The iPhone is a nightmare for carriers

why carriers fight have iphone when hurts bottom line? sprint lose billions in next few years privilege of selling iphone. has hurt of bottom lines. why bother subsidizing phone? why not let apple sell phone , carriers sell service? long term business sense?

quote

new york (cnnmoney) -- iphone may great consumers, takes nasty toll on wireless carriers' bottom line.
price of apple's (aapl, fortune 500) iconic smartphone heavily discounted carriers. subsidies single-handedly devastate profit margins verizon, at&t , sprint.

since apple's iphone debuted on verizon's network in february 2011, verizon's "ebitda service margin" -- closely watched metric carriers use measure core profit percentage of sales -- has tumbled.
between 2009 , 2010, verizon (vz, fortune 500) averaged ebitda service margin of 46.4% per quarter. in first quarter iphone went on sale, fell 43.7%. last quarter, when verizon sold record 4.2 million iphones, margin plunged 42.2%.

verizon had 1 "good" stretch year: third quarter, when margin bounced record 47.8%. that's same quarter in iphone sales stalled, customers waited apple unveil heavily anticipated new model.

at&t (t, fortune 500) , sprint suffered worse fate. at&t posted stunning 28.7% ebitda service margin last quarter, compared 37.6% year earlier. 1 contributing factor: at&t sold twice many iphones verizon last quarter.

after selling 2 million iphones last quarter, sprint's adjusted wireless margin fell 9.5%, down 16% year ago. company said wednesday morning margin lower have been without iphone subsidy.

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full article: http://money.cnn.com/2012/02/08/technology/iphone_carrier_subsidy/index.htm?iid=hp_ln

 

sure, iphone subsidized, doesn't carrier make money customer paying bill every month 2 years (or long they're lock contract)? i'm confused

 

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