or Connect
AppleInsider › Forums › Mobile › iPhone › Sprint buys 30.5M iPhones from Apple for $20B in 'bet-the-company' move
New Posts  All Forums:Forum Nav:

Sprint buys 30.5M iPhones from Apple for $20B in 'bet-the-company' move

post #1 of 181
Thread Starter 
Sprint has "bet the company" on Apple's iPhone, according to The Wall Street Journal, and has agreed upfront to purchase 30.5 million iPhones over the next four years, a commitment of nearly $20 billion.

Sprint Chief Executive Dan Hesse reportedly told his company's board of directors in August that Sprint will likely lose money on the mega-deal until 2014, but he is banking that the addition of the iPhone will help turn around the company that is the No. 3 largest wireless provider in the U.S.

"Mr. Hesse told the board the carrier would have to agree to purchase at least 30.5 million iPhones over the next four years -- a commitment of $20 billion at current rates -- whether or not it could find people to buy them, according to people familiar with the matter," the report said.

"in order to keep the price people pay for the phone low and competitive with rivals, Sprint would be subsidizing the cost of each phone to the tune of about $500, which would take a long time to recoup even at the high monthly fees iPhone users pay."

One person familiar with the company's approach says it's a "bet-the-company" level move that could make or break Sprint. It was the Journal that first reported in August that Sprint would offer Apple's fifth-generation iPhone at launch in the U.S. alongside competing carriers AT&T and Verizon.

Though the plan was initially met with concern by the board, they are said to have approved the massive $20 billion deal, dubbed the "Sony" project internally. Those on the board reportedly believed that Sprint would not be able to compete with AT&T and Verizon if it could not offer the iPhone.

Together, AT&T and Verizon sold nearly 12 million iPhones in the first half of 2011, and sales for Apple's handset continue to grow. The report noted it's possible that Sprint, which currently has 52 million customers, could conceivably sell all of the 30.5 million handsets if it were to capture a third of U.S. sales.

Sprint's apparent desperation was hinted at last month, when Hesse admitted that the lack of the iPhone is the "number one reason" that customers leave his company for competitors AT&T and Verizon.



For years, the iPhone was exclusive to AT&T in the U.S., but that changed this February when availability expanded to Verizon, the largest wireless carrier in the U.S.

The addition of Sprint would make Apple's hot-selling handset available on the three largest carriers in the U.S. That would only leave out T-Mobile among the "big four," though AT&T hopes to acquire T-Mobile with regulatory approval.

Executives at T-Mobile signaled last week that they will not have access to the iPhone 5 at launch, but also made clear that they hope a deal can be worked out with Apple to offer the company's smartphone. In a letter to the carrier's customers, T-Mobile's chief marketing officer suggested that customers take a close look at the carrier's lineup of Android-powered smartphones instead.
post #2 of 181
Hard to see a move like this from any company for an Android phone...
OSX, because making UNIX user friendly is easier than debugging windows.
Reply
OSX, because making UNIX user friendly is easier than debugging windows.
Reply
post #3 of 181
Typical Appleinsider news story

1. Read article on the web
2. Add a bit of context
3. Profit

Wish I thought of that first!
post #4 of 181
Quote:
Originally Posted by AppleInsider View Post

Sprint has "bet the company" on Apple's iPhone, according to The Wall Street Journal, and has agreed upfront to purchase 30.5 million iPhones over the next four years, a commitment of nearly $20 billion.

Sprint Chief Executive Dan Hesse reportedly told his company's board of directors in August that Sprint will likely lose money on the mega-deal until 2014, but he is banking that the addition of the iPhone will help turn around the company that is the No. 3 largest wireless provider in the U.S.

"Mr. Hesse told the board the carrier would have to agree to purchase at least 30.5 million iPhones over the next four years -- a commitment of $20 billion at current rates -- whether or not it could find people to buy them, according to people familiar with the matter," the report said.

"in order to keep the price people pay for the phone low and competitive with rivals, Sprint would be subsidizing the cost of each phone to the tune of about $500, which would take a long time to recoup even at the high monthly fees iPhone users pay."

One person familiar with the company's approach says it's a "bet-the-company" level move that could make or break Sprint. It was the Journal that first reported in August that Sprint would offer Apple's fifth-generation iPhone at launch in the U.S. alongside competing carriers AT&T and Verizon.

Though the plan was initially met with concern by the board, they are said to have approved the massive $20 billion deal, dubbed the "Sony" project internally. Those on the board reportedly believed that Sprint would not be able to compete with AT&T and Verizon if it could not offer the iPhone.

Together, AT&T and Verizon sold nearly 12 million iPhones in the first half of 2011, and sales for Apple's handset continue to grow. The report noted it's possible that Sprint, which currently has 52 million customers, could conceivably sell all of the 30.5 million handsets if it were to capture a third of U.S. sales.

Sprint's apparent desperation was hinted at last month, when Hesse admitted that the lack of the iPhone is the "number one reason" that customers leave his company for competitors AT&T and Verizon.



For years, the iPhone was exclusive to AT&T in the U.S., but that changed this February when availability expanded to Verizon, the largest wireless carrier in the U.S.

The addition of Sprint would make Apple's hot-selling handset available on the three largest carriers in the U.S. That would only leave out T-Mobile among the "big four," though AT&T hopes to acquire T-Mobile with regulatory approval.

Executives at T-Mobile signaled last week that they will not have access to the iPhone 5 at launch, but also made clear that they hope a deal can be worked out with Apple to offer the company's smartphone. In a letter to the carrier's customers, T-Mobile's chief marketing officer suggested that customers take a close look at the carrier's lineup of Android-powered smartphones instead.

holy sh**
post #5 of 181
At last, a carrier thinking outside their comfort zone. Nice marketing move.
post #6 of 181
Quote:
Originally Posted by jukes View Post

holy sh**

Not a single reason that you needed to quote the whole thing. Or any of it, for that matter.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #7 of 181
Quote:
Originally Posted by ddawson100 View Post

Typical Appleinsider news story

1. Read article on the web
2. Add a bit of context
3. Profit

Wish I thought of that first!

this is apple rumor site. this is a rumor, what more do you want. i come here to find out whats going on with apple so i dont have to read all the other sites
post #8 of 181
Some web sources are saying Sprint has exclusivity. I call BS on that.
post #9 of 181
Quote:
Originally Posted by Tallest Skil View Post

Not a single reason that you needed to quote the whole thing. Or any of it, for that matter.

Not a single reason you needed to say anything.
post #10 of 181
Quote:
Originally Posted by shen View Post

Hard to see a move like this from any company for an Android phone...

I am sure the Android fans will claim that Sprint is simply caving in to the media created frenzy in order to market an inferior product (the iPhone) and that only by shoring up their portfolio with the 87 different varieties of Android hardware and software combinations will Sprint survive or remain relevant in the US market. I mean, come on people, Android based devices have a larger screen, a removable battery, AND more buttons on the front than the iPhone, so they are clearly superior. Oh, and don't forget that you have the freedom to try to figure out just where the heck you are supposed to get apps to load on your Android device that are safe and won't be rendered obsolete in 3 months when the Tootsie-Pop version of the OS comes out - no, wait I mean the Fruit-Roll-Up version - no, no wait, the Pop-Tart version.

Oh yeah - and Betamax is better than VHS, just you wait and see.
post #11 of 181
Quote:
Originally Posted by monstrosity View Post

Some web sources are saying Sprint has exclusivity. I call BS on that.

BGR, for one, is running with the exclusivity angle. As an out-of-contract AT&T subscriber (and frequent traveler to the land of no CDMA), I'd be pretty pissed if that were the case.
_ _ _________________________ _ _
smatanovic
_ _ _________________________ _ _
Reply
_ _ _________________________ _ _
smatanovic
_ _ _________________________ _ _
Reply
post #12 of 181
post #13 of 181
Quote:
Originally Posted by stelligent View Post

Not a single reason you needed to say anything.

Er deal with it?

The most important thing to consumers isn't having the iPhone on every carrier, it's having one iPhone for every carrier.

When switching carriers because their service sucks doesn't require another $600 purchase, the telecoms will be forced to fight for our subscriptions.

Until then, expect the same draconian plans, data caps, and throttling from every carrier the iPhone ever graces.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #14 of 181
Quote:
Originally Posted by ddawson100 View Post

Typical Appleinsider news story

1. Read article on the web
2. Add a bit of context
3. Profit

Wish I thought of that first!

I check AI since they aggregate relevant news bits from around the web, but then i immediately click on the source link within the AI article to get the scoop. Otherwise I'm reading huge chunks of the source article masquerading on AI as original journalism.
post #15 of 181
In other news, Verizon to acquire Sprint for $14 billion.

Life is too short to drink bad coffee.

Reply

Life is too short to drink bad coffee.

Reply
post #16 of 181
Quote:
Originally Posted by monstrosity View Post

Some web sources are saying Sprint has exclusivity. I call BS on that.

For this *rumor*, all so-called sources trace back to a WSJ article. WSJ tends to get accurate scoop when the 12th hour approaches. This also explains the pattern of *leaks* about 4S, to some extent.

On the other hand, is $30B enough to buy Apple?

I wonder if what Spring gets is an iPhone that looks different but otherwise has the same features and specs. Or, perhaps, it's a limited period of exclusivity (say 6 months).

And, how does this shake out in other parts of the world?

Regardless, if this is true, the center of gravity may be shifting.
post #17 of 181
Quote:
Originally Posted by Tallest Skil View Post

Er deal with it?

Exactly
post #18 of 181
Maybe Sprint is getting the 4S models exclusively and Verizon and ATT get the iPhone 5
post #19 of 181
Quote:
Originally Posted by smatanovic View Post

BGR, for one, is running with the exclusivity angle. As an out-of-contract AT&T subscriber (and frequent traveler to the land of no CDMA), I'd be pretty pissed if that were the case.

They got their story from WSJ, like everyone else.
post #20 of 181
Quote:
Originally Posted by stelligent View Post

For this *rumor*, all so-called sources trace back to a WSJ article. WSJ tends to get accurate scoop when the 12th hour approaches. This also explains the pattern of *leaks* about 4S, to some extent.

On the other hand, is $30B enough to buy Apple?

I wonder if what Spring gets is an iPhone that looks different but otherwise has the same features and specs. Or, perhaps, it's a limited period of exclusivity (say 6 months).

And, how does this shake out in other parts of the world?

Regardless, if this is true, the center of gravity may be shifting.

If Sprint gets this then I will reluctantly go to sprint. I always thought AT&T had the best service ever. I really like my Iphone and will switch to have the new one.
post #21 of 181
If true, it's probably the safest "bet" they've ever made.

   Apple develops an improved programming language.  Google copied Java.  Everything you need to know, right there.

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

Reply

   Apple develops an improved programming language.  Google copied Java.  Everything you need to know, right there.

 

  MA497LL/A FB463LL/A MC572LL/A FC060LL/A MD481LL/A MD388LL/A ME344LL/A

Reply
post #22 of 181
Wonder if Obama already has the new iPhone 5. He got the iPad early from Jobs.
post #23 of 181
Quote:
Originally Posted by SailorPaul View Post

At last, a carrier thinking outside their comfort zone. Nice marketing move.

Buying a bunch of product that is already pre-sold out the wazoo is "thinking outside their comfort zone?" Um, someone needs to take some businesses courses.
post #24 of 181
Quote:
Originally Posted by AdonisSMU View Post

If Sprint gets this then I will reluctantly go to sprint. I always thought AT&T had the best service ever. I really like my Iphone and will switch to have the new one.

Quote:
Originally Posted by John.B View Post

If true, it's probably the safest "bet" they've ever made.

True dat.

Also, they have the insider scoop - they know how many customers they lost to the iPhone. So they can do the predictive math quite reliably.

On the other hand, I can't see Apple making this a prolonged exclusivity.

Is this happening in other countries? Is China Mobile outbidding China Unicom?

Up until recently, foreign nationals (particularly from China) line up in US Apple Stores to purchase iProducts and bring them back to their home countries. Will Americans now line up in Canada (or elsewhere) to get their iP5?
post #25 of 181
Quote:
Originally Posted by mmcconnell1618 View Post

Maybe Sprint is getting the 4S models exclusively and Verizon and ATT get the iPhone 5

post #26 of 181
Quote:
Originally Posted by stelligent View Post

Wonder if Obama already has the new iPhone 5. He got the iPad early from Jobs.

According to his own words, Obama is totally clueless on technology.

In a commencement speech to students of Hampton University last May, Obama admitted to not knowing how to work Apple's iPod or iPad, or Microsoft's Xbox and Sony's PlayStation game consoles. Obama had also referred to the devices as turning information into a "distraction, a diversion," and "a form of entertainment" that kept people from empowering themselves.

Read more: http://news.cnet.com/8301-13579_3-20...#ixzz1ZklDVxmU
post #27 of 181
Quote:
Originally Posted by AppleInsider View Post

"in order to keep the price people pay for the phone low and competitive with rivals, Sprint would be subsidizing the cost of each phone to the tune of about $500, which would take a long time to recoup even at the high monthly fees iPhone users pay."

Wow...and people wonder why the carriers charge so much. Needless to say, if this happens you can say buh-bye to unlimited data on Sprint.
post #28 of 181
Quote:
Originally Posted by ddawson100 View Post

Typical Appleinsider news story

1. Read article on the web
2. Add a bit of context
3. Profit

Wish I thought of that first!

Nothing stopping you from doing it too. Of course that's not the only thing AI does. They do in-depth reviews and have an occasional scoop. Sure is better than MacDailyNews an all their pretentious crap.
post #29 of 181
Quote:
Originally Posted by Freshmaker View Post

Wow...and people wonder why the carriers charge so much. Needless to say, if this happens you can say buh-bye to unlimited data on Sprint.

Perhaps but they will need to make some waves and give a lot o people a good reason to switch to Sprint. They will need to put some serious marketing muscle behind their investment, which is good for Apple.
post #30 of 181
Well, the WSJ as well as Sprints cheif are now confirming the deal. It's a good deal for Apple's already flush bottom line but is good for the customer loyalty they so often benefit from? If Sprint is the only carrier this holiday season to get the new styalized iPhone body, then this becomes Apples long term problem. Tbose of us who have been always looking to Apple for fair treatment of their early adopters, will (and should) begin to question their integrity as a company.

They need to understand that we are no longer going to jump carrier just to follow their master marketing plan...whatever that may be! I won't switch from ATT as Sprint has given no indication that their unlimited enticement wont be history in a few months. At leaat ATT has been fair in that regard.

I hate telling my kids that they won't have the newest iPhone after making them wait patiently with their 3GS's for years! But se la' vie!

Apple may not have lost us as customers if this exclusivity proves true but they wlll have lost something even more valuable...our faith and confidense that they continue to appreciate us!
post #31 of 181
Holy Crap Batman!
Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
Reply
Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
Reply
post #32 of 181
The bgr story is pretty cool!
post #33 of 181
Quote:
Originally Posted by Seattleinfo View Post

Well, the WSJ as well as Sprints cheif are now confirming the deal.

Where is the link showing Sprint has confirmed the deal?
post #34 of 181
Quote:
Originally Posted by monstrosity View Post

Some web sources are saying Sprint has exclusivity. I call BS on that.

It is ridiculously gonzo as an idea, and I can't believe anyone would even for a moment think Apple would make such a bizarro, dunderheaded move.
post #35 of 181
Quote:
Originally Posted by stelligent View Post

For this *rumor*, all so-called sources trace back to a WSJ article. WSJ tends to get accurate scoop when the 12th hour approaches. This also explains the pattern of *leaks* about 4S, to some extent.

On the other hand, is $30B enough to buy Apple?

I think you left this half thought half baked...

Quote:
I wonder if what Spring gets is an iPhone that looks different but otherwise has the same features and specs.

you obviously have learned nothing about apple branding. I'm surprised about the 3GS rumor. I can't see Apple have 9 SKUs out there

3GS
4White CDMA
4Black CDMA
4White GSM
4Black GSM
4SWhite (CDMA/GSM/HSPA+)
4SBlack (CDMA/GSM/HSPA+)
5White (CDMA/GSM/HSPA+)
5Black (CDMA/GSM/HSPA+)

I sense that the 3GS dies (until supplies runout) and the 4Whites die (same death).


Quote:
Or, perhaps, it's a limited period of exclusivity (say 6 months)

Or, other than for Apple retail, maybe they get priority for restocks. If sprint (and ATT) have all the phones after the first weekend, they get the exclusivity of supply.

It's that form of exclusivity that Apple has dominated in the chip/memory business... "I'll buy all mine 'upfront.' and when I say I want more, I get them drop shipped on time." Hesse/Sprint may have just committed to that sort of volume purchase. Considering they have committed to what... nearly 2M phones a quarter, I could see them getting their own 747 from Sao Paulo right into Sprint Fulfillment Center in KC, and after their plane (and apple's), then the rest of the US channels are fulfilled.
post #36 of 181
Quote:
Originally Posted by stelligent View Post

Where is the link showing Sprint has confirmed the deal?

What?
Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
Reply
Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
Reply
post #37 of 181
Quote:
Originally Posted by boeyc15 View Post

What?

Proof. Tends to help when you're making an argument.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #38 of 181
Quote:
Originally Posted by SailorPaul View Post

At last, a carrier thinking outside their comfort zone. Nice marketing move.

I what way(s)?
post #39 of 181
Quote:
Originally Posted by Cpsro View Post

The bgr story is pretty cool!

It is beyond stupid.
post #40 of 181
Quote:
Originally Posted by Cpsro View Post

The bgr story is pretty cool!

It is, but .... According to them, Sprint would have exclusivity to Assistant. That is doubtful. Would Apple put their next great revolution (as some are touting it) in the hands of the 3rd carrier in the US alone?

Also, the spec division would have the 4S retaining the Retina Display and the iP5 getting a 4" screen (with lower than RD resolution). That's contrary to Apple's way of marketing.
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: iPhone
AppleInsider › Forums › Mobile › iPhone › Sprint buys 30.5M iPhones from Apple for $20B in 'bet-the-company' move