming its losses last year ahead of the fourth-quarter jolt. For all of 2011, it lost $2.89 billion instead of the $3.47 billion it lost a year earlier.

Revenues neared $32.7 billion, a 3 percent improvement over 2010.

Read more here: http://www.kansascity.com/2012/02/08...#storylink=cpy
*LTD* is offline   -4 Reply With Quote
Old Feb 9, 2012, 07:37 AM   #10
belvdr
macrumors 68040
 
Join Date: Aug 2005
Quote:
Originally Posted by *LTD* View Post
Consumers want iPhones. Demand is sky-high. That's all there is to it.
Stop the generalizations. I just got a flip phone, leaving smartphones behind, as did my wife. I see plenty of people without a smartphone (of any brand).

So, no, not all consumers want an iPhone.
belvdr is offline   -3 Reply With Quote
Old Feb 9, 2012, 07:42 AM   #11
imahawki
macrumors 6502a
 
Join Date: Apr 2011
Quote:
Originally Posted by belvdr View Post
Stop the generalizations. I just got a flip phone, leaving smartphones behind, as did my wife. I see plenty of people without a smartphone (of any brand).

So, no, not all consumers want an iPhone.
I know MR is not debate club but you just countered a statistically supported generalization with ANECDOTAL evidence.... LOL
imahawki is offline   0 Reply With Quote
Old Feb 9, 2012, 07:50 AM   #12
*LTD*
Banned
 
Join Date: Feb 2009
Location: Canada
Soon all feature phones will be smartphones.

Quote:
Originally Posted by belvdr View Post
Stop the generalizations. I just got a flip phone, leaving smartphones behind, as did my wife. I see plenty of people without a smartphone (of any brand).

So, no, not all consumers want an iPhone.
Quote:

http://www.csmonitor.com/Innovation/...Android-iPhone

http://www.csmonitor.com/Innovation/...e-phones-aside

Apple now third largest phonemaker, pushing feature phones aside

New data shows the worldwide breakdown of mobile phone sales in 2011. Feature phones are increasingly being replaced by smart phones, with top-tier models from Apple and Samsung leading the pack.

There's no stopping the rise of the smart phones now.

We've known for a long time that regular cell phones, also called feature phones, are on the wane. The latest numbers from market research firm IDC confirm the trend, but their biggest surprise is how much the iPhone has risen: Apple jumped ahead of LG to become the third-biggest worldwide vendor of mobile phones this year, trailing only Nokia and Samsung.

Although cheaper feature phones still made up the majority of sales in 2011, smart phones are gaining. A lot of that growth is thanks to Apple -- the iPhone now makes up 6 percent of the total market, compared to 4 percent last year and 2 percent the year before that.

There's still a pretty big gap separating Apple from Nokia and Samsung, though: Nokia controlled 27 percent of the market in 2011, and Samsung controlled 21.3 percent. A lot of that share comes from feature phones (remember, Apple's only model is the iPhone), although both companies have been making waves with high-end smart phones. Nokia took a hit while retiring its Symbian OS, but it recently launched the Lumia line running Windows Phone 7 software, and early reactions have been pretty positive.

Samsung, meanwhile, is rising steadily thanks to Android devices (the Galaxy S II and Galaxy Nexus handsets in particular) and Windows Phone 7 ones (including the Focus Flash and Focus S models). Although Samsung's overall market share is boosted by a healthy bulk of feature phones, it actually trails Apple in the smart phone market.

It's been a bit of a rough year for LG, the fourth-largest phone vendor. Its selection of smart phones isn't as robust as Nokia's, Apple's, or Samsung's, and feature phone sales are down from 2010. LG finished 2011 with 5.7 percent of the market, followed closely by Chinese manufacturer ZTE with 4.0 percent. ZTE is mainly known for low-end feature phones, but it, too, has been making roads lately with some smart phone models.

Overall, the mobile phone market grew at a healthy clip of 11.1 percent during 2011, but that's down from 18.9 percent in 2010. IDC says the statistics indicate that the phone market is "not immune to weaker macroeconomic conditions worldwide," but also expects brisk growth in 2012 as more consumers gravitate toward smart phones.
Quote:
Originally Posted by roadbloc View Post
Consumers can want all they want, if companies don't see them as a decent profit maker, they won't bother with them.
Apparently, carriers are indeed "bothering with them."

http://news.yahoo.com/apple-posts-re...214518686.html

To the tune of:

http://www.pcworld.com/article/24919...one_maker.html

Last edited by *LTD*; Feb 9, 2012 at 08:02 AM.
*LTD* is offline   -7 Reply With Quote
Old Feb 9, 2012, 08:31 AM   #13
roadbloc
macrumors 604
 
roadbloc's Avatar
 
Join Date: Aug 2009
Location: UK
Well there we go then. The iPhone obviously isn't too much of a nightmare for carriers to discontinue them. But that still doesn't prove that carriers will continue if the nightmare becomes worse, just because there is consumer demand. Would you go to the large trouble of selling something for a very small profit just because customers want it? I wouldn't, I'd keep my company afloat.
__________________
roadbloc is offline   1 Reply With Quote
Old Feb 9, 2012, 08:31 AM   #14
belvdr
macrumors 68040
 
Join Date: Aug 2005
Quote:
Originally Posted by imahawki View Post
I know MR is not debate club but you just countered a statistically supported generalization with ANECDOTAL evidence.... LOL
Statistically supported? What statistics say all consumers want an iPhone? There are none that say so, because it simply isn't true.

Quote:
Originally Posted by *LTD* View Post
Soon all feature phones will be smartphones.
Feature phones certainly have changed since my last one, for sure. I noticed that my last feature phone (around 2003) was much faster than this one. This one has some email/web capability, but I have data blocked as I don't need it.
belvdr is offline   1 Reply With Quote
Old Feb 9, 2012, 08:47 AM   #15
wpotere
Guest
 
Join Date: Oct 2010
Quote:
Originally Posted by *LTD* View Post
Consumers want iPhones. Demand is sky-high. That's all there is to it.
Most of the people I know don't have them and don't want them but I digress. Although I agree the iPhone is in demand, these companies are still taking a hit as they now have to upgrade their networks to keep up with the data demand that the iPhone puts on their networks. This cost is not recovered from iPhone sales so there is a loss. Simple math...
wpotere is offline   0 Reply With Quote
Old Feb 9, 2012, 08:47 AM   #16
thewitt
macrumors 68000
 
thewitt's Avatar
 
Join Date: Sep 2011
Quote:
Originally Posted by roadbloc View Post
Well there we go then. The iPhone obviously isn't too much of a nightmare for carriers to discontinue them. But that still doesn't prove that carriers will continue if the nightmare becomes worse, just because there is consumer demand. Would you go to the large trouble of selling something for a very small profit just because customers want it? I wouldn't, I'd keep my company afloat.
It depends on volume.

If I can sell 2M iPhones a quarter at 18% margins, but only 200k other phones at 50% margins, I will continue to offer both...
thewitt is offline   2 Reply With Quote
Old Feb 9, 2012, 08:54 AM   #17
GoCubsGo
macrumors Nehalem
 
GoCubsGo's Avatar
 
Join Date: Feb 2005
Quote:
Originally Posted by wpotere View Post
Most of the people I know don't have them and don't want them but I digress. Although I agree the iPhone is in demand, these companies are still taking a hit as they now have to upgrade their networks to keep up with the data demand that the iPhone puts on their networks. This cost is not recovered from iPhone sales so there is a loss. Simple math...
It's also not covered by payment over the course of the contract. One cannot assume that the margin is narrowed by way of repaying the contract over 24 months because it is a well known fact that most carriers allow the 24 month contract to end in 18 if you upgrade to the newest iPhone. If they're saying that somewhere in that 24 months the negative turns into a positive, allowing the premature cancellation of a contract in place of a new one causes a shift and a negative amortization effect, for lack of better words.
GoCubsGo is offline   0 Reply With Quote
Old Feb 9, 2012, 09:00 AM   #18
Menel
macrumors 601
 
Menel's Avatar
 
Join Date: Aug 2011
Location: Atlanta
Good thing I'm not much a fan of the carriers.
Turning into a pretty big fan of Apple.

=) I see nothing wrong with this news post.
__________________
iPhone 6 • iPad Air • Mac mini (2011)
Menel is offline   1 Reply With Quote
Old Feb 9, 2012, 09:03 AM   #19
*LTD*
Banned
 
Join Date: Feb 2009
Location: Canada
As usual, Dilger's comments are especially lucid, and point to the bigger picture.

Quote:

http://www.appleinsider.com/articles...to_get_it.html

Mobile carriers hate not having iPhone, pay premiums to get it

A flurry of reports have insinuated that the larger upfront subsidies carriers pay to gain access to the iPhone are "not good for wireless carriers," with one blog claiming "carriers hate the iPhone," despite facts indicating the opposite.

The seed report behind these claims originated with CNNMoney, which ran a story today claiming "the iPhone is a nightmare for carriers," explaining that "The iPhone may be great for consumers, but takes a nasty toll on wireless carriers' bottom line."

"Nasty bottom line" visible in iPhone launch quarters

It recounted how Verizon earned margins of 46.4 percent per quarter in 2009 and 2010, which dropped to 43.7 percent when the US carrier began selling iPhones last spring and subsequently "plunged" to 42.2 percent after signing contracts for 4.2 million iPhones in final quarter of last year.

It noted Verizon's margins jumped up to 47.8 percent in the third calendar quarter, a period of delayed iPhone sales that gave the carrier a greater mix of higher margin alternative smartphones.

The report noted even greater horror for AT&T and Sprint; the former's margins dropped from 37.6 to 28.7 percent over the past year, while the latter's margins dropped from 16 percent to 9.5 percent during its iPhone launch.

Jumping to conclusions

CNNMoney writer David Goldman cited Mike McCormack, an analyst at Nomura Securities as stating, "a logical conclusion is that the iPhone is not good for wireless carriers!"

McCormack added, "when we look at the direct and indirect economics that Apple has managed to extract from the carriers, the carrier-level value destruction is quite evident."

The primary reason for this is the industry leading subsidy that Apple demands from carriers, about $450. But Apple also regularly asks for large volume sales commitments from its carrier partners and cuts into the carriers' efforts to push adware or other bundled services onto new devices, sell apps and media, and manage subscribers' phone support.

Ask the carrier, not the analyst

With all the muscle Apple is flexing in its negotiating efforts with mobile carriers, Sprint has estimated that "the cost of adding an iPhone customer is about 40% higher than the cost for the average non-iPhone customer," according to the report.

And yet Sprint's chief executive Dan Hesse said that he expects, eventually, that Apple's iPhone will be "our most-profitable device." The report also referenced an interview with Hesse from last October when the company was new to selling iPhones.


At the time, Hesse reported that the primary reason customers gave for leaving Sprint prior to October was because it had no iPhone. T-Mobile similarly reported that its lack of the iPhone was the primary culprit for its inability to attract and retain customers.

Hesse stated, "It comes down to, 'Do you want to be with them or bet against them?' Apple is arguably the best global brand in the tech space."

So rather than "hating" iPhone as a nightmare, carriers actually dream about the prospects of selling it. The upfront lower margins in launch quarters are won back over the two year terms of users' contracts.


Who pays for iPhone subsidies?

CNNMoney noted that "carriers have been gradually hiking prices," as well as canceling unlimited data plans and discontinuing older subsidy promotions like Verizon's "New Every Two" program.

"Apple isn't the only factor, of course," the report backtracks, noting that carriers are also investing billions to build out expensive LTE networks that are not yet attracting huge volumes of customers. Verizon has consistently reported having sold more iPhones than 4G LTE handsets.

Some of the infrastructure and premium iPhone subsidy costs are being passed along into the price tag of high end Android phones, which a minority of fans will buy regardless of their price. In many cases, those phones are at least $100 more than comparable iPhone models.

Those 4G Android users are also working out the bugs, preparing for a better experience once LTE chipsets are optimized and Apple beings adding the feature to its own wireless devices.

Who failed to anticipate the future revenues on contract sales?

Which brings the story back to its source: Nomura Securities. Is the firm encouraging carriers to abandon the iPhone and rely on alternative products that have less clout to demand higher subsidies for buyers? That was Verizon's strategy in 2010, but it didn't work well to attract and retain buyers or Verizon wouldn't have switched to Apple by the end of the year.

Nomura previously generated headlines in 2008 after claiming that Apple's recently launched iPhone 3G suffered reception problems related to an "immature" chipset solution from Infineon and stating it would be "unlikely that Apple can rectify the issue through software updates," suggesting a massive recall would be needed.

This wasn't the first time this had happened however; Nomura analyst Richard Windsor had also published a research note in the fall of 2007 suggesting that the original iPhone would likely suffer problems due to a faulty industrial design using “a chemical deposition to provide touch sensitivity based on heat,” and said Apple might have to recall millions of faulty units. But the iPhone didn't ever use touch sensitivity based on heat.

Keep in mind that Nomura also expects "Apple's tablet market share gains to peak around fiscal 2012-13, with Google and Microsoft 'emerging as powers in the tablet OS market.'" The firm specifically added that "despite softening demand for personal computers and netbooks, PC OEMs are proving to be in a stronger position than smartphone makers to capitalise on tablet sector growth."
*LTD* is offline   3 Reply With Quote
Old Feb 9, 2012, 09:09 AM   #20
jayducharme
macrumors 68020
 
jayducharme's Avatar
 
Join Date: Jun 2006
Location: The thick of it
As many articles have pointed out, Sprint is willing to take the short-term hit to realize long-term gains. The iPhone brought them a new customer base of 40%! That's huge! And people who sign on to a new carrier will often renew with that carrier. When the carrier subsidizes a $700 device once and from that brings in $1400 over two years, that's not a bad deal for the carrier. And I wouldn't doubt that any loss the company takes from the subsidy can at least partially be written off in their taxes.

I think if Apple had forced their original AT&T revenue sharing agreement on other carriers, the iPhone wouldn't be expanding nearly as quickly.
jayducharme is offline   3 Reply With Quote
Old Feb 9, 2012, 10:01 AM   #21
rhett7660
macrumors G3
 
rhett7660's Avatar
 
Join Date: Jan 2008
Location: Sunny, Southern California
Quote:
Originally Posted by roadbloc View Post
Consumers can want all they want, if companies don't see them as a decent profit maker, they won't bother with them.
And yet the companies still want the iPhone regardless of the losses they are taking right now. Seems to me they are bothered by not having them.
__________________
"It's quite an experience to hold the hand of someone as they move from living to dead."
"Times are looking grim these days, holding on to everything, it's hard to draw the line"
rhett7660 is offline   2 Reply With Quote
Old Feb 9, 2012, 10:13 AM   #22
kdarling
macrumors Demi-God
 
kdarling's Avatar
 
Join Date: Jun 2007
Location: Device engineer 30+ yrs, touchscreens 23+.
Quote:
CNNMoney noted that "carriers have been gradually hiking prices," as well as canceling unlimited data plans and discontinuing older subsidy promotions like Verizon's "New Every Two" program.
Exactly. Those of us who used smartphones for over a decade have seen a lot of changes because of the iPhone popularity, and it hasn't all been for the better.

Nowadays the airwaves are far more crowded, some promotions have gone, ETFs have skyrocketed and data plans cost more.

OTOH, apps are cheaper and new phone models come out faster (non-Apple phones, I mean).

Quote:
Some of the infrastructure and premium iPhone subsidy costs are being passed along into the price tag of high end Android phones,
Nonsense. There's not enough sold to do that, and their price quickly drops.

The high price tag for hot Android models is a) because they can and b) because most of those high end users are legacy unlimited data owners.

--

As for the subsidy, that's a loan to the customer, and is figured into the plan prices... and the long term cost of doing business.

AT&T has stated before that, on the average, they get repaid for the iPhone subsidy (or any subsidy for that matter) around the 20th month of a contract.
kdarling is online now   0 Reply With Quote
Old Feb 9, 2012, 11:12 AM   #23
AppleScruff1
Thread Starter
macrumors 604
 
AppleScruff1's Avatar
 
Join Date: Feb 2011
Quote:
Originally Posted by *LTD* View Post
And yet, carriers are falling all over themselves to get it. The iPhone makes them relevant.
Sprint may well be broke before they fulfill their deal with Apple. And without improving their network, how long are people going to stay for the unlimited data at slower than dial up speeds? And Verizon did just fine without the iPhone.

Quote:
Originally Posted by roadbloc View Post
Consumers can want all they want, if companies don't see them as a decent profit maker, they won't bother with them.
If they don't make a profit on the service with the phone or it doesn't lead to more customer spending somewhere, there's not much point in it. If you buy apples for a dollar and sell them for a dollar, you have to sell a lot of apples to make a profit.


Quote:
Originally Posted by rhett7660 View Post
And yet the companies still want the iPhone regardless of the losses they are taking right now. Seems to me they are bothered by not having them.
Which raises the question, why? Why not let the consumer buy the phone from Apple and the service from the carrier of their choice?
AppleScruff1 is offline   -1 Reply With Quote
Old Feb 9, 2012, 11:45 AM   #24
MacNut
macrumors P6
 
MacNut's Avatar
 
Join Date: Jan 2002
Location: CT
Quote:
Originally Posted by *LTD* View Post
As usual, Dilger's comments are especially lucid, and point to the bigger picture.
Stop bolding your articles, it makes them hard to read and is very obnoxious.
__________________
The thoughts in my head are rated TV-MA. Viewer discretion is advised.
Now batting, Number 2 Derek Jeter, Number 2
MacNut is online now   2 Reply With Quote
Old Feb 9, 2012, 12:13 PM   #25
LethalWolfe
macrumors Demi-God
 
LethalWolfe's Avatar
 
Join Date: Jan 2002
Location: Los Angeles
The reality of the situation is that Apple, because of such strong consumer demand for their products, is able to strong arm anyone they do business with (be it part suppliers, manufacturers or cell phone carriers) and their partners live on the hopes that the expense of doing business with Apple will eventually be outweighed by the profit/prestige of doing business with Apple. Whether or not this is sustainable for the long haul is the question. Welcome to the new Apple Tax.

Not to make this thread any more inflammatory, but this is basically the same thing Walmart does in the retail space. They squeeze their suppliers to the point of little to know profits.

W/regards to Sprint's CEO, does anyone expect him to not publicly be optimistic? I mean, do you actually think he's going to come out and bitch about the $15 billion hail marry pass to save the company? I don't think so.


Lethal
__________________
Looking For Lenny - documentary about comedian Lenny Bruce's timeless impact on stand-up comedy & Free Speech.
Netflix, iTunes, Amazon, Hulu
LethalWolfe is offline   4 Reply With Quote


Reply
MacRumors Forums > Mac Community > Community Discussion > Apple, Industry and Internet Discussion

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Similar Threads
thread Thread Starter Forum Replies Last Post
iPhone 5s Top-Selling Smartphone at All U.S. Carriers, iPhone 5c Takes Third MacRumors MacRumors.com News Discussion 230 Jan 23, 2014 03:06 PM
iPhone 5s Tops Sales Charts at Major U.S. Carriers as iPhone 5c and Galaxy S4 Battle for Second MacRumors iOS Blog Discussion 86 Dec 9, 2013 07:31 AM
U.S. Regional Carriers Announcing October 1 Launch Date for iPhone 5s and iPhone 5c [Update: Canada Too] MacRumors MacRumors.com News Discussion 50 Oct 9, 2013 10:57 AM
iPhone 5C carriers swarmster iPhone 1 Sep 3, 2013 12:00 PM
Just a thought...about Carriers and iPhone 5 Macguy76 iPhone 11 Sep 19, 2012 09:05 AM

Forum Jump

All times are GMT -5. The time now is 09:16 PM.

Mac Rumors | Mac | iPhone | iPhone Game Reviews | iPhone Apps

Mobile Version | Fixed | Fluid | Fluid HD
Copyright 2002-2013, MacRumors.com, LLC