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Comment by andrewljohnson | Hacker News Reader

If Sprint gets an exclusive on iPhone 5, there is going to be severe backlash. I know many people waiting to upgrade their phone until iPhone 5 comes out, and they aren't going to switch to Sprint to do it.

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.

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Disagree.

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.

But it's not $20B in the bank, it's a commitment to buy $20B worth of phones over four years. Assuming 50% margin on Apple's side, this deal is worth about $2.5B/year. Compared to Apple's revenue of $65B/year or profit of $18B/year, this is peanuts, and not worth any sort of beating, especially since many of the sales they would make from such a deal would not be new, but merely shifted.

So a guaranteed 2.5B/year for a few months of exclusivity? Seems like a pretty big win to me.

> 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).

You have to compare it to the alternative -- how many sales on Verizon / AT&T will they lose with this exclusivity? How many phones would they sell on Sprint if it was available there, just not exclusively?

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