IPhone Won't Be Profitable for Sprint Until '15, Early Upgrades Ending June 1
May 16, 2012 2:05 PM
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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.
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,
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.
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Cell phone carriers are a poor person's banking option.
5/16/2012 4:50:48 PM
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."
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
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