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The iPhone is a nightmare for carriers

doesn't Apple get skewered for being "too expensive" by having a similar 40% margin? (Of course, I'm no CPA and am not sure if that is an EBIDA margin or gross, etc).

I'd go 100% in the other direction, and say that iPhone (and other smartphones in general) are a boon for the carriers since they charge "mandatory" add-ons such as data, which brings the ARPU up +$15-$30/month, then have the gall to throttle said users when they use an arbitrary amount (in the case of AT&T and "unlimited" plans). Ridiculous.
 
Dear god how do those poor carriers survive on those razor thin 40% margins?

If the iPhone was a nightmare they'd drop it.

The fact is a 42% margin with millions of iPhone users is a lot more money than a 47% margin with no iPhone users.
 
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J-Money said:
Dear god how do those poor carriers survive on those razor thin 40% margins?

If the iPhone was a nightmare they'd drop it.

The fact is a 42% margin with millions of iPhone users is a lot more money than a 47% margin with no iPhone users.
Click to expand...

Bingo.

Cellular companies only exist to make money, and the iPhone brings it to them. If it didnt make profits they wouldnt bother with it.
 
shortylickens said:
Bingo.

Cellular companies only exist to make money, and the iPhone brings it to them. If it didnt make profits they wouldnt bother with it.
Click to expand...

Yeah, I'd imagine that this just serves as an additional handy excuse for the carriers to squeeze a little bit more out of us.

One of the comments made this point:

Percentages(margins) can be misleading...20% of $1,000,000 is $200,000, but 10% of $1,000,000,000 is $100,000,000. Which is the better margin? % as a metric mean nothing unless the data behind them is known. They may have lower margins, but I would bet their total profit is going way up...
 
article is BS, same thing happened to AT&T a few years back and within a few quarters the $$$ started to roll back in

iphone users are loyal
apple takes care of the support and advertising freeing up carriers to invest in networks
apple sells the phone so that carriers don't have to hire people
40% of iphone/smartphone users are on family plans and almost all of them have different contract end dates lowering churn

and for all you financial geniuses EBIDTA is not profits, it's earnings before interest, taxes and some other expenses
 
I would say iPhone saved the carriers from becoming just dumb pipes. Carriers control the smartphone lineup and if we want the latest and the greatest, we have to go through them. Voice was becoming so cheap before the iPhone and people were jumping ship to low cost providers. But now with data plans most people cellphone bill has doubled or tripled. And they can't jump ship to low cost providers because of limited or no highend handset available for use there and the poor and slow data coverage. It didn't matter with voice but it matters with data. Apple, AT&T, and VZ are raking in the dough now and people need them more than ever. They have the consumers by the balls now.
 
ponyo said:
I would say iPhone saved the carriers from becoming just dumb pipes. Carriers control the smartphone lineup and if we want the latest and the greatest, we have to go through them. Voice was becoming so cheap before the iPhone and people were jumping ship to low cost providers. But now with data plans most people cellphone bill has doubled or tripled. And they can't jump ship to low cost providers because of limited or no highend handset available for use there and the poor and slow data coverage. It didn't matter with voice but it matters with data. Apple, AT&T, and VZ are raking in the dough now and people need them more than ever. They have the consumers by the balls now.
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I am seeing a lot of people jump to low cos carriers like Virgin Mobile and such now that they have some decent handsets.
 
the 40 million or so iphone customers in Q4 disagree with you

between apple and samsung almost everyone in the US has a smartphone
 
300 million people
call it 100 million kids as an estimate
the latest numbers from comscore are 97.2 million smartphone users

back in the day when cell phones reached 80% penetration that was called full penetration because everyone who wanted one had one

right now we are at 50% to 55%. factor in old people and some others who will never get one and we are pretty close to full penetration for smartphones. and some people also have work issued phones that may not be counted in these numbers. i told someone the other day to just buy a tablet and save $80 a month since he has a work issued droid

same with me. if i wasn't on a family plan i'd settle for an ipad or ipod touch and use my work droid for some things
 
Bateluer said:
I am seeing a lot of people jump to low cos carriers like Virgin Mobile and such now that they have some decent handsets.
Click to expand...

Except, because VM and other low cost carriers generally don't have contracts, they can change policies on the drop of a hat. My coworker went to VM because they had a 'decent' (really, it was a POS) Android phone and she wanted to use Skype to call family in India. Then VM announced their change in data plans a day after her full refund period - granted, she wasn't in contract but then she's out the price of the phone.

I'd like to see what the Android/WP7/BBOS overhead is considering they give the phones away after 6-9 months of them being on the market. I'd think that because Apple has a locked price point that the phones are actually cheaper for them vs. giving away a $500 phone for $0-$99.
 
Bateluer said:
I am seeing a lot of people jump to low cos carriers like Virgin Mobile and such now that they have some decent handsets.
Click to expand...

I will be when my contract is up. Anyone who doesn't think the users pay a premium for the iphone in the end is blind. Look at what Sprint has done with it's discounts, pricing and plans since they announced the iphone... and anyone who doesn't think the iphone was a large part of that is well... wrong. I am not paying extra to fund the iphone users anymore. Prepaid is becoming much more popular and I see that trend continuing.
 
Lol. Or it's not.

CEO Dan Hesse said he expects that, eventually, the iPhone will be "our most-profitable device."
Click to expand...

That doesn't sound like the CEO considers the iPhone a 'nightmare'. Carriers would have raised their rates with or without the iPhone. Carriers would have removed unlimited data from their plans with or without the iPhone.
 
MrX8503 said:
AFAIK, there isn't a separate "premium" data plan for the iPhone.
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He is talking about the subsidy on the iPhone. It is larger than other phones. He feels that even though android & WP7 phones get subsidized as well, the iPhone is the biggest offender and therefore is at fault for the price hikes.

The iPhone addition was a convenient way to increase prices. They were going to increase prices anyways. There is no way you can truly think that sprint wouldnt have increased their prices if they never took on the iPhone.
 
Nobody's making carriers reduce the prices of iphones are they? If I were selling something I would make damn sure I charged enough money for it to avoid hurting my business. Obviously they're getting something out of this or they wouldn't do business with Apple.
 
Dulanic said:
I will be when my contract is up. Anyone who doesn't think the users pay a premium for the iphone in the end is blind. Look at what Sprint has done with it's discounts, pricing and plans since they announced the iphone... and anyone who doesn't think the iphone was a large part of that is well... wrong. I am not paying extra to fund the iphone users anymore. Prepaid is becoming much more popular and I see that trend continuing.
Click to expand...

there are features that the low cost carriers don't offer, they are serving a niche

no night/weekned minutes
no free minutes on the same carrier
no roaming

and the only reason they offer unlimited data is they only offer phones that don't use that much data.
 
Oh boo f'n hoo. Poor poor Verizon only able to churn 42% instead of 46% profit margins. They got $720 a year extra out of my household this year from a data plan for my wife and I's iPhone data plans that they wouldn't have gotten last year. So that paid for the subsidy. Next year they are in the black for that amount. And we're lucky to use a gig a month in data between us so it's not like we're gigging them in data usage either.
 
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OK, so at this point I think we can agree the article got its bullshit title so CNN could get more hits on their website, yes?
 
pretty sure this is a troll thread from the OP but w/e

United States carrier Sprint, the nation’s third-largest wireless telecommunications network, announced today holiday quarter earnings containing a couple interesting tidbits related to Apple’s iPhone, which helped bring in most of its new customers. Sprint reportedly ponied up $20 billion to land Apple’s iconic smartphone last October, calling the handset launch in today’s statement “successful.”

Forty percent of Sprint’s 1.8 million iPhone sales in the fourth quarter were to new customers.

According to Sprint’s internal estimates, high costs associated with subsidizing the iPhone —combined with the impact of iPhone and Network Vision costs— are to blame for wider than expected short term loss, which reached an astounding $1.3 billion in Q4 2011 and $2.9 billion for 2011. These factors also reduced fourth-quarter adjusted operating income before depreciation and amortization (OIBDA) of $842 million by approximately $684 million.

Reuters reported in October 2011 that Sprint paid about 40 percent higher subsidy to Apple than the industry average, amounting to $200 more per device.

Sprint CEO Dan Hesse has some nice words for Apple’s phone:

Our strong fourth quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience,” said Dan Hesse, Sprint CEO. “During the past year, Sprint added more than 5 million net new customers and grew wireless service revenue by more than 5 percent, including 17 percent for the Sprint platform.
Click to expand...

http://9to5mac.com/2012/02/08/forty...8-million-iphone-sales-were-to-new-customers/
 
Dulanic said:
I will be when my contract is up. Anyone who doesn't think the users pay a premium for the iphone in the end is blind. Look at what Sprint has done with it's discounts, pricing and plans since they announced the iphone... and anyone who doesn't think the iphone was a large part of that is well... wrong. I am not paying extra to fund the iphone users anymore. Prepaid is becoming much more popular and I see that trend continuing.
Click to expand...


I just left VZW for Tmo $30/mo prepaid myself.
My VZW smartphone plan was costing $75/mo even with a corporate discount, and I never used anywhere near the allocated minutes/data.

Before I sucked it up because VZW had 1 year contracts, so i got a new phone every year.
VZW obviously killed that. I don't know how much the salespeople actually know but atleast one of them told me VZW killed their 1 year contract and best discounts to pay for the iphone.
When I pointed out that means even non-iphone customers are subisidizing iphone users, the sales guy tried to backpedal, but it's true.

Anyways eff verizon and eff apple.
I don't need to be locked into a $75/mo for two years, locked into an expensive and rapidly depreciating device so i can surf facebook. I was a VZW smartphone customer for 3-4 years and blew $1k/yr on these plans, but the terms are even more onerous now.

Tmo data coverage is not as good, but like i said, i don't do anything important on my phone. Voice coverage no problems so far.

smartphones, contracts and data plans are massive consumer rape.
 
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