Sprint Bets Big On the iPhone 366
hazytodd was one of several readers to tip news of Sprint Nextel's plan to grab a piece of the iPhone action in order to halt the company's downward slide. According to a Wall Street Journal report, Sprint has committed to buying 30.5 million iPhones over the next five years (summary of paywalled WSJ story), which at retail rates works out to roughly $20 billion. "To sell that many iPhones, Sprint would have to double its rolls of contract customers, convert all of them to the Apple device or a combination of the two." A separate rumor at Boy Genius Report suggests the iPhone 5 may be a Sprint exclusive until sometime next year, with Verizon and AT&T getting the upgraded iPhone 4S until then. Apple is holding an event to unveil the new phone tomorrow.
Re:All in (Score:5, Insightful)
Yes you can, you charge the customer more than you pay and hide the extra in the monthly charges. Some phones are free to consumers.
Do you really think the phone companies were paid by the manufacturers to distribute those phones?
Now, does that mean they paid retail? Not necessarily or even probable, but your reasoning was just silly wrong.
Re:They'll have my name on a contract (Score:5, Insightful)
I imagine that for many, contract voice and data plans are very good. I, however, got sick of them after having a PocketPC for two years and then an iPhone for two years. I finally realized that 90% of my already small amount of data usage was just twiddling my thumbs, and that 90% of my actual phone usage was in a place where I was in front of a computer.
So I got a pay-as-you-go phone for under $100. It has a touchscreen, camera, mp3 player, etc. along with a Web browser that just uses pay-as-you-go minutes instead of counting bytes. It uses AT&T's network, so it has the same coverage as my iPhone did. When I'm gonna be on a long call, I just put the cellphone down, put on a headset, and talk through my computer on Google Voice for free.
Now I'm paying $70/month less and wondering why I ever allowed myself to get roped in to those contracts in the first place.
I don't believe it, but here's why it's a bad idea (Score:4, Insightful)
- BGR says that the exclusivity will only last until Q1 2012... very short lived for a $20bil investment
- No iPhone 4 users (except people who purchased out of contract) will even be able to switch without paying a hefty penalty, making it nearly impossible for Sprint to win over a good chunk of the current iPhone users. Why is this important? Many of these people are early adopters. Luring them to Sprint for a 2 year commitment would be a huge win for Sprint. My guess is that the market for the iPhone 5 is much bigger for those that already have an iPhone 4 than those who don't. Even if the exclusivity was for an entire year, it would be just in time for upgrade window and contract ending for the current crop of iPhone 4 owners.
- Sprint is a discount provider, along with T-Mobile. They really do not compete at the same level, in terms of service and coverage, as AT&T and Verizon. People are less likely to switch from AT&T & VZW to Sprint
- For the above 2 reasons, hitting the kind of sales that Sprint needs to make that commitment to Apple seems unlikely
- The article pegs the Sprint version as a WiMAX phone. Sprint has already said that their strategic direction for 4G is LTE. Why would Apple or Sprint invest $20 billion in a technology (soon to be) in decline?
If Sprint is indeed doing this, they are betting the farm on the iPhone 5. If I was a shareholder, I'd be concerned.