Slashdot Mirror
Sprint Bets Big On the iPhone
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.
Who can't do math? 20,000,000,000 / 30,000,000 = 666.67
That's why the article said that it's $20billion AT RETAIL. Of course Sprint is going to get them cheaper. You can't turn a profit any other way.
If you gave me a choice between a printer and a giraffe with explosive diarrhoea, i'll get my ladder and my raincoat
Preview of the iPhone 5
Who can't do math? 20,000,000,000 / 30,000,000 = 666.67
FWIW its 30.5M not 30M.
;-)
So 20,000M / 30.5M = 655.74.
Apologies to the Iron Maiden fans who were liking the earlier calculation.
Are they not doing any of that? I'm not a sprint customer, but I've been thinking of switching. They seem to be the only carrier left with an unlimited data plan, their rates seem fairly competitive, and at least in my area coverage is complete (although I don't know how it is around the rest of the country). Considering the iPhone's popularity, perhaps not having it really is limiting their growth. Perhaps maybe $20B is a comparatively cheap way of growing their market share (compared to infrastructure improvements, for example).
The idea of iPhone 5 being a Sprint exclusive doesn't make any sense whatsoever. Obviously it would be great for Sprint, but I don't see what Apple would get from such an arrangement, other than a horde of pissed off existing customers who have a shiny new toy dangled in front of their face and then told that they can't have it right here and now.
...more and more people will turn to the one button wipe my bum for me interface ...
Its a vast improvement over the three sea shells.
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.
Well.. maybe. Or Maybe not. But Definitely not sort of.
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.
Fun with Anagarams! LADS HOST, SHALT DOS. HAS DOLTS. AD SLOTHS, HATS SOLD. ASS HO, LTD.
> Providing more price-competitive packages.
Compared to what? Sprint has plenty of warts, but price (at least, for individual customers with no family plan and exactly one phone who'd burn through AT&T and Verizon's caps within a matter of days and are perfectly cool with $69.95 + $10 for 450 minutes of peak airtime, and more or less unlimited everything else) isn't really something I'd classify as one of them.
> Providing better 4G caps than the competition.
Root your phone like everyone else, and the 4g hotspot caps are meaningless. Sprint chose that specific group very carefully -- the nontechnical users who actually go out and PAY for an official hotspot plan are almost exactly the same group who'll try to use their phone as their one and only means of internet access.
Sprint isn't stupid... they know the overwhelming majority of users who root, reflash, and tether for free already have the most expensive cable or DSL internet access they can buy, and use it instead of their Sprint data service when they're at home just because it's faster and works better. To repeat: Sprint really doesn't care about users who tether once in a blue moon so they can get online with their laptop at an airport somewhere while waiting for a plane. Sprint passionately cares about users who try to use tethering as a substitute for real internet service and 21st-century dialup.
Nobody who has high-end internet access at home is going to screw around with torrenting from a tethered phone, because it would be slow, suck, and annoyingly cause most of your incoming calls to end up going straight to voicemail. Likewise, statistically nobody with the means to tether is going to stream lots of HD video, because it's not free -- users who tether for free rip their content from Blu-Ray, convert it to .mkv, copy it to their 32-gig Class 10 microSD cards, and watch it from THERE. Sprint is one of the few carriers who understands that the users who can most easily subvert any controls they try to impose are likely to be the ones who fall towards the lower end of total monthly data use, simply because those users have better ways of getting online anyway.
> Upgrading network capacity.
No arguments there. Sprint definitely has plenty of room to improve in that regard.
In many areas the towers are already there. AT&T and Verizon are already using them. I takes nothing other than leasing space on them for another cell provider to get his gear on those towers.
I call shenanigans.
Apple has had no problems selling all the iPhones they can make - so what would they gain by doing this? It seems like, if anything, they'd lose potential income, given that Sprint would almost certainly be paying less than retail.
#DeleteChrome
re: Its a vast improvement over the three sea shells.
How many people are going to get this reference? I'm sorry to admit that I just watched that movie recently.
- 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.
In other completely unpredicted news...
a sprint exclusive would be a surprise to most people. It would fit with the conflicting stories we've heard. And it would make sense for apple too as a way to turn a negative-- limited supply-- in to a positive value--exclusivity premium paid by the carrier-- without raising the price.
this will make me sad. I can totally understand the logic if it's true. But I was so hoping that t-mobile or Verizon would get the iphone 5. We don't get sprint or aT&T where I live.
Some drink at the fountain of knowledge. Others just gargle.
I wonder how many towers $20 billion would buy, so that Sprint might actually be a choice around here, instead of the joke option you pick when you don't want to own a cell phone that can actually receive calls?
I think you are thinking about this wrong. Sprint is not losing 20B. theey are hoping for a 20B influx from either new subscribers or old ones churing to iphones. for new subscribers the payback time would be within a year since the marginal cost of new subscribers is small.
thus within 2 years that 20B should be all paid back.
the way apple books the payments usually they don't want it all upfront either. so chances are this isn't a 20B pre-pay but a 20B contract ammortized over 5 years.
thus the net effect is that sprint should have a positive cash flow to build new towers if their subscribers increase.
Some drink at the fountain of knowledge. Others just gargle.
That's ridiculous. I love my iPhone, and my contract has been up for 4 months or so. When the iPhone 5 comes out on AT&T, I'm getting one. But switching carriers for it? Hah! General hassle aside, I'll be damned if I'm giving up my grandfathered unlimited data plan.
Would Sprint really think that it'd be worth a risky deal that, chances are, will never pay off? Making a 5-year commitment in order to get a 6-month head start, where everyone knows they can just wait? In a market where most people are on a 2-year upgrade cycle? So, let's be generous and say that 1 in 2 people are actually able to take advantage of the deal. What percentage are going to be willing to shell out for a new iPhone and go through the trouble of changing carriers to get a phone they'll have to keep for 2 years 6 months early? What percentage of those haven't already had a bad experience with Sprint? What percentage of those won't be enticed right back away by one of their better-funded competitors?
No way Sprint could be so stupid. If they are, well, short selling is still legal, right?
<xml><I><am><so><damn>Web 2.0</damn></so></am></I></xml>
I for one did immediately. It was a movie that deserved to be much more popular. I'm not sure who wrote it, but they did a really good job of putting that sort of detail in without providing even the slightest hint as to how one used the sea shells.
Or the somewhat more explained rise of Taco Bell to rule over the restaurant industry.
"I wish Sprint would have fewer customers and make less money -- passing up on high-margin customers, risking buyout, a selloff of assets, and long-term degredation of the network -- because it means my Sprint reception will be better over the next 6 months."
Adverse selection at work.
Don't blame me, I voted for Baltar.
In many places, it's not that easy. Money for towers is just a part of the problem. I imagine that people screaming, "Oh NOES! Radiaaashun!", are probably the major obstacles these days. For example, as much as people like to whine and moan about AT&T coverage in San Francisco, here is one small example of what AT&T has to deal with (yes, it's a bit old, but likely still 1000% valid): http://cdn.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/07/06/BAT01E8QTQ.DTL
Other examples:
http://www.engadget.com/2011/09/15/west-virginias-quiet-zone-becomes-refuge-for-those-on-the-run/
http://gawker.com/372440/?tag=television (this is for wifi, but I'm sure the sentiment extends to cellular)
Or should it know where to turn the Wi-Fi radio on and off based on GPS?
If you use Tasker on Android, you can program it to do exactly that. I do. I also programmed it to set my phone to silent when I get to work and turn the volume back up once I leave work.
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." ~Thomas Jefferson
A VERY good question.
30M iPhones is 10% of the US population (or just under the population of Canada).
This is for a phone using a radio used ONLY by Sprint (WiMax - AT&T, Verizon use LTE, as does practically everyone else in the world). So it's a phone with 4G capabilities limited to the US market only.
I don't know what Sprint's marketshare of the US cellular market is, but 10% of the US population would be a pretty significant chunk of their subscriber base I'd think.
The one thing about the iPhone that's interesting though is the lack of branding. The only other phone sold by carriers that's the same is the Nexus S. No branding, no carrier apps, ...