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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RE: Profits are always 12-18 months away
5/16/2012 8:45:33 PM
"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".
"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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