Apple's iPhone loses carriers money, claims researcher
Will someone please think of the operators...
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? ®
COMMENTS
Price
Looked at the iphone on the simplest of contracts for the 32Gb 3GS. It came out as £1000 over the course of the contract. That's a lot of money for a phone.
Gonna stick with a simple phone until the costs come down
@The First Dave
Dave,
Very few consumers would want to pay the upfront costs of a non-subsidized phone, given the limited lifetimes of many devices. Additionally, there is a HELL of a lot of testing and certification on each device before it is rolled out onto a telco's network - and sometimes each network requests firmware upgrades to better support it's network from the handset vendor, and sometimes testing will show that a given handset has too many problems to be worth supporting (rare, but it has happened).
Then there is the question of support - while many El Reg readers can configure WAP and proxy gateways on their phones, the overall public is loathe to do this, and wants things pre-configured so they just work. And if a Joe Public user has issues, they expect to be able to get detailed help from the network operator (after all, Curry's or Best Buy staff will not know the way to configure your phone for each network either!). But network operators cannot be expert with all phones, nor have the skilled staff to support an infinite variety - so they offer a selection (and remember, they have to support even older phones they used to sell, so the number of supported devices for each network is actually fairly large).
All of this points that the handset is NOT independant of the network, and therefore I don't expect the current model to go away any time soon for Joe Public. I personally buy my phones seperately (until I got an iPhone!), starting when I just "had to have" a linux-powered Moto A780 that I bought in a decrepit importer's office in Manhattan, and then I "had to have" the one of first HTC Touch imported in the UK by Expansys...so I am very familiar with the issues of non-supported handsets! Fine for some of us, but a nightmare for most...
Wah
If AT&T/SBC is losing money, maybe they need to look at themselves for a change.
Wankers. Remember, SBC was the company that told the FCC that the problems with their missing scheduled land-line installed dates was that the people in the Midwest expected them to show up and do the installations on the date that SBC had chosen.
(Where's a Darth Vader/Deathstar icon when you need one?)
Plan
I think that what this really shows you is the madness that is the current mobile market.
What needs to happen is for some separation between the phone makers and the networks - you should be able to go into one store and buy a handset, and walk into any other store and buy/rent a sim card, with the two acts being entirely separate, like it is with computers, or land-lines, or cars...
Ooohh Shiny - Not :)
Just a quick word to all the nonboi's on here who are wading in to the argument, stating that the only reason to buy an iPhone is because you like shiny things.
After being a pro user of Nokia's for about 12 years, interspersed with an occasional SE. I picked up an original iPod Touch when they were first released, which coincidentally is still my only "Mac". My main PC was handbuilt by me, and the other two in the house are build off old bits that still work....
Now with an aging N82 and iPod Touch that are both slowly dying from lots of use I find myself in the market for a new phone and mobile media/ game device... I've looked at various phones including the Hero and the iPhone 3GS, and the simple crux of it is that I want to have a single device that does all the things I want it too. Namely, make calls, sms and email as well as being able to play a few games and browse the web on the go and navigate on occasion when I'm in London Town.
Although the Hero is a lovely device, its musical and video performance is till sub par when even compared to the iPhone (give it another year and I think that this will be different though).
So I find myself resigned to the fact that the only device that will do both jobs reasonably well is the iPhone until Android improves (which I'm sure it will).
However I'll be dammed if I have to pay to get on to O2 absolutely rubbish network, so will instead wait until either I or a friend go on holiday to a location where you can just walk in to an Apple store and buy one for the same price as it would cost to buy a PAYG one here.
