I generally try to steer clear from the silly and crazy rumour mill surrounding soon-to-be-expected-to-be-launched devices, but this one is kind of interesting. The Wall Street Journal is reporting that the US carrier Sprint is pretty much betting the company on Apple’s next iPhone, ordering a staggering 30.5 million of them. At the same time, BGR reports that the iPhone 5 will be exclusive to Sprint (in the US at least), as a WiMAX device.
The report by The Wall Street Journal is probably accurate, as Apple and the WSJ are more or less close friends, and Apple would want to brag about a deal like this. On top of that, the WSJ almost always has an Apple “rumour” up and running the day before an Apple event.
The gist is this: Sprint has ordered at least 30.5 million iPhones (the new one, unveiled tomorrow), which would cost Sprint about $20 billion. This is a massive gamble, since the company is struggling to make ends meet as it is, so this really has to work for them or else the company might very well be in big, big trouble in a few years.
Just how big the gamble is becomes evident when you crunch the numbers. To sell all of these iPhones, Sprint has to double its customer base – or convert all of its existing customers to iPhones (they’re obviously aiming for somewhere in the middle). That’s pretty intense. The WSJ reports that some of Sprint’s board members were apprehensive about the deal, questioning whether the iPhone would still be popular in a few years’ time.
Now, from all this, one question became obvious at least to me: the only way this can work for Sprint is if they will be the exclusive US carrier for the new iPhone. If both AT&T and Verizon get the exact same iPhone from day one, Sprint will have very little to lure customers away with from the other two carriers.
This is where the less trustworthy rumour from BGR comes into play. BGR’s Jonathan Geller had been going back and forth for weeks with what he calls an extremely reliable and solid source about a very hard-to-digest rumour – namely, that Sprint will be the exclusive US carrier for the iPhone 5.
“I have been told that Sprint will be getting the iPhone 5 – yes the real iPhone 5, not the iPhone 4S – as an exclusive,” Geller writes, “And it will be a 4G WiMAX device. AT&T and Verizon would launch the iPhone 4S and get the iPhone 5 some time in the first quarter of next year as an LTE device. Globally, the iPhone 5 might be available as a 4G HSPA+ device.”
Geller didn’t know what to do with the rumour at first, but combined with the $20 billion deal The Wall Street Journal is reporting, it might actually make sense. We’re looking at 30.5 million guaranteed iPhone channel sales (not real sales, since Sprint might as well not sell them all) – which is great for Apple. Even if Sprint can’t sell all of them, Apple still gets the money.
So, in what way does the iPhone 5 differ from the iPhone 4S which is pretty much a sure shot? It will have a faster CPU, larger screen (4″), 1GB of RAM, larger but thinner design, 32GB, iPhone 5 exclusive software and APIs (Assistant), and a dedicated Assistant button.
If all this is true, it’s pretty big news – at the same time, as I understand it, Sprint’s coverage isn’t exactly very good, so I’m wondering just how many people will choose crappy coverage just to get the iPhone 5. I mean, the Verizon iPhone was supposed to be a big deal, but it barely registered on the radar in the grand scheme of things.
We’ll know for sure tomorrow.
That will make people buy more Android, Bada and Windows phones.
That is exactly what I think. I am not going to change carriers and I am not going to upgrade to a second rate new iPhone.
Apple is rich enough that they don’t have to punish their loyal customers for 20B. Shame on them if they do.
I think they want to punish AT&T for the carrier satisfaction disaster the first 4 gens have been, it have created Android.
Nonsense. The U.S. smartphone market is only a tiny slice of the world market. It created nothing.
The news concern US market, not global market.
iPhone was exclusive to one carrier in very few places. In all the rest where it wasn’t, this usually didn’t influence much its adoption, or of Android; it demonstrably turned out to be not a particularly important factor.
Google reaps more than enough benefits from their vast presence in the global market to justify entirety of their push for Android – so that nobody would be able to lock them out (even “just” in the global market) from the future mobile versions of the ways in which Google makes profit.
In my neck of the woods, Sprint was everyone’s first cellphone carrier. It was the best, without question in terms of price, signal quality, availability and phones.
That was ten years ago. I have no idea what their data coverage is. Their phone selection sucked for years. The Epic caused a few of my friends to switch to them. a couple years ago.
The best thing about sprint today is their prices. They are the cheapest, if you want unlimited talk, text and phone minutes while agreeing to a contract. They also advertise that they do not cap or throttle data usage.
If they offer cheapest prices with iPhone, then they are in deep trouble.
That is the way that Apple sells iPhone in the rest of the world. They just tell the operators/carriers how many they have to sell to have iPhone. It’s happening in, at least, 4 countries in Europe. And the operators pay up and sell them at a discount later on. That’s how a lot of businesses in my country got free* iPhone3Gs upgrades, the operator just was about to loose iPhone so they pushed out the devices onto their most profitable customers – businesses. Expect to see a surge of iPhone “sales”.
* – When I say free, I mean free. No contract extension, no nothing…
I think you misunderstood my description. When I said that sprint was the cheapest, I was referring to the monthly charges for unlimited text, phone and data usage. The prices they charge for phones on or off contract are about the same as other carriers.
My point is that they can’t stick to those low prices, because that will not result in profits to them.
Apple takes their $500-$700 no matter how much the carrier charges the customer. In addition Apple does not reduce the prices with time.
k, I’m not much of an accountant and am unfamiliar with Sprint’s actual costs as they pertain to their main mobile revenue stream. I couldn’t begin to to tell you if that was true or not.
The phones/technology are great (for me anyhow), but their customer service definitely leaves something to be desired…
If they are paying $20 billion for 30.5 million phones they aren’t betting the company, they are throwing it into the street.
Unless they are going to sell them all on E-Bay for $750 each.
Well, the high price wouldn’t be just for the phones, but for exclusivity (if this is true at all).
Well that’s the normal price for an iPhone to start with, of which they (AT&T, Verizon, etc) discount to $199 already.
Now consider how much it costs for a data plan to go along with it. At $30/month for 24 months that’s $720, or nearly the cost of the phone right there alone. Now add all the data overage charges that will likely be incurred (since they don’t have an unlimited plan!), the voice service charges, etc, and don’t forget that initial $199 payment from the customer.
Yeah, it’s still at a profit over the life of the contract.
Don’t know if you can get an iPhone with the $15 data plan or not but it looks like it would provide almost everything that the $30 plan does. Some folks would like it and use it. It wouldn’t make sense for me. So if it were available I’d be knocking their take on data down to $360 over the two year contract life. Not enough to cover the $655.and-change. So the difference would have to come from somewhere else. $300 in accessories? Increased early termination fees? $20/mo. paper-billing charge? Other creative income strategies?
However the $30 data plan isn’t pure profit either because it creates more of a load on the Sprint system compared to non-data consuming customers with feature phones. And that load isn’t just on the airwaves, it’s on the equipment itself, the employees, both technical and customer support (my text got lost -, I couldn’t have used that much data -, I’m paying $30 a month for [insert complaint here]!?!#%*$&), increased costs in network expansion rollout, the accelerated rate of maintenance on infrastructure, increased power consumption, etc.
You may recall that the problems that AT&T had when their network started crashing caused them quite a bit of churn, from which you may see that infrastructure and personnel issues need to be addressed before the problems start to crush you. (;
Now AT&T didn’t get crushed by any means but it did hurt their reputation [some more] and their bottom line. They recovered from it just fine and are now seeking to establish an effective duopoly with Verizon. Sprint simply can’t afford the churn, the loss of rep., nor the possible relegation to near non-entity status. Given their cost structure to consumers their margins must be pretty thin already.
Besides it is essentially a discount on data usage, at least for some folks. It would be vastly more profitable, and no doubt drive away all the customers too, to not offer a data plan and simply charge $0.03/kb which is their non-plan rate now.
Then in a reversal of the often repeated accounting joke they could say, “Sure we lost most of our customer volume, but by eliminating the discount on service we more than make it up in profit!” (o;)
All very true. However, my main point was that when you add up all the charges that you are incurring, they are still making a profit.
This pretty much ignores the fact that AT&T was the first to really offer a true SmartPhone with a full data plan. I don’t care who did it – whether Sprint, Verizon, etc – they all would have had the same problems as it was an entirely new market that no one really knew how it was going to function. Everyone learned, and thereby avoided most all the mistakes.
So that won’t really be a problem with the Sprint now – the infrastructure is pretty much already in place to support it.
Or if you’re like me, you just turn those off to start with.
That’s correct – my phones don’t have the Data network enabled, and I have TXT/SMS disabled on the accounts. Now if they were smart, then they’d let people receive TXT/SMS for free, and up the charge a little on sending to make up for it. Then I would have kept it enabled, and who knows – might have ended up using it in the long run. However, I refuse to pay for something I neither wanted myself or use – and I don’t appreciate being forced to pay for something someone else makes me use (which is why I disabled it so I can’t even receive them).
I’m not disputing that they are a profitable company. I am disputing your example of how they might make this [rumored] deal with Apple work. Because your example implies that the, presumably required, $30 data plan pays the whole cost of the phone. It doesn’t. (; Especially if the $15 plan is an option. Something else has to figure into it.
Do you have something to support that statement? Because as I recall it there were smartphones, true or not, and data plans available on all networks long before AT&T started getting their network knocked down by data-related issues. I certainly didn’t find anything in Google to support your claim either. (; And avoiding most all the mistakes doesn’t ensure that one or more of the ones not avoided won’t give you a bad experience, customer-service, P.R. or otherwise.
Do you have something to support that statement? I saw that:
“Under reported construction plans, LightSquared would place its equipment on Sprint^aEURTMs towers, and the deal could enable Sprint^aEURTMs customers to access LightSquared^aEURTMs proposed 4G LTE network.
LightSquared^aEURTMs plans to build an LTE network that covers 92% of the population by 2015 has been described as ambitious by many industry experts considering the company^aEURTMs attempts to integrate mobile technology with satellite-based services. Construction is due to begin in 2012 after a $7 billion deal was signed with Nokia Siemens Networks to design and operate the network.”
But if construction starts in 2012 it may not be in place in time to handle the [un]expected volume resulting from Sprint’s exclusivity pact with Apple. Did I miss a big announcement somewhere? (;
Absolutely! When I was an AT&T customer I had all that stuff turned off. And data was only $0.01/kb at that time. I had SMS turned on when it became cheaper to get it on my AT&T phone than from a prepaid plan that I used.
Now I have a Virgin Mobile phone for $25/mo. with unlimited web and data. You can’t get it for that price any more. The bottom tier for that plan is now $35. But the PayLo plan for $30 gives you 1500 minutes, 1500 messages and 30 MB data.
So, I may need to switch. I’m pretty sure that my data usage is well under 30MB and having 1200 more minutes a month would be like having unlimited talk to me. (;
And still $20/mo cheaper than my half of the AT&T family plan with 200 texts on my phone and 700 minutes split between me and my brother.
Thanks for impelling me to go check out the plans again. I hadn’t realized how good a deal PayLo had become.
They’re betting that exclusive access to WiMax is the compelling feature that makes them the leading carrier. Still not sure how the financials work out. But, clearly, Sprint isn’t going to survive without having a wider range of phones.
After just getting out of exclusivity, why would Apple want to jump into bed with a single carrier again. Sure that’s a good chunk of guaranteed sales, but it’s not like they’ve had any trouble selling the things so far, so why wouldn’t they target the whole market?
The only reason I could see would be that Apple isn’t confident about its product’s ability to attract more purchases – making the guaranteed sales very desirable.
I, however, do not see Sprint betting the company to this degree unless they are convinces the company will otherwise falter completely.
If neither is the case, then this is bad for BOTH.
Most people have contracts with their carriers and can’t just swap carriers at will without paying serious penalties. I would expect those people to become very sour over such a move by Apple.
–The loon
They are just replicating their business practice, they use in other countries, in US.
Not only did they not have trouble selling the things …
This may be the best of both worlds for Apple. They continue targeting the whole market with the 4s and any other models that they don’t choose to discontinue, creating an unheard of low-end niche for Apple, and go exclusive with the 5 while using Sprint to limit the volume of sales.
Why limit he volume of sales? Because they have supply pipeline limitations that creating a demand-side limitation will be an answer to. They won’t have to worry about unanticipated, nor anticipated, demand because they know and have fixed the volume of demand in advance. They can also repeat the exclusivity coup that everyone said wouldn’t work.
instead of saying –
I should have said potentially creating that low-end niche with the model(s) that they don’t theoretically discontinue.
No offense but I have been with sprint for years even when they had a bad phone selection and bad customer service. Since then they have really stepped up the customer service and it is very rarely that I get a dropped call and I travel between states everyday. And yes, the unlimited data plan is the best value by far….at least for the moment. You may be surprised how much they have improved there service for those that have never had it or haven’t had it in a while.
This to me means that the iPhone5 will kick ass, if Spring is putting all that money into it, is because it saw it already.
It’s going to be an iPhone 5 with an option to buy without a phone number.
My two bit’s FWIW, if this is the scoop they more than likely at least recover their initial investment. Will they make a profit….. we’ll see. Honestly they probably will, but not huge. The religion of Apple has it’s followers who will buy.
The competition as in the Android phones, let’s just say Apple’s cash cow has run it’s course. I’ve got the Atrix with the Lapdock, let’s just say to rocks and Apple has nothing to even come close. But again the religion of Apple does have their followers
He wrote, “I mean, the Verizon iPhone was supposed to be a big deal, but it barely registered on the radar in the grand scheme of things.”
Thats funny, last I saw back in June/July period, multiple sources including Verizon say the exact opposite. In fact, this article from the NY Times source: http://www.nytimes.com/2011/07/23/technology/iphone-bolsters-verizo…, states quite simply:
Verizon^aEURTMs earnings might also shed some light into the brewing rivalry between Apple and Google and both look to dominate the smartphone and tablet industry. Although Verizon continued to achieve sales from its catalog of Android and 4G devices, the company sold far fewer of those devices than they did iPhones. For the quarter, the company reported sales of 1.2 million LTE and Android devices, which includes tablets, smartphones and wireless modems.
^aEURoeVerizon^aEURTMs had Android for a long time,^aEUR said Mr. Sharma, who keeps a close eye on the industry. ^aEURoeThis was the first real test between an iPhone and Android and consumers still gravitate towards the iPhone.^aEUR
So someone please tell me, what in the blue blazes is Thom talking about? Is he being the Anti-Apple Andy Rooney of OSAlert again?
Too soon, man. Too soon.
I think Thom was referring to another part of the same article :
“On Friday, while reporting its quarterly earnings results, Verizon said it activated 2.3 million iPhones during the company^aEURTMs second quarter. That is a hefty figure, because the device has been available on Verizon for only a few months, but it paled in comparison to AT&T^aEURTMs iPhone activations for the same quarter. On Thursday, AT&T reported that it had activated 3.6 million iPhones on its network, and that nearly a quarter of them were for new customers to AT&T.”
In short : only half of *new* US iPhone customers buy it from Verizon, showing that AT&T was not so much of a problem after all, in sense that the huge customer rush from AT&T to Verizon that some were expecting didn’t happen.
I don’t know why you’re bringing Android on the table, but from the data I have it seems to me that it’s doing fine in its corner, since its introduction at the end of 2008. If a major OS manufacturer would have to worry in the US, that would rather be RIM : http://gs.statcounter.com/#mobile_os-na-monthly-200812-201110
Edited 2011-10-04 07:37 UTC
I didn’t bring Android into anything, those are quotes from the article.
Well, quoting is a part of argumentation, and what you chose to quote (and highlight) is a claim that the Verizon iPhone outsells Android devices (whether combined or not remains unclear) on the Verizon network. In my opinion, this metric is not so good from many points of view, but most noticeably because it is more of an iOS vs Android metric than a Verizon vs AT&T one.
I do not live in the US and some of the mobile network choices there are beyond me (two incompatible cell standards ? lolwut ?), but it is my understanding that the Verizon iPhone was supposed to change everything because the Verizon network is supposedly much better than the AT&T one, which would have made AT&T exclusivity cripple iPhone sales. It seems to me that in order to study this, a good metric should somehow compare the attractivity of Verizon and AT&T for the iPhone buyer population. Which is apparently pretty much equal, even in favor of AT&T.
Edited 2011-10-05 06:53 UTC
Well if you just had taken a look outside US, you’d see that Verizon was not “first real test”, since there a lot of countries where Android and iPhone were being sold on the same operator.
http://www.catb.org/esr/comscore/
Thats funny, it caused a slight uptick in iPhone sales, Android was not affected.
If Apple locks the iPhone to Sprint, I’m fucking done with them. I’m a hardcore iPhone user but this is not something I’m willing to deal with. I had high hopes that the iPhone was going to be the first successful phone I can buy unlocked and use with whatever carrier I wished. I was already looking to moving back to Sprint but them forcing me is just going to make me run the other way.
I’m tired of this carrier tying bullshit. Fucking Apple learned nothing from being tied to AT&T and having their phone’s reputation marred by a shitty network, now they are locking it to an even shittier network. Fucking brilliant. This just soured my day. Even more so because I just lost my 3GS, this last week and I was looking forward the iPhone 5 to replace it. Right now I’m on my 1st Gen iPhone. Dammit I want to hit something. I so hope this isn’t true.
Don’t worry, the iPhone 6 will be out soon I’m sure, and even shinier (well, kinda)
.
Your post is bullshit…seek therapy if a phone, a fucking phone takes you through all that.
Or, instead of crying like a baby you could get the iPhone 5 (since you’re going back to Sprint anyway), wait for a Jailbreak/Unlock and enjoy the best of both worlds.
Or, you could wake up and realize that Apple will do anything — no matter how anti-consumer — to pad their purse, and you could move on to another platform like Android, WP7, or even BlackBerry. Apple is a business, and one of the most profitable in the U.S.,and this is exactly what businesses do to remain so.
Or…well you get the picture.
WTF are you talking about. I said I was THINKING of moving to Sprint not that I would. Unlike others I have had no issues with AT&T’s service. I don’t use the phone portion of the device all i care about is the data and in that respect AT&T delivers.
I have a right to be pissed. i don’t give a shit if you don’t like it, I wasn’t asking for your fucking opinion. I was just airing out my frustration at loosing my 3GS, which is why I’m really pissed.
I was calling you out for being a whiny little brat over a cellphone. I personally don’t give a shit what you do. Myself, I got pissed at AT&T when they refused to honor their warranty and return policy after a phone arrived damaged, and instead of cursing and wailing, I took my money elsewhere.
All I’m saying is, you’re taking this stuff way to personally. Yes, the companies involved suck for personally screwing you over and making changes that affect only you and no one else…yeah whatever dude.
When the did I say they were personally screwing me over. WTF are you talking about? I never said they were personally screwing me over. i was airing out my frustration at the situation, that’s it. Why do you give a shit what the fuck I think? So you don’t whine good for you. I don’t really care. I wanted to air out my frustration, so I did. Get fucking over it.
And you’re still crying and cursing at someone who doesn’t matter (me) instead of being positive and looking at your options.
This is really why I’m starting to hate the cellphone companies. If they can cause this type of turmoil on a personal level between two strangers with their self-serving deals, what the hell are they doing to us on a grand scale?
Unfortunately, the only solution seems to be picking the carrier that sucks the least yet still offers hardware and coverage we can use.
At first you said
That doesn’t sound like you haven’t had problems with att.
Then you said,
Thats the problem with apple apologists*…
*Typed from my macbook pro. Just bought a samsung galaxy s2 yesterday to replace my first gen iphone that I have been using for four years since the day it was released.
Even “shittier” network. LOLOLOLOLOL. I get almost 8-10mg down and 1.4-1.5mg up on Sprint 4G sitting inside my apartment in a hilly area of Los Angeles. I listen to my friends bitch and moan all the time about AT&Ts crappy network. 10 years with Sprint and no problems with service. Maybe you should give them a try a dude before throwing a fit.
Edited 2011-10-04 19:40 UTC
Eh, the dude goes back and forth contradicting himself over and over. Maybe he should dump AT&T and Apple and go with Sprint to ease his frustrations. I know I’ll end up there if the T-Mobile merger goes through.
I’m glad to hear so many people (online and real life friends) who have had good experiences with Sprint. Their coverage is just about as good as T-Mo where I live, and as long as they keep carrying good phones I’ll definitely consider switching to them next March.
WOW…desperate much?
This makes no sense at all. Sprint has already hinted around that it plans to ditch Wi-Max in favor of LTE. Sprint’s existing Wi-Max coverage is tiny and only available in very few places as well. Apple already makes CDMA and GSM phones, with LTE to be the next standard for all carriers in a few years, so why would they make a Wi-Max phone for only one carrier that has stated it plans to switch to LTE?
…because Iphones come out almost every year and the Iphone 6 will probably be LTE. Besides all Iphones have been a little behind the times. Remember when you couldn’t even get one that did 3G?
I have been with Sprint for more 10 years. I had their service while living in Kansas City, Chicago, Dallas and now in Los Angeles. I have never had coverage issues and travel quite regularly to smaller cities. I am sad to see that Sprint sold out to the devil (aka Apple), however hope this will help boost their sales. You would be crazy not to switch to Sprint. Great customer service. Excellent products. Unlimited data and they have stated publicly that they are not going to cap it for iPhone users.
Now that we know the Sprint exclusivity deal is a complete load of shit, can we now discount anything that BGR has to say on rumors and speculation?
Not disputing your comment on BGR in the title of your post. The linked article is the first thing I’ve read there and it will discourage me from ever going back.
However: Did I miss an update somewhere? How do we know that the Sprint exclusivity deal isn’t going to happen? I see more rumors of it happening than denials, but nothing convincing either way yet.
It was confirmed yesterday that the iPhone 4s will be on Sprint, AT&T, and Verizon. Unless, if by ‘iPhone 5’, they meant the next iPhone after the 4s …
Indeed, the iPhone 5 is NOT the same thing as the iPhone 4s.
In fact, even this article on which you’re posting comments differentiates between the two:
Does it? What is this “Assistant”? Siri Assistant, the voice-controlled helper of 4S? (NVM how it was available until few days ago freely, and for more than a year after Apple bought Siri; now removed seemingly just so it can be a 4S selling point)
The rest can easily fall just under wishful thinking spec-anticipation.
Edited 2011-10-08 18:09 UTC