Quick Note: Sprint to "Bet the Farm" on Apple's Next Generation iPhone
October 3, 2011 4:40 PM
comment(s) - last by
Sprint CEO Dan Hesse
(Source: Mark Costantini/The Chronicle)
Sprint is reportedly committing to purchase 30.5m million iPhones over the next four years
All signs are
pointing towards Sprint getting Apple's next generation iPhone
, and the official announcement will come tomorrow during Tim Cook's keynote address. However, the price that Sprint will have to pay to join the iPhone brotherhood in the U.S. -- along with fellow wireless carriers AT&T and Verizon -- will be tremendous.
According to the
Wall Street Journal
, Sprint has agreed to buy 30.5 million iPhones over the next four years from Apple. The price tag for Sprint is a whopping $20 billion USD. Sprint will be subsidizing the cost of each on-contract phone to the tune of $500.
Another risk for the copmany is the fact that Sprint won't even make any money on the deal until at least 2014.
Sprint CEO Dan Hesse approached Sprint's Board of Directors with the deal, and they were understandably hesitant about betting the company on Apple's smartphone prowess. But in the end, the Board felt that it was fighting a losing battle against larger rivals Verizon and AT&T which both have the iPhone. In addition, if AT&T's
planned acquisition of T-Mobile
were to be approved, its fortunes in the marketplace would be even more dire.
The board eventually decided, "How can we pass this up? We have to have it."
commitment to making unlimited data a priority for its customers
(at a time when
are putting bandwidth caps on users), such a deal could help bolster Sprint's survival chances in this cutthroat industry.
While Hesse and the Board are definitely onboard with the iPhone deal, investors are less thrilled. Sprint shares closed at $2.73, representing a 10.2 percent drop from the opening bell.
Wall Street Journal
This article is over a month old, voting and posting comments is disabled
Not such a risk
10/4/2011 5:07:10 AM
Very good by the numbers analysis of the so called 'Sprint Gamble', turns out it's not so much of a gamble.
RE: Not such a risk
10/4/2011 12:13:32 PM
The numbers that article deals with requires Sprint to increase their Apple sales by about 50% every year with a first year commitment of 4M.
And they won't be 4G - they will be EVDO devices moving to LTE next year. So whenever Sprint fields an LTE network they will be able to have 4G when the real iPhone5 comes out in 2012. We get 4GS this year.
"This is about the Internet. Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis
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