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Print 18 comment(s) - last by semiconshawn.. on May 17 at 8:31 AM

Apple is sure to see a much greater benefit from this iPhone relationship than Sprint

Apple's iPhone is a huge seller both worldwide and in the United States. At first, the smartphone was exclusive to AT&T's wireless networks in the U.S. Just over a year ago, Verizon jumped onboard. And with the launch of the iPhone 4S, Sprint was finally able to provide Apple's popular smartphone to its customers.
 
When the deal was first announced, it was reported that Sprint would purchase 30.5 million iPhone over the course of four years (at a cost of $15.5 billion USD). It was also reported that Sprint wouldn't make any money on the arrangement with Apple until at least 2014.
 
Fast-forward to today, and Sprint CEO Dan Hesse is now pushing back that profitability date until 2015. Hesse still stands by his assertion that "carrying the iPhone will be quite profitable;" shareholders are just going to have to wait a bit longer than they originally envisioned.


[Source: TechnoBuffalo]
 
For anyone that questions Hesse's decision to make a deal with Apple, he simply tells them to take a look at embattled T-Mobile. T-Mobile recently announced that it would be laying off an additional 900 workers in the U.S. and has lost contract customers for 10 straight quarters.
 
T-Mobile is also the only one of America's "Big 4" wireless carriers that doesn't have the iPhone.
 
In other Sprint news, TechnoBuffalo has learned that the wireless carrier will end early upgrades for customers effective June 1. The program allowed customers to upgrade to a new phone within 10 to 14 days of their originally scheduled upgrade date.
 
Granted, waiting an extra two weeks isn't going to be a deal breaker for most people, so we doubt that many Sprint customers will cry themselves to sleep over this move.

Sources: Market Watch, Bloomberg, TechnoBuffalo



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Profits are always 12-18 months away
By tayb on 5/16/2012 2:45:35 PM , Rating: 5
Profits from the iPhone are always 12-18 months away. Carriers eat so much of the upfront costs to get the phone to $200 that it takes them 12-18 months to recoup the costs and start profiting. Just as they are about to enter the black the customer comes back in and upgrades and the process starts over again. This is exactly why we have upgrade fees, huge early termination fees, increased usage charges, and the end of unlimited data. I loathe carriers so it makes me happy to hear they aren't printing money.




RE: Profits are always 12-18 months away
By Ticholo on 5/16/2012 3:10:04 PM , Rating: 2
You should correct that to "... they aren't printing money yet ."
They will... in 12 months...


RE: Profits are always 12-18 months away
By michael2k on 5/16/2012 3:44:35 PM , Rating: 2
Until the newest iPhone comes out with <X> feature that removes a profit stream, ala iMessage or FaceTime or AppStore or Find my iPhone or whatever.


RE: Profits are always 12-18 months away
By Samus on 5/16/12, Rating: 0
RE: Profits are always 12-18 months away
By sprockkets on 5/16/2012 5:58:15 PM , Rating: 2
Yeah, but wimax is dead and not getting any bigger or better.

And for anecdotal evidence, everytime I have no data coverage for sprint (for work), I have coverage for tmobile.

Oh well, get what works for you.


By semiconshawn on 5/17/2012 8:31:16 AM , Rating: 3
Arguing about which is better Sprint or Tmob is like asking if you want the head or the claw of the hammer to your face.


By name99 on 5/16/2012 8:45:33 PM , Rating: 2
"Carriers eat so much of the upfront costs to get the phone to $200 that it takes them 12-18 months to recoup the costs and start profiting. Just as they are about to enter the black the customer comes back in and upgrades and the process starts over again. "

Boo hoo, poor carriers. They COULD, of course, ALSO provide the option that I
- buy the phone at full price
- get a month to month (no two-year) contract AND
- the phone is not carrier locked.

Given that they're unwilling to do this, it's a little hard for me to weep about how much difficulty they're having with their business plan of choice.

The HONEST truth here is that Sprint has made a long series of crappy decisions, from WiMax to getting in bed with the snakes at LightSquared to passing on the original iPhone. Dan Hesse wants to blame Apple because Apple are a convenient target --- but Apple have buggerall to do with his current problems.

To take just one example of Sprint's never-ending incompetence --- if I get an iPhone on Sprint, does it come with unlocked GSM? As far as I know, no it does not. WTF not? Why doesn't Sprint just do this automatically and advertise it as a special Sprint feature --- buy OUR iPhone and, out the box, you can use it anywhere in the world?
This is precisely Sprint's problem --- they have this iPhone commitment now, but they can't decide if they want iPhone to be successful or not. God forbid that they actually consider the question of "what would increase customer satisfaction --- that's completely off their radar".


WP7
By Gunbuster on 5/16/2012 3:41:19 PM , Rating: 1
Wont it be funny if Windows Phone 7 and 8 end up on top with Sprint left holding the iPhone bag...

I left Sprint last year when they put no effort into windows phone and 100% effort into screwing anyone on a SERO plan. I am looking forward to seeing them fail.




RE: WP7
By michael2k on 5/16/2012 3:46:27 PM , Rating: 2
Good luck on that one. How long are you willing to wait, until 2015?


RE: WP7
By Kyuu on 5/16/2012 4:34:41 PM , Rating: 2
Yeah, I think it was a really poor decision to basically stake the entire future of the company on an absurdly expensive iPhone deal. Won't be profitable until 2015? The entire mobile landscape could be completely different by that point.

They should've focused on getting exclusive access to some of the latest and greatest on Android and Windows Phone instead, and putting more captiol into improving their network. A lot of people would love to get away from AT&T and Verizon, but can't because Sprint/T-mobile simply don't have the coverage/capacity they need in their area.


Contract Cost
By cladari on 5/16/2012 9:02:02 PM , Rating: 2
Subsidized phones are a red herring. If I buy a subsidized phone and run through my contract, then renew my contract but keep the same phone does my monthly fee decrease? Does my ETF go away? Why not?

If you ask them they say the monthly is high and the ETF is there to subsidize the phone. That can't be true.




RE: Contract Cost
By djc208 on 5/17/2012 7:12:24 AM , Rating: 2
Because it's money in their pockets. Same way most of these companies will only offer you special discounts when you call to cancel service.

Remember they're looking out for their bottom line, not yours. If you're willing to renew your contract with all the fees and not get a new phone that's you're loss.

Corporations may be people in the eyes of the law, but they're just as soul-less as most lawers. Don't expect moral decisions from them.


I agree
By Ticholo on 5/16/12, Rating: 0
RE: I agree
By gamerk2 on 5/16/12, Rating: 0
RE: I agree
By Ticholo on 5/16/2012 4:20:55 PM , Rating: 2
Yes, I know.
And the guy has a point that not having iPhones on their roster can be a bad thing (though I can't imagine the iPhone is killing T-Mobile), but those upfront costs seem really high for it not to get too risky.


By Boze on 5/16/2012 4:50:48 PM , Rating: 2
One of the biggest reasons we have such ridiculous contracts is because the carrier is subsidizing the price of the phone through those monthly payments. With unlocked phones like the Galaxy Nexus selling for $430 and the Galaxy S II selling for $499, I would imagine if these providers would be completely transparent about actual costs, we'd see that our monthly plans probably have a 60% or above markup.

The problem is that too many people in America have forgotten how to save money for large purchases (which I would argue a $399 to $799 telephone is). They'd rather be fleeced for 24 months. It makes the butt reaming easier to take when it comes in a small amount every month.

This is exactly why I switched over to Virgin Mobile. They don't have the most bleeding edge phones, that's true, but they do have unlimited everything except data (which is capped at 2.5 GB/mo, dropping down to a 256 kbps throughput once over the cap - you never actually get 'cut off'), for $55 a month.

Well worth it IMO, especially since I get 3G speeds in every area in which I travel.

Without doubt though, the biggest problem is the amount of unused spectrum that certain businesses and wealthy individuals are just sitting on, doing absolutely nothing with it. Its some ridiculous number like 90%. And instead of some enormous company like AT&T or Verizon Communications just paying these people whatever they want for the spectrum rights, they just jack up pricing to force out poorer customers, and no CEO will grow the balls necessary to tell shareholders, "Well we're not going to be profitable for the next five years because I'm going to buy 30% of the spectrum in a massive multi-billion dollar deal. Once we own that 30% though, we're going to slash prices by 50% and put every other cellular company out of business."




absurd
By Trisped on 5/16/2012 5:42:03 PM , Rating: 2
quote:
For anyone that questions Hesse's decision to make a deal with Apple, he simply tells them to take a look at embattled T-Mobile.
More likely it is the fact that T-Mobile was going to be bought by AT&T, so all the T-Mobile customers who did not want AT&T made the switch to a new carrier. It is also likely the result of T-Mobile not having LTE.

The thing I just realized is that Sprint is paying over $500 per iPhone. Seems absurd to me.




Excuses Excuses
By zephyrwind69 on 5/16/2012 8:47:33 PM , Rating: 2
To quote Dan Hesse:

quote:
For anyone that questions Hesse's decision to make a deal with Apple, he simply tells them to take a look at embattled T-Mobile. T-Mobile recently announced that it would be laying off an additional 900 workers in the U.S. and has lost contract customers for 10 straight quarters.


Yet realize that Tmo's and ATT's wireless work together. In fact over 1 million iPhones migrated to Tmo when they could be unlocked, article is June 2011:

http://www.tmonews.com/2011/06/t-mobile-says-over-...

Given that this is dated news you predictably argue that there's some variability in this subscriber count; however, can't we conservatively estimate at least 500k subscribers with iPhones on the Tmo network, if not more? In exectuve terms I suppose these would be 'Free' customers in Tmo's eyes.

On the other end we get more excuses courtesy of Tmo's executive team just last quarter 2012. They argue that not having the iPhone is placing them at a technical disadvantage.

http://money.cnn.com/2012/02/23/technology/t-mobil...

Does anybody on wall street really buy that excuse?!




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