The Carriers should just say NO! to Apple.

[SeaKing]

The Carriers should just say NO!

For carriers, the iPhone is a bittersweet drug
by Roger Cheng January 26, 2012 6:51 AM PS

"Could the wireless carriers actually be addicted to the iPhone?

By now, it's well understood that the iPhone is a double-edged sword for the wireless carriers. On one side, Apple's smartphone is a pricey device to carry, requiring an unusually high subsidy that carriers must pay to keep it affordable enough for the masses. On the other, it leads to more loyal customers who pay more each month.

Furthermore, the telecom companies get to wrap themselves in the hip vibe that Apple brings to its products and partners, and can you put a price on being cool?

Apparently, you can, and it's a steep one. The dilemma for the carriers is that with each successful quarter of iPhone sales, there is a corresponding hit to their profit as a result of the extra subsidies paid out, as illustrated by Verizon and AT&T's fourth-quarter results. (Sprint Nextel hasn't reported yet, but will likely see a similar impact.)... "

http://news.cnet.com/8301-1035_3-573...CmoreStories.0

Personally, I think my relatives and friends are crazy to pay for an iPhone as much as they do. I didn't know the carriers were crazy too.

[Dylrob]

I suspect the carriers are more upset that they don't get to slap all their logos and proprietary services on the iPhone.

[heySkippy]

LOL! Not gonna happen. iPhone was 81% of all smartphones sold by AT&T last quarter. (7.6 million iPhones vs. 9.4 million total smartphones).

[RainingLemur]

Sprint, meanwhile, has more at stake than anyone else. The company has basically bet its financial future on the success of the iPhone, reportedly committing to pay Apple $20 billion for 30 million iPhones for the next four years.

Holy batflaps, grandma. That's a lot of money.

I hope this doesn't make me too bad of a person...But, if/when the iPhone crashes, I'll laugh heartily. Not because of Apple failing, but because of the carriers putting so much faith in one thing, and then they'll have to scurry to pick up the pieces.

[elcreative]

Originally Posted by RainingLemur

Holy batflaps, grandma. That's a lot of money.

I hope this doesn't make me too bad of a person...But, if/when the iPhone crashes, I'll laugh heartily. Not because of Apple failing, but because of the carriers putting so much faith in one thing, and then they'll have to scurry to pick up the pieces.

After their last quarter's sales I really recommend that you don't hold your breath waiting for this to happen... unless you like the colour blue...

[SeaKing]

I no longer think I know much about money and investments.

I try to be frugal, and just deal in cash these days. If I have extra money I just sock it away in a safe deposit box so the government and other people can't track it. (These days you don't lose any or very much interest doing that.) I usually pay the total for purchases up front or on one of those interest free 90 day things, and avoid borrowing money. The reasons are many and varied. If I can, I pay for things and services with things and services of my own. I trade a lot. No taxes, no record.
I lost a lot of money in the dot.com bust and more in the housing bust. I have been cheated. I bought a few houses for some ex-wives, but I have already covered that.

Anyway, I think the carriers are using that old plan of "trying to make up for losses on each unit, with volume." Even I have learned that doesn't work.

[heySkippy]

They do make it up. 2 years of contract @ $35 a month for a data plan more than makes up for the $400 subsidy to Apple.

[ilovejedd]

Originally Posted by SeaKing

Anyway, I think the carriers are using that old plan of "trying to make up for losses on each unit, with volume." Even I have learned that doesn't work.

They're not making up for the deep subsidies simply via volume. They do that by locking you into a 2-year contract ($55/month minimum but usually $80 or higher more often than not) with hefty early termination fees. Granted, because of the deeper subsidies, it does mean they make less profit on iPhone customers than they do on, say, Android or WP7 users but make no mistake, they still do rake in a lot of profit. Verizon initially said no to the iPhone (mostly because of the lack of control). It would appear that Verizon has weighed the pros and cons and figured that the pros outweighed the cons or they wouldn't be carrying the iPhone now.

It would be interesting to see whether Apple can maintain its dominance with Jobs gone.

[SeaKing]

heySkippy quote:
"They do make it up. 2 years of contract @ $35 a month for a data plan more than makes up for the $400 subsidy to Apple. "

Originally Posted by ilovejedd

They're not making up for the deep subsidies simply via volume. They do that by locking you into a 2-year contract ($55/month minimum but usually $80 or higher more often than not) with hefty early termination fees. Granted, because of the deeper subsidies, it does mean they make less profit on iPhone customers than they do on, say, Android or WP7 users but make no mistake, they still do rake in a lot of profit. Verizon initially said no to the iPhone (mostly because of the lack of control). It would appear that Verizon has weighed the pros and cons and figured that the pros outweighed the cons or they wouldn't be carrying the iPhone now.

It would be interesting to see whether Apple can maintain its dominance with Jobs gone.

Hey guys and gals. Read the article. Verizon lost money.

And one thing I am still not sure about is how that the customers upgrading also costs them money.
Explain that someone! If a customer enters into a 2 year contract and gets a subsidy for the first iPhone, and then 6 months or a year down the road, decides to upgrade the iPhone which would bump them into another 2 year contract, do they then get another subsidy?

I could see that really playing hell with the bottom line. And those iPhone users upgrade every time the color changes, or they add a suffix to the number.

[leebase]

The carriers pay upfront for the iPhone subsidy (as they do ALL of their phones)...and make it back, and then some, monthly.

Lee

[wannabee]

I bought one for my wife for Christmas. $1 delivery, nothing up front.
I pay $60 a month. 1.5 gig data, free sms, $500 calls @ 90c minute.
She thinks the sun shines from my "you not what".

Spoiler:

The music dock cost me two hundred bucks for her birthday this week

[twowheels]

Originally Posted by leebase

The carriers pay upfront for the iPhone subsidy (as they do ALL of their phones)...and make it back, and then some, monthly.

This might be the key... they (Verizon) might have brought on a lot of former AT&T customers who were sticking with AT&T despite the rumored poor coverage because they wanted to stay with the iPhone. Now that Verizon had the iPhone they could switch, meaning that the big red took a big hit up front, but that'll be made up over the next two years.

I'm probably VZW's worst nightmare... grandfathered into an older cheaper plan, grandfathered into unlimited data, still had a new every two upgrade discount [making the phone even cheaper], no texting, a LOT of in-network calling, and receiving a 22% corporate discount through my employer... I pay < $90/mo for three lines (only one has data) and paid $160 OUT THE DOOR [though, of course, subsidized] for my iPhone 4S.

[rhadin]

I've been with AT&T for about 8 years now; 7 of them without contract. We have so many rollover minutes that I never pay more than monthly minimum. But what bothers AT&T is that I have no data plans, and am not interested in one. Every couple of months they offer me a good upgrade deal, which I turn down because it would require a contract. Lately, the offers have been for a couple of free iPhones.

I'm not at all interested in the iPhone (or Apple anything for that matter). What I am interested in and waiting for are the smart phones running Windows 8. Then I may be tempted and if I am, I'll be free to get the best deal with any carrier.

[murraypaul]

Originally Posted by SeaKing

Hey guys and gals. Read the article. Verizon lost money.

I don't see anything in the article which says that, overall, Verizon is looking money on iPhone customers.

[Kumabjorn]

Originally Posted by wannabee

I bought one for my wife for Christmas. $1 delivery, nothing up front.
I pay $60 a month. 1.5 gig data, free sms, $500 calls @ 90c minute.
She thinks the sun shines from my "you not what".

Spoiler:

The music dock cost me two hundred bucks for her birthday this week

Whoaa!
90 cents a minute? WTF???
In Sweden I pay 19 öre or 0.19 SEK a minute that translates into 2.8 cents a minute. I always assumed that cell phone minute rates were a lot cheaper in the US. I'm not even on a plan, I have a cash refill setup, pay in advance (say $20) and call for that until it reaches zero.