The iPhone is a nightmare for carriers

[spork183]

I can find multiple articles both supporting and vilifying the iphone and its impact on wireless carriers. The one key fact that jumps out at me is the sheer number of carriers, around the world, that are desperate to carry the iphone. It is incomprehensible to me that so many different carriers would fall for the "same" blunder of killing their business with the iphone. It is possible to make numbers say anything, but these carriers aren't all losing money in the clutches of Apple.

(However, say for the sake of argument that Apple has duped them all: Whoa, that is some serious reality distortion field stuff going on...)

 

[Mac2012]

I hope all the cell companies go broke! They are RIP OFFS to say the least! It's JUST A WALKIE TALKIE get real! I think they are doing well for being such BS! I can't wait till WIMAX hits and hits hard because the cell companies will be GONE BABY he he... they'll do their best to keep that one on the back burner I'm sure but people want better pricing for a walkie talkie man!

 

[AppleScruff1]

I can find multiple articles both supporting and vilifying the iphone and its impact on wireless carriers. The one key fact that jumps out at me is the sheer number of carriers, around the world, that are desperate to carry the iphone. It is incomprehensible to me that so many different carriers would fall for the "same" blunder of killing their business with the iphone. It is possible to make numbers say anything, but these carriers aren't all losing money in the clutches of Apple.

(However, say for the sake of argument that Apple has duped them all: Whoa, that is some serious reality distortion field stuff going on...)

Could you link to a few that support the iPhones impact on carriers? I'd like to read them.

 

[BaldiMac]

Here's another article that claims that the iPhone is hurting carriers profits and that AT&T has been hit the hardest. In parrt:



http://www.latimes.com/business/la-fi-iphone-blues-20120211,0,3110013.story

Again, any smartphone that adds smartphone users to a carrier in a given quarter is going to impact the carrier's profit margins for that quarter. That's the nature of paying a subsidy.

 

[calderone]

So explain to me how they are going to make money in the long run. I buy a truck load of watermelons for a dollar eachand sell them for .99. I sell nothing but watermelons and there is no other money stream besides watermelon sales. How many watermelons must I sell to make a profit?

The carriers don't sell "nothing but smartphones." In other words, invalid comparison.

Not to mention your elementary understanding of economics is startling.

The Amazon and XBox examples are a bit different. They are selling you a product at a loss in the hopes of selling you further content at a profit. The data service is the content for a cell carrier.

No, they aren't different. Generalization is your friend here. What is shared in common between the two examples: Selling you something in the hope you'll buy something else.

In one breath you say "I am only selling watermelons (smart phones), nothing else" and follow with "The data service is the content for a cell carrier."

Honestly, this is laughable. No response from you yet despite numerous subsequent posts. Those posts include more of the same basic argument and new even more childish arguments.

 

[vvswarup]

Pay more money for less machine because it was Apple branded. Used to be true years ago but not as much anymore (don't pay attention to *LTD* he's still rather new when it comes to Macs). Newly revised Macs are pretty price comparable but since Apple doesn't update as often nor typically lower prices the longer a Mac has been out the less of a deal it becomes. Take the current Mac Pros, for example. Very long in the tooth and no longer priced competitively, but when the new towers come out they will probably the same price, if not a bit cheaper, than a similar spec'd PC from Dell or HP.


Lethal

A tax is usually something that is forced on you. The government is forcing you to pay taxes. How is Apple forcing you to pay for their stuff?

 

[AppleScruff1]

The carriers don't sell "nothing but smartphones." In other words, invalid comparison.

Not to mention your elementary understanding of economics is startling.



No, they aren't different. Generalization is your friend here. What is shared in common between the two examples: Selling you something in the hope you'll buy something else.

In one breath you say "I am only selling watermelons (smart phones), nothing else" and follow with "The data service is the content for a cell carrier."

Honestly, this is laughable. No response from you yet despite numerous subsequent posts. Those posts include more of the same basic argument and new even more childish arguments.

I'm quoting two articles. Please provide information that shows the amount of profit a carrier makes from the iPhone. Thanks. And no need to be insulting about it. Remember, we're discussing an article. I'm the messenger, stop attacking me and provide evidence to the contrary.

 

[BaldiMac]

I'm quoting two articles. Please provide information that shows the amount of profit a carrier makes from the iPhone. Thanks. And no need to be insulting about it. Remember, we're discussing an article. I'm the messenger, stop attacking me and provide evidence to the contrary.

Obviously, that information isn't released by the carriers. You claimed to be starting this thread looking for an explanation. I provided you with an explanation. Twice. Why are you ignoring it?

 

[LethalWolfe]

A tax is usually something that is forced on you. The government is forcing you to pay taxes. How is Apple forcing you to pay for their stuff?

It's a figure of speech.

 

[BaldiMac]

It's a figure of speech.

No, it's propaganda.

 

[AppleScruff1]

Obviously, that information isn't released by the carriers. You claimed to be starting this thread looking for an explanation. I provided you with an explanation. Twice. Why are you ignoring it?

You provided no source for your explanation. And as you are so fond of asking when anyone else makes a post like yours, source? Why are you ignoring providing facts? See, two can play your game.

 

[calderone]

I'm quoting two articles. Please provide information that shows the amount of profit a carrier makes from the iPhone. Thanks. And no need to be insulting about it. Remember, we're discussing an article. I'm the messenger, stop attacking me and provide evidence to the contrary.

That information does not exist. These companies are simply not breaking down the iPhone math outside of subscribers. You yourself said previously you would like to see these numbers, but I am sure you have found they do not exist.

I have an insulting tone because you clearly have no idea what you are talking about. You got roped in by a sensational headline and you ran with it. I honestly don't think you even understand the articles you are quoting.

The articles are using earnings reports with high customer activations. It is obvious given the subsidies being paid and high activations, the balance sheet with shift with more payouts despite the higher revenue. This goes for iPhone or anything else.

In other words, these articles are looking at one piece of the picture (remind you of anyone?)

Let's for the sake of argument that the iPhone is a nightmare. All the carriers are losing money on the thing despite service fees. As I asked you before: What is the solution? Of course you provided nothing in response. The carriers solution (which is in response to smartphones in general) is to raise service fees, overage fees and decrease usage limits to ensure overages. Is this a reasonable response?

I digress. You started this thread asking "Why do they sell the iPhone given decreased margins due to higher subsidies?" and "Why they subsidize?"

Those answers have been given to you. They sell it to stay competitive and they subsidize because Americans are cheap and shortsighted.

Until we receive numbers on the real impact of the subsidies, there exists only a correlation to short term decreased profits due to subsidies. Which is really not very interesting. What is more interesting to discuss is the long term impacts (what many have been trying to explain possible outcomes and reasoning to you) and potentially whether this model of subsidizing should persist.

That warrants a discussion. Not "I buy my watermelons for x and sell them for less, this is stupid!"

 

[AppleScruff1]

I have an insulting tone because you clearly have no idea what you are talking about. You got roped in by a sensational headline and you ran with it. I honestly don't think you even understand the articles you are quoting.

I got roped in by nothing. I posted it here for discussion, but you and a few of your cronies have turned it into a discussion about me, not the article.

 

[vvswarup]

It's a figure of speech.

On that note, I'm surprised no one talks about the Microsoft tax, because it exists. Microsoft's profit margins are higher than Apple's margins.

 

[BaldiMac]

You provided no source for your explanation. And as you are so fond of asking when anyone else makes a post like yours, source? Why are you ignoring providing facts? See, two can play your game.

What would you like a source for? Do you need a source for the fact that carriers pay a subsidy? Or the fact that when you pay for something up front and expect to make your money back over two years, you lose money in the quarter that you pay for it?

 

[noisycats]

I got roped in by nothing. I posted it here for discussion, but you and a few of your cronies have turned it into a discussion about me, not the article.

Because the article is not worthy of discussion. It is a junk article designed to generate clicks. The cronies are trying to explain this to you but you keep hiding behind the article.

In this case, you are more worthy of discussion than the article--specifically why you continue to stand (or hide) behind it.

 

[spork183]

Could you link to a few that support the iPhones impact on carriers? I'd like to read them.

http://www.kansascity.com/2012/02/09/3418804/sprint-bondholders-like-buy-now.html
More duped people who don't see the light...

http://www.nytimes.com/2011/10/21/technology/att-profit-is-hit-by-slowing-iphone-demand.html
Profit hit by slowing iphone demand. Must be that reverse psychology accounting. "Please, rescue us from the iphone."

http://news.cnet.com/8301-1035_3-20122868-94/at-t-profit-down-but-company-upbeat-about-q4/

Apple on Tuesday reported iPhone sales figures that fell below Wall Street analysts' target, which many expected to translate to lower iPhone sales for AT&T. A high number of iPhone activations leads to lower margins because of the subsidies AT&T pays Apple.

The carrier, like its rivals Verizon Wireless and Sprint Nextel, is willing to take an immediate financial hit with the iPhone because it leads to more loyal customers willing to spend more each month.

Bold added

Just not seeing it. Margins are not everything.

 

[AppleScruff1]

What would you like a source for? Do you need a source for the fact that carriers pay a subsidy? Or the fact that when you pay for something up front and expect to make your money back over two years, you lose money in the quarter that you pay for it?

Just using the same tactic you use here day in and day out. When someone posts something you don't like, you start your circle talk. And ask for a source. Otherwise it's just opinion and speculation. Your words, not mine.

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http://www.kansascity.com/2012/02/09/3418804/sprint-bondholders-like-buy-now.html
More duped people who don't see the light...

http://www.nytimes.com/2011/10/21/technology/att-profit-is-hit-by-slowing-iphone-demand.html
Profit hit by slowing iphone demand. Must be that reverse psychology accounting. "Please, rescue us from the iphone."

http://news.cnet.com/8301-1035_3-20122868-94/at-t-profit-down-but-company-upbeat-about-q4/

Bold added

Just not seeing it. Margins are not everything.

Thank you for providing the links to support a viewpoint different than the two sources in this thread.

And to those to whom it applies, are margins only important for Apple and not anyone else? If another company makes a big profit they are ripping off consumers?

 

[rhett7660]

Just using the same tactic you use here day in and day out. When someone posts something you don't like, you start your circle talk. And ask for a source. Otherwise it's just opinion and speculation. Your words, not mine.

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Thank you for providing the links to support a viewpoint different than the two sources in this thread.

And to those to whom it applies, are margins only important for Apple and not anyone else? If another company makes a big profit they are ripping off consumers?

Can you provide an example of this? I ask in all fairness not to be a J/A? I don't think this is the case at all. There are plenty of companies who provide a premium for services or products and are not lambasted over the coals. Some of the "higher" end cars and stereo equipment come to mind as being companies that charge a premium for products that can be had at a much more reasonable price to the average person.

 

[AppleScruff1]

Can you provide an example of this? I ask in all fairness not to be a J/A? I don't think this is the case at all. There are plenty of companies who provide a premium for services or products and are not lambasted over the coals. Some of the "higher" end cars and stereo equipment come to mind as being companies that charge a premium for products that can be had at a much more reasonable price to the average person.

On this forum? People are crying because AT&T raised their data price by $5 and calling them greedy pigs. These same people are also beating their chests about how much profit Apple makes and are glad to pay more to insure Apple's future. Maybe in the real world it's as you have stated. Here if a company other than Apple makes money, they are thieves. Read some of the threads on the upper forums and you should find ample evidence of this.

 

[Consultant]

New York Times, February 8, 2012
http://www.nytimes.com/2012/02/09/technology/sprint-posts-net-loss-but-revenue-gain-on-iphone.html

Sprint has said that it expected the iPhone to initially depress its earnings because of the high costs of subsidizing each handset, which lowers the retail price of the phone for customers signing a two-year contract.

Yes, higher cost up front, but they
- will make money in the long term
- gained subscribers

Same with Verizon. Higher cost up front, but becomes profitable later.
http://paidcontent.org/article/419-...iphones-in-q4-but-costs-higher-than-expected/

So the OP thinks all these companies and everybody who buys Apple products are fools?

 

[rhett7660]

On this forum? People are crying because AT&T raised their data price by $5 and calling them greedy pigs. These same people are also beating their chests about how much profit Apple makes and are glad to pay more to insure Apple's future. Maybe in the real world it's as you have stated. Here if a company other than Apple makes money, they are thieves. Read some of the threads on the upper forums and you should find ample evidence of this.

I can see the greedy pig comments about ATT and Verizon. They are offering a service that hasn't changed yet they are charging more for it? You don't hear so much about sprint, because when they say unlimited it is unlimited, there are no caps etc. You have Verizon and ATT both saying unlimited but we will throttle you down if you use to much and we are going to raise our prices on all our subscribers. Yes I can see that as being greedy. You are no longer offering a service that has any benefits for the end user or added benefits to the end user yet you are going to raise the price on them.

 

[jsolares]

I can see the greedy pig comments about ATT and Verizon. They are offering a service that hasn't changed yet they are charging more for it? You don't hear so much about sprint, because when they say unlimited it is unlimited, there are no caps etc. You have Verizon and ATT both saying unlimited but we will throttle you down if you use to much and we are going to raise our prices on all our subscribers. Yes I can see that as being greedy. You are no longer offering a service that has any benefits for the end user or added benefits to the end user yet you are going to raise the price on them.

I actually think they're finding the iPhone is not as good for their profits due to higher subsidy than they thought, so to appease their shareholders they have to raise prices, that or they're finding they need to spend more to improve their network now that smartphones are in such high demand.

Someone with more time go and look at apple profits per subscriber and see if it has changed in any way since the iPhone, and again now that Verizon and Sprint also have them.

 

[Consultant]

One reason why companies decide to sell the iPhone.

10 minute course "Introduction to return on capital and cost of capital. Using these concepts to decide where to invest."
http://www.youtube.com/user/khanacademy?ob=4#p/c/9ECA8AEB409B3E4F/23/9T6ZPYYu_Dk

The companies use these concepts to invest in the iPhone.

 

[rhett7660]

I actually think they're finding the iPhone is not as good for their profits due to higher subsidy than they thought, so to appease their shareholders they have to raise prices, that or they're finding they need to spend more to improve their network now that smartphones are in such high demand.

Someone with more time go and look at apple profits per subscriber and see if it has changed in any way since the iPhone, and again now that Verizon and Sprint also have them.

This could be very true..... however hasn't there always been issues with ATT network coverage and now that they have a phone or phones that are just blasting their network those issues have just been magnified exponentially? Even if they didn't have the iPhone they will still need to improve their network.

It is just like the cable companies who raise their rates but give nothing in return. It is one thing to raise and say you are now going to get xyz. However to raise the rates and not give anything in return, not even better coverage or services. That is where people get upset.