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Sprint sold 1.8M iPhones in holiday quarter, 40% to new subscribers

post #1 of 32
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Sprint, the third-largest wireless carrier in the U.S., announced on Wednesday that it sold 1.8 million iPhones in the fourth quarter of 2011, with 40 percent of those to new subscribers.

The holiday quarter represents the debut of the iPhone on Sprint, with both the iPhone 4S and the iPhone 4 becoming available at the carrier in October. When the handsets became available, they broke Sprint's one-day sales records, but Wednesday was the first indication of just how many iPhones Sprint actually activated in the period.

In all, Sprint had net subscriber additions of 1.6 million during the fourth quarter of 2011, representing the carrier's best quarterly result in 6 years. The iPhone represented 720,000 of those new customers, or 45 percent.

"Our strong fourth quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience," said Dan Hesse, Sprint CEO. "During the past year, Sprint added more than 5 million net new customers and grew wireless service revenue by more than 5 percent, including 17 percent for the Sprint platform. This momentum gives us confidence as we execute our Network Vision upgrade and 4G LTE roll-out."

Sprint's numbers compare to 7.6 million iPhone activations at AT&T, which was Apple's exclusive carrier partner in the U.S. for years. The iPhone represented more than 80 percent of the smartphones activated at AT&T in the holiday quarter.

And Verizon, the largest wireless carrier in the U.S., and a company that first gained access to the iPhone in February of 2011, activated 4.2 million iPhones in the holiday quarter. That represented more than half of the 7.7 million smartphones Verizon sold in the three-month period.




The iPhone helped Sprint report its largest sequential increase in operating revenues in more than 5 years. Sprint now serves more than 55 million customers, its highest total ever.

The carrier said its strong revenue growth and cost management were partially offset in the quarter by sales expense caused by a "successful launch of the iPhone." Last year, it was rumored that Sprint had purchased 30.5 million iPhones from Apple over the next four years in a $20 billion commitment described by The Wall Street Journal as a "bet-the-company" move.

[ View article on AppleInsider ]
post #2 of 32
It seems impossible to deny the effect the iPhone has on the industry. Despite the high cost for carriers the device is so popular that customers are coming back to Sprint. I don't recall the last time they didn't have a net subscriber loss.

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post #3 of 32
If they maintain that volume they'll just make that 28M+ commitment on iPhone purchases over 4 years. Here's hoping they do. We don't need fewer telecom options.
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post #4 of 32
Quote:
Originally Posted by Gatorguy View Post

If they maintain that volume they'll just make that 28M+ commitment on iPhone purchases over 4 years. Here's hoping they do. We don't need fewer telecom options.

There is a clear trend of iPhone sales increasing YoY. Of course, when talking about a single carrier things could be different, especially if Sprint has to drop their unlimited data plan in the future due to excessive smartphone usage saturation but I assume that would only come about because they are doing so well in subscriber additions and upgrades from dumb phones to smartphones.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #5 of 32
30 million - 1.8 million = 28.2 million. Oh boy.

Now, when the iPhone 5 comes out this year with LTE, who's going to get a Sprint iPhone then? Sprint does not have LTE....yes, they said they plan on it....but it won't be built out for several years.
post #6 of 32
Good for them. The iPhone needs to be on even more carriers. How many people are buying Android because they can't buy an iPhone?

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post #7 of 32
Quote:
Originally Posted by noexpectations View Post

30 million - 1.8 million = 28.2 million. Oh boy.

Now, when the iPhone 5 comes out this year with LTE, who's going to get a Sprint iPhone then? Sprint does not have LTE....yes, they said they plan on it....but it won't be built out for several years.

First, the 30 million is a rumored number. Second, it's certainly in the range of achievable, even without allowing for YoY growth: 4 years = 16 quarters. 16*1.8 ≈ 29M.
post #8 of 32
But I had no useful signal in my house. Returned all 5. It was too bad, I wanted to return to Sprint.
post #9 of 32
I think we can all agree we don't need fewer telecommunications companies.
post #10 of 32
Quote:
Originally Posted by MacBook Pro View Post

Unfortunately, Sprint added 1.6 million subscribers but "...the iPhone represented [only] 720,000 of those new customers, or 45 percent."

Why is the sale of another iPhone to an existing customer not a 'sale'?
post #11 of 32
Quote:
Originally Posted by anantksundaram View Post

First, the 30 million is a rumored number. Second, it's certainly in the range of achievable, even without allowing for YoY growth: 4 years = 16 quarters. 16*1.8 ≈ 29M.

The 30 million phones is speculative based on an average sale price but the $20 billion commitment seemed fairly certain to me.

Isn't the iPhone average $649 for Apple in the last quarter? For 1.8 million units that 1.1682 billion for the quarter. 16 x 1.1682 = 18.6912 billion. So with an assumed growth they should easily sell 20M. Note that is without assuming that Sprint subscribers are buying lower-end iPhones than other carriers and/or countries, which I think is worth considering for any carrier that is considered "budget" or low cost in some way.

I think the real question is whether Sprint is healthy enough to maintain the iPhone. It's like giving someone who's been near starvation rich food. Their body may not be able to handle it well. They did lose $1.3 billion this quarter, and a huge portion was because of the iPhone subsidizations. Hopefully we'll see that drop over the coming quarters as they start to recoup their investments.

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post #12 of 32
I'm guessing the news will be bleak for T-moible. Not every company can gain new subscribers... somebody is going to have to lose.
post #13 of 32
I'm running back to Sprint as soon as my contract is over with ATT.
post #14 of 32
Quote:
Originally Posted by ArchAngel21x View Post

I'm running back to Sprint as soon as my contract is over with ATT.

Good luck. Based on recent national tests, Sprint drops more calls and is 1/6 the speed of AT&T. Maybe your area is different.

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post #15 of 32
Quote:
Originally Posted by anantksundaram View Post

Why is the sale of another iPhone to an existing customer not a 'sale'?

It is a sale. But the carrier makes MUCH less money. If the existing customer keeps their current phone, the carrier gets full boat. If they have to subsidize a phone to the existing customer, they have an immediate expense, make a lot less in total, and the money just dribbles in over the course of two years.

The best customers are the ones who just keep paying without claiming a new phone. Second are the new customers, and a distant third are existing customers who get new phones every time.
post #16 of 32
Quote:
Originally Posted by SolipsismX View Post

I think the real question is whether Sprint is healthy enough to maintain the iPhone. It's like giving someone who's been near starvation rich food. Their body may not be able to handle it well. They did lose $1.3 billion this quarter, and a huge portion was because of the iPhone subsidizations. Hopefully we'll see that drop over the coming quarters as they start to recoup their investments.

This.

With 5 billion in cash, an LTE rollout starting, losing upfront money on the iPhone, and taking a billion dollar loss in a quarter...how long can you survive?

I certainly hope they do. But right now the math is bleak.
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post #17 of 32
post #18 of 32
Quote:

1) While I appreciate the extra take on the story I would also like to read your thoughts on it instead of just a link without an explanation.

2) The title "Sprint Nextel (S.N) posted a bigger loss, reflecting the higher costs of selling Apple Inc's (AAPL.O) iPhone. But the loss was smaller than expected because its signed up fewer subscribers than expected" is funny. No wonder AT&T wanted to keep profit sharing.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #19 of 32
Android is claimed to have a higher new to smartphones rate than iPhone. This is seen as a material advantage, I presume with the view of cost of change will keep them. However, the much poorer customer satisfaction, poor renew Android with Android, etc. as well as, the high percentage of iPhone new users to telco, e.g., Sprint, says to me:

1. I got conned into buying on the cheap, but not sure I will stay
2. I will stay with iPhone if I have one now and if I have an Android i will most likely hop to iPhone in the future

So what is the situation from an evolving business sense for Android. Are they gettting newbies at a high rate but not keeping them so in the end Apple wins?
post #20 of 32
Quote:
Originally Posted by AppleInsider View Post

Sprint, the third-largest wireless carrier in the U.S., announced on Wednesday that it sold 1.8 million iPhones in the fourth quarter of 2011, with 40 percent of those to new subscribers.


The more iPhones Sprint sells, the more money they lose in the short run. At some point, selling too many iPhones will cause huge cash flow problems.

Eventually, Sprint will profit off of every iPhone they sell. In the meantime, they get deeper into the hole with every sale.

My guess is that Apple is one of Sprint's largest secured creditors, and having provided purchase money financing, will be in a good spot if Sprint claims bankruptcy compared to some others. The question is how long Sprint can hold out. If they haven't got a finely-tuned enough crystal ball, they might have to declare chapter 7 to get debtor -in-possession financing to tide them over until the profits flow.

Then again, maybe they will be forced to liquidate, with the various pieces going in all directions.

Or they could hold out OK for a while, until the profits start coming back.

It will be interesting to watch.
post #21 of 32
So once Android gutted RIM and Windows Mobile phone marketshare they began a systematic erosion of the feature phone market segment. It looks like Android has now hit the first of the plateaus in the market uptake slope. However, it seems like the iOS phones are using the Android marketshare as a gateway device. And as Android growth slows, the proof of this will become more evident as Apple does to Android what it is doing to the PC market.

Apple has demonstrated that their approach (build a customer-focussed user experience) may be the ultimate successful approach against the industry standard "build a technology that consumers can use". Android made the classic mistake of assuming that simply providing a technology to consumers would sustain market uptake, failing to recognize the eventual failure of that model in the PC marketplace. The result - the first of the plateaus in marketshare growth that marks the eventual downturn and decline in marketshare.

This is why Android, driven as it is primarily by engineers, can't get around to refining the user experience, other than by adding features or refining existing ones. Seemingly no one there is pushing the consumer-centric approach, or it is getting lost in the actual motives behind Android - drive mobile ad revenue for Google.

The carriers are slowly being moved into commodity providers like other utilities, Sprint has a narrow window in which to regain marketshare against V & A, before this impact is felt deeply.
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post #22 of 32
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Originally Posted by fecklesstechguy View Post

Android made the classic mistake of assuming that simply providing a technology to consumers would sustain market uptake, failing to recognize the eventual failure of that model in the PC marketplace.


I'm not sure what you mean by that. Can you give examples?
post #23 of 32
Quote:
Originally Posted by Aizmov View Post

Good for them. The iPhone needs to be on even more carriers. How many people are buying Android because they can't buy an iPhone?

A lot more by a huge number. Despite the cheerleading of Apple fans, if you look at the big picture, globally, iOS is just a drop in the bucket.

http://mobithinking.com/mobile-marke...t-mobile-stats
post #24 of 32
Quote:
Originally Posted by slapppy View Post

A lot more by a huge number. Despite the cheerleading of Apple fans, if you look at the big picture, globally, iOS is just a drop in the bucket.

http://mobithinking.com/mobile-marke...t-mobile-stats

If you look at the big picture...

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post #25 of 32
Quote:
Originally Posted by slapppy View Post

A lot more by a huge number. Despite the cheerleading of Apple fans, if you look at the big picture, globally, iOS is just a drop in the bucket.

http://mobithinking.com/mobile-marke...t-mobile-stats

You are correct. Poor, poor Apple. Only 9% of the global mobile phone market share and only 70% of global mobile phone profit share.
post #26 of 32
Quote:
Originally Posted by MacBook Pro View Post

You are correct. Poor, poor Apple. Only 9% of the global mobile phone market share and only 70% of global mobile phone profit share.

Apple made more profit last quarter than all the profit had in the handset business a year priot. Poor, poor Apple, surely they wish they had the volume and profit of Nokia¡

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post #27 of 32
I'm putting Slapppy on ignore...he's definitely a Poe or a troll but whatever he is he's annoying.
post #28 of 32
Quote:
Originally Posted by fecklesstechguy View Post

So once Android gutted RIM and Windows Mobile phone marketshare they began a systematic erosion of the feature phone market segment. It looks like Android has now hit the first of the plateaus in the market uptake slope. However, it seems like the iOS phones are using the Android marketshare as a gateway device. And as Android growth slows, the proof of this will become more evident as Apple does to Android what it is doing to the PC market.

Apple has demonstrated that their approach (build a customer-focussed user experience) may be the ultimate successful approach against the industry standard "build a technology that consumers can use". Android made the classic mistake of assuming that simply providing a technology to consumers would sustain market uptake, failing to recognize the eventual failure of that model in the PC marketplace. The result - the first of the plateaus in marketshare growth that marks the eventual downturn and decline in marketshare.

This is why Android, driven as it is primarily by engineers, can't get around to refining the user experience, other than by adding features or refining existing ones. Seemingly no one there is pushing the consumer-centric approach, or it is getting lost in the actual motives behind Android - drive mobile ad revenue for Google.

The carriers are slowly being moved into commodity providers like other utilities, Sprint has a narrow window in which to regain marketshare against V & A, before this impact is felt deeply.

This is an incredible insight! Thanks for sharing it!
post #29 of 32
Quote:
Originally Posted by SolipsismX View Post

There is a clear trend of iPhone sales increasing YoY. Of course, when talking about a single carrier things could be different, especially if Sprint has to drop their unlimited data plan in the future due to excessive smartphone usage saturation but I assume that would only come about because they are doing so well in subscriber additions and upgrades from dumb phones to smartphones.

Remember Sprint is charging an extra $10/phone for new smartphones purchased since January 2011 and before that with the Evo and other 4G phones. That's a lot of extra money and it is their selling point for why they are able to offer unlimited data. My wife and I are getting our iPhones from them today


Quote:
Originally Posted by noexpectations View Post

Now, when the iPhone 5 comes out this year with LTE, who's going to get a Sprint iPhone then? Sprint does not have LTE....yes, they said they plan on it....but it won't be built out for several years.

You are mistaken, unless several now means 2. They have stated they will have their LTE build out nearly completed by the end of 2013. I think it was something like 90-95% of their coverage would provide 4G access.
post #30 of 32
Quote:
Originally Posted by SSquirrel View Post

Remember Sprint is charging an extra $10/phone for new smartphones purchased since January 2011 and before that with the Evo and other 4G phones. That's a lot of extra money and it is their selling point for why they are able to offer unlimited data. My wife and I are getting our iPhones from them today.

I wasn't aware they moved that $10 fee to those with 3G smartphones, too.

I did notice their broadband data speeds for non-phones aren't that cheap and are metered. $35 for 3GB/month.

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post #31 of 32
Quote:
Originally Posted by SolipsismX View Post

I wasn't aware they moved that $10 fee to those with 3G smartphones, too.

I did notice their broadband data speeds for non-phones aren't that cheap and are metered. $35 for 3GB/month.

Yeah they started the $10 fee for just the EVO and the next 4G phone, then they made the decision to add the $10 fee to all new smartphones purchased on Sprint
post #32 of 32
Quote:
Originally Posted by noexpectations View Post

30 million - 1.8 million = 28.2 million. Oh boy.

Now, when the iPhone 5 comes out this year with LTE, who's going to get a Sprint iPhone then? Sprint does not have LTE....yes, they said they plan on it....but it won't be built out for several years.

Kansas City, Baltimore, Houston, Dallas, San Antonio, and Atlanta all go LTE for Sprint in April/May time frame of this year.

No doubt Apple has told AT&T, Sprint and Verizon if LTE is coming for iPhone5, so I would expect all carriers to be VERY aggressive with deployments over the next few months to get up to speed.
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