Apple's iPhone Outsells All Android Phones Combined at Verizon
January 24, 2012 4:18 PM
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Verizon takes a loss, but grows customer base, solidifying its #1 spot
Maybe Sprint Nextel Corp.'s (
bold iPhone gamble
such a bad idea
after all. At a time when many predicted Apple, Inc. (
) to be fading in the smartphone race after
by Samsung Electronics Comp., Ltd.'s (
) slick Android handsets, Apple surged back with the
launch of the iPhone 4S
its iconic voice-controlled assistant, Siri
. Analyst numbers place Apple in a
near dead heat with Android
in December U.S. smartphone sales.
And the situation is looking even better for Apple based on the just-announced
of Verizon Wireless, the joint venture between Verizon Communications Inc. (
) and Vodafone Group Plc. (
For Verizon Wireless it was a lukewarm quarter as a pension charge and another one-time expense brought a net loss of $2.02B USD ($0.71 USD/share), versus the $1.48B USD profit ($0.52 USD/share) it would have recorded without these charges. The company did solidify its American lead, adding 1.2 million new contract subscribers (and 1.46m total new subscribers) bringing its total (contract and non-contract) customers to 108.7m and its contract customer base to 87.4m.
Smartphone sales rose from 39 percent in Q3 2011 to 44 percent in Q4 2011. And the iPhone was king at Verizon. Of the 7.7m smartphones sold by the carrier in Q4 2011, 4.3m (~55%) were iPhones. Again, take that figure in -- the iPhone outsold all Android phones
on America's largest carrier.
The iPhone remains a top draw at Verizon. [Image Source: Reuters]
Of course Verizon pays more for iPhones that the initial carrier AT&T, Inc. (
) did. And Sprint is reportedly paying even more -- so maybe it isn't such a good deal, after all.
It's certainly a good deal for Apple, though, who reportedly pulled in almost $600 USD per Verizon iPhone sold, on models that retail for $200 USD with contract. Verizon is doing its best to recoup this capital expenditure, with a slew of overage fees. Reportedly the average iPhone bill on Verizon was around $100 USD with all the taxes and fees added [
]. Verizon likely pockets $80 of this, meaning that it will haul in $1,920 over the duration of a contract. But it has to deal with the significant costs of network upgrades, power use, land use, employee pay, and more.
Some analysts are convinced that a net profit on an iPhone may be a fatalistic quixotic fantasy. Sanford Bernstein analyst Craig Moffett
Verizon is following in the line of AT&T in deluding itself that it will someday see a profit, but consistently failing to do so. He writes, "The earnings pop will always be a year away."
Still, if America's third and fourth largest carriers -- Sprint and Deutsche Telekom AG's (
) T-Mobile USA -- collapse under
their respective debt
, Verizon and AT&T could soon be able to significantly unilaterally increase contract rates, solving both companies' iPhone profitability dilemma.
The collapse of T-Mobile and Sprint -- a possible scenario -- may hold the key to AT&T and Verizon finally profiting off of their expensive iPhone commitments. [Source: T-Mobile]
Apple is also extremely well positioned under such a scenario, given that it's the top selling model at Verizon and likely near the top at AT&T, as well. The first major test for Apple, though, will be how it responds to the inevitable need to reinvent iOS. On the one hand it can't sit still as Google Inc. (
) unveils its slick latest Android build,
Android 4.0 "Ice Cream Sandwich"
. On the other hand, Apple must tread the fine line of avoiding alienating its largely non-technophile customer base with too gaudy an interface.
Android 4.0 "Ice Cream Sandwich" [Image Source: Google]
For now, though, Apple and its fans can simply savor the thrill of being back near the top of the U.S. smartphone market -- even if challenges await.
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RE: Wake up Geeks
1/25/2012 3:47:01 PM
Most people are not looking to replace all their electronic equipment with a smartphone. The problem of trying is you end up with a big fat power-hungry smartphone that runs out of juice.
RE: Wake up Geeks
1/25/2012 4:31:13 PM
Zlandar - Very true.
I wasn't clear on the point I was trying to make. Let me try again.
The poster says that he uses a smartphone to emails, takes pictures, and updates social networks. Then goes to claim "it's a frigin phone" and you shouldn't look to a phone to replace a PC or console because it ain't going to happen.
The point I was trying to make is: smartsphones are not phones. They are little computers that make calls. This might show my age but my phone right now has more processing power than the PC I used in high school and has a better internet connection! My mother and sister uses their phones to play a variety of games. In their case, the phone would replace a dedicated video game machine. I have a friend that uses the Droid Bionics webtop software and a hdmi connector to hook up the phone to his TV and uses that to browse the internet and use netflix when 4G wants to works. In that case, it replaces a home PC for him.
Maybe it was because the poster drew a line in the sand that said a phone can never replace certain things without realizing that in certain ways, it has. Just a side note, just how many people replaced their tomtoms or other GPS devices with their new smartphone?
It might not be that a smartphone can replace a PC or console but the practically of it. If he would have made that point, I would have agreed. But to say that it can't just doesn't make sense.
"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997
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