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Apple's iPhone loses carriers money, claims researcher

Will someone please think of the operators...

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The iPhone isn't the cash-cow many operators behave as though they believe it to be, a market watcher claims.

Denmark's Strand Consulting says that operators have fallen over themselves to gain access to the trendy handset - and rather a lot of money has dropped from their pockets as a result.

Operators pay much of their iPhone-related earnings to Apple and carriers also have to subsidise the handset to reach a price point that customers are willing to pay. Together, these two factors leave the networks out of pocket, the company said.

"We have not found one operator which has created shareholder value with iPhone," Strand alleges.

"As one chairman of a multinational operator stated: 'The iPhone effect is the effect that comes from moving our management's focus away from the 99 per cent of our customers that generate the cash flow that pays our bills'."

Undoubtedly, iPhone naysayers will pounce upon Strand's claims as a sign that the handset isn't the success that it so clearly is. Apple has sold tens of millions of the things - many more than rather a lot of rival handsets have managed to - LG's Arena, for example, has notched up sales of just over a million - and done very nicely out of it, especially when you factor in earnings from the exclusive deals it has struck with carriers like O2 and AT&T, and ancillary earnings from the iTunes application and media stores.

Whatever deals the likes of O2 and co have been offered by Apple, they will have consulted their spreadsheets, pondered the strength - like it or not - of Apple's brand, and made a decision to sign based not only upon anticipated iPhone sales but also upon the impact that Apple's marketing will have more broadly have upon their business.

It's hard to believe that the iPhone hasn't raised O2's profile among mainstream consumers, irrespective of whether those punters go on to buy an iPhone or not. Any impact on O2's finances will, in any case, be amortised across its entire range of handsets, juts as is the case with other phones and other operators.

Lots of handsets, especially high-end ones, don't profit operators. What makes them money are the airtime fees.

O2 told the Guardian this weekend that it has benefited from the iPhone. It didn't address the specifics of the handset's direct impact upon its finances, but it clearly thinks it's better off (possibly) losing money on the iPhone and gaining elsewhere.

Does anyone really dislike the iPhone so much that they're willing shed a tear for the poor, hard-done-by network operators? ®

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