Iphone making worldwide loss (for carriers) | Hacker News Reader

Iphone making worldwide loss (for carriers)

guardian.co.uk

10 pointswr14728 comments

The study mentioned seems to say "iPhone isn't making the profit you might think" even though the thing is spun in the story as "iPhone making a loss for carriers."

But bearing that exaggeration in mind, Strand Consult is three guys in Denmark, and they're not going to make a name for themselves saying "iPhone is great." What I wonder is, if it's not worth having, why O2 and Vodaphone and others are so keen to extend their iPhone operation into other countries?

iPhone is the beginning of a trend that's very negative for mobile carriers - heavy data use (for limited returns and big burden on networks) taking over from heavy call and SMS use (which have enormous profit margins.) There's nothing the carriers can do to prevent this, but it's not going to be good for their mobile spectrum cash cow. So don't blame iPhone, it was too good to last indefinitely anyway.

Looking at the prices for unlocked iPhones, this doesn't come as a big surprise. The 3GS is especially expensive, at around €800 for the 16GB model, and over €900 for the 32GB one. That's a lot for a phone, most consumers won't consciously spend that much, just hidden in the monthly fees, which have to be in a similar ballpark to other tariffs.

However, I suspect the "old" 8GB 3G model, which is around €500 these days, has been generating a tidy profit for the operators since the release of the 3GS. I wouldn't be surprised if this pattern repeated every year: the new model is the loss leader, the previous model, profitable after having come down in price, feeds off the awareness of the high end one.

… for the providers, not for Apple.

You can try filling out their form there if you want to look at the actual text of the free report, rather than what the headline-writers spun it as. (I tried, but didn't get anything yet from them yet). http://www.strandconsult.dk/sw3871.asp

There's also their own non-quantitative summary of the report: http://www.strandreports.com/sw3501.asp

Headline is misleading (in the original article too). What the article says is that the phone operators are losing money on the iphone. The article says nothing about Apple, which presumably is making a ton of money.

It doesn't even really say that the carriers are loosing money it just says they aren't reaping huge profits from it as some people seemed to expect they would.

I really don't get this. It is just a fr*kking phone. From a telco perspective there should be no difference between selling a Nokia smartphone or an iPhone. If there is then they are doing it wrong.

I'm not so sure. iPhone users have a distinctive "feel" that distinguishes them from other smartphone users. This translates into different behavior, different responses to stimulus.

For instance, they tend to be music lovers, more-so than, say, Nokia purchasers. This translates into high-bandwidth usage, and iTunes sales probably isn't shared with carriers. They're interested in accessories that achieve sonic fidelity, something that carriers are notoriously bad at. So they get legit in-ear stuff instead of buying carrier's bluetooth crap.

And Safari is--well--usable, in a way that many (but not all) mobile browsers are not. The awesome layout engine and sweet UI mean that you are likely to actually use it while waiting in line or whatever, where on many other phones the usability cost is so high that you'd rather be bored for 120 seconds waiting to check out of the grocery lane. And of course, the aggregate cost of millions of people waiting in checkout lines is a force to be reckoned with.

This is coming from a guy who loves his iPhone, so feel free to cast my unwavering praise in a negative light. But the thesis--that iPhone users have distinct behavior that tends to oppose the aims of carriers--is a valid one.

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