Sprint to 'Bet the Company' on iPhone
online.wsj.com
online.wsj.com
http://www.bgr.com/2011/10/03/sprint-guarantees-to-buy-over-...
If this did happen, I'm not sure what the knock-on effect for Sprint is. Anyone who wants an iPhone has one. The Verizon thing is over. All those people are locked into contracts. I don't think we'll see lines out the door on release morning for iPhone 5 and Sprint.
Just give me a decent amount of minutes I'll never use, maybe 4-5g data/mon with no tethering and unlimited texts for something close to what the Europeans get service for. If carriers want to play price war, its about damn time. AT&T and Verizon aren't going to play that ball unless someone blinks.
I know a few people still on the 3GS, out of contract, and looking for an upgrade. If the iPhone 5 came out on another carrier (especially with an unlimited plan), they'd be happy to jump ship.
Where one to entertain this crazy notion though the reasoning could center around Sprint's WiMAX deployment and the iPhone 5's need for higher bandwidth. Should the much rumored "Assistant" feature of the new iPhone require a bigger pipe to the Internet to function, then this could be plausible.
Yet in the end, why? Apple has only expanded their supported carriers since 2007. Centering on Sprint in the hope of forcing the hand of AT&T and Verizon in the US is a fools errand. They would be effectively shrinking the market they worked so hard to expand into. Seems nuts.
There's a better chance that Tim Cook will eat an iPhone than announce a Sprint exclusive.
(Again, doubtful, but it would address that problem.)
I left Sprint to get an iPhone. If I need to rejoin Sprint to get the next iPhone, that's no problem.
You have to figure how much is your time really worth?! All the AT&T network b.s. (esp in San Francisco & NYC) that we've had to deal with costs me and my gf much more than the cancellation fee ever will. That said, the cancellation fee is still a load of crap.
My wife, however, makes at least 60 minutes of calls on more days than not, keeping in touch with friends and family (basically all the social lubrication I do with email and Google+). For her, the network effect is incredibly strong: all her friends and family are on Verizon, so she is very hesitant to switch as she gets the in-network minutes free. It was a huge deal for her when I announced I wanted to leave Verizon (for a Virgin Mobile Android) and how many minutes that would add to her plan.
I think a lot of people are loyal to their network not because of what they get from it, but about the people they know on it.
Sprint has unlimited mobile to mobile for plans with data, so as long as the other person is on a mobile line (probable since they are on Verizon), the call is free.
It seems likely to me that Sprint made this commitment in order to get access to the iPhone at all. But an exclusive on their network makes no sense at all for the relatively small deal (from Apple's perspective) being described here.
- It may not possible to produce an LTE iPhone 5 for either Verizon or AT&T right how (or for any other country), as the LTE chipsets are not ready and LTE deployments are limited. However, it may be possible in six to nine months.
- WiMAX chipsets may be more mature than LTE, and Sprint's LTE deployment may be widespread, making it possible to produce such a phone for Sprint.
- Sprint has promised to buy 7.5 million iPhones a year, which is a whopping 31% of US iPhone sales
- The depth of the Sprint commitment effectively means there is no room for Android on that carrier.
So, if Apple's choices are:
a) Produce non-LTE phone for AT&T and Verizon, only to obsolete it six months later in order to compete with LTE phones running Android.
b) Give Sprint temporary six to nine month "exclusivity" to a phone that they could not produce for anyone else anyway in return for 30% more U.S. sales and killing Android on Sprint
... then it's plausible for them to choose b.
The main reason I wanted to switch to Sprint was they seemed to be really for the consumer and pushed that they offered Unlimited Data. Most months I stay under 5gb (though its close) on my android phone but occasionally I travel and do use quite a bit more.
Before I did sign up though the rumors started coming out about the iphone coming to sprint which I immediately predicted would kill their unlimited data deal, which though its not on the phones themselves yet has been enforced on hotspot users.
I know people love their iphones but I just really hate how it is ruining networks for everyone. Every network they move to kills their unlimited data plan with their arrival. :(
So, you should look into it, and if you're still planning to switch, you should probably try to do it before the iPhone comes out.
On the consumer side, I've seen plenty of helpful customer service people do something slightly wrong and then the customer is locked out of their grandfathered plan or whatever else.
So yes, I agree. What they say and what is true don't always have anything to do with one another.
(One caveat to this is that sometimes only a few people know how to do something, and to everyone else it is "impossible." Sometimes this is poor training, and sometimes it is a rep who knows how to cheat the system a bit for a better customer experience.)
There are two different modes of operations wrt the mobile phone industry. US and most other European countries package phone and services together. Whereas in a lesser sophisticated market like here in India phone and services are independent of each other.
Both have their own pros and cons - Here I would never choose a crappy network because they have a better phone (I buy the phone of my choice) but at the cost of paying an extra premium (and that's quite a bit) for the phone (and the freedom to switch network anyday). The advantage wanes away as more operators provide better choice (but there is always the possibility that a phone maker could enter into an exclusive agreement).
Which of these models would result in a better service for the customer? Which is likely to succeed (or rather, be more successful)?
The only way to beat this is to buy phones out of pocket and get a plan that doesn't require a contract. However, you'll still lose out on flexibility, because the companies in the US use incompatible technologies.
Fun fact: the incompatible technologies were originally conceived of as a way to increase competition between phone companies. Guess what effect they actually had!
Bundling uses a common pricing psychological trick - by reducing the fixed price (i.e. the phone price) but increasing the variable charge (i.e. the monthly bill) the consumer has a perception that the deal is "cheaper". I'd venture to say that the wealth level of consumers who buy high end smartphones in the US is lower than those who do in other markets - essentially the lower one time charge encourages consumers to buy phones they really can't afford (it's like layaway for mobile phones). Furthermore, the consumer is locked into a long term contract (usually 2+ years) so they can't churn.
Finally, carriers can exploit uninformed consumers. For example, you can offer two free phones with a plan, one of which has a cost of $300 and the other $200 to the carrier. You can list both phones at a fake MSRP $350 making both phones seem like equivalent deals when in fact consumers who buy the $200 phone are essentially writing a $100 check to the carriers. Since carriers bundle phones with the service and most models are carrier specific, there is no perception of the actual value of a phone and thus, it's really easy to do this.
In general, the US market is pretty anti-competitive because of i) bundling ii) carrier locked phones iii) lack of pre-paid options (esp on the high end) iv) long term contracts v) CDMA networks which prevent re-using phones with another carriers
So in general US customers get a raw deal when compared to other markets (don't get me started on how we get charged for incoming calls and SMS). On the plus side, we do tend to get coolest phones first.
A lot of Europe also purchases the phone and the services separately.
> "Five years ago, the Motorola Razr was the top-selling phone," says
> Credit Suisse analyst Jonathan Chaplin. "Imagine trying to sell 6
> million of them today."
It seems more like the iPhone combines generally good-but-not-fabulous engineering with the continued irrational loyalty of "Apple Fanboys".
Edit: But this too may indeed be a competitive advantage that's hard to match...
Frankly, I'm surprised they haven't organized into a massive armed malita, given the amount of hatred and bigotry apple fanboys bring to a discussion. It seems like the complete solidarity of everyone to ever pass a credit card to Apple would make them a formidable force.
There are plenty of us who have suitable portable computers (iPad in particular) who don't want an iPad Nano overlapping functionality.
I have a hunch that this will apply to the iPhone too. Of course, you would be able to jailbreak then tether, but I'm not sure how many ordinary users would be willing to do that.
According to my first reference below, tethering will also be capped at five gigabytes with the launch of the iPhone. So, you'll have to pay $30 for tethering five gigabytes a month. The internet on the handset will still be unlimited.
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1. http://www.dslreports.com/shownews/Sprint-Caps-Official-Teth...
I think if the iPhone comes with the same price plans as today you'll see Sprint sell a boatload of iPhones.
Remember, though, that the smartphone market is far from saturated. You could argue that it's barely been tapped - dumbphones still compose the vast majority of the U.S. phone share. Upgrading from a 3 year old dumbphone is a prime opportunity for a consumer to rethink their phone carrier. I imagine Sprint lost a lot of first time smartphone buyers to the iPhone thanks to Apple's "easy-to-use" reputation and the massive hype of every iPhone debut.
The only benefit for the locked ones are that you get to buy it on what is essentially cheap credit, but it's not like you save any significant amount of money on that.
This would be a betrayal of all of their customers holding iPhone 3G/3GS/4 waiting to upgrade on Verizon or AT&T, and it will be a big chink in the armor for Android to exploit.
It would annoy me as a developer too.
For these reasons, I sort of find it hard to believe that an exclusive is possible, but I guess $20B is a lot of money.
There's no 3G/3GS on Verizon and exactly zero iPhone 4 Verizon customers are eligible for a subsidized upgrade yet. So it only affects the tiny number of customers who are going to pay $600 for an out-of-contract upgrade. The vast majority of Verizon iPhone owners would have to wait for their subsidized upgrade date which for most is March/April 2012 at the earliest.
For AT&T customers things are a bit more tricky. Any iPhone 4 owners are in the same boat as Verizon customers. Most won't have a subsidized upgrade available until late December. (if you have a more expensive plan with AT&T your upgrade date is earlier) This also goes for people who bought the 3GS in the last 14 months. The people who opted for the 3G in the last ~20 months decided to buy a low end model. For them the iPhone 4 or 4S would be the natural upgrade path and a massive upgrade.
No doubt there are some risks but I doubt Sprint would have a very long exclusivity period so even if Apple takes a beating for a month or two it will be of little consequence compared to $20B in the bank.
> especially since many of the sales they would make from such a deal would not be new, but merely shifted
Possibly, but they could pick up new customers as well (existing sprint customers that want to upgrade to a smartphone, etc).
And iPhone is more available today - you can buy it unlocked, you can buy it on AT&T or Verizon. So the only people that are really going to buy iPhone on Sprint are the smaller number that have only Sprint coverage (theoretical - not sure if that is valid) and only want an iPhone. The second smaller group will be the people within Sprint's 4G coverage areas that like Sprint's data plan better - as the speeds aren't all that great on WiMax compared to competition.