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

Posted:
in iPhone edited January 2014


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 ]

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Comments

  • Reply 1 of 33
    solipsismxsolipsismx Posts: 19,566member
    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.
  • Reply 2 of 33
    gatorguygatorguy Posts: 23,364member
    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.
  • Reply 3 of 33
    solipsismxsolipsismx Posts: 19,566member
    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.
  • Reply 4 of 33
    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.
  • Reply 5 of 33
    aizmovaizmov Posts: 989member
    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?
  • Reply 6 of 33
    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.
  • Reply 7 of 33
    But I had no useful signal in my house. Returned all 5. It was too bad, I wanted to return to Sprint.
  • Reply 8 of 33
    I think we can all agree we don't need fewer telecommunications companies.
  • Reply 9 of 33
    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'?
  • Reply 10 of 33
    solipsismxsolipsismx Posts: 19,566member
    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.
  • Reply 11 of 33
    blastdoorblastdoor Posts: 2,649member
    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.
  • Reply 12 of 33
    I'm running back to Sprint as soon as my contract is over with ATT.
  • Reply 13 of 33
    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.



    http://m.minyanville.com/?guid=4714&catid=5
  • Reply 14 of 33
    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.
  • Reply 15 of 33
    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.
  • Reply 17 of 33
    solipsismxsolipsismx Posts: 19,566member


    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.
  • Reply 18 of 33
    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?
  • Reply 19 of 33
    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.
  • Reply 20 of 33
    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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