Phone companies lose $400 for each iPhone sold, see their stock fall

[Paul F]

It was part of the rules of breaking up the old AT&T, which oddly enough has largely re-merged back together. Verizon is the other large part of the old AT&T.

 

[ilauzirika]

it was happening exactly the same around here in spain. The moment they saw they were losing money, a lot of money, not only with iPhones but giving out free mobile phones with new contracts. They decided not to give away mobile phones anymore. Since then if you want a phone from them you buy it from them and pay a monthly fee until the mobile phone is fully paid.
Luckily I got my iphone 4s for free....one of the last mobile phones they gave out for free (tied to a not so free contract).

 

[Vultch]

I fail to see whats new in this, phone companies in the UK have always subsidised iPhones, interestingly enough Apple make some 75% of the profits of all mobile phone sales despite being outsold many times by other OS phones, some handsets are virtually given away and one new Chinese brand (well they have been around a while making others peoples stuff) are giving handsets plus a bonus to networks to sell their handsets.

Want to see fireworks, wait until Google who recently bought Motorola release their new smartphone, you see Google and Samsung are the best of friends against the evil empire of Apple, until that is, Googles own handset appears, and the battle begins for the droid market and hmmm who writes the droid OS, why Google.
Wait until the new droid OS is optimised for the Google phone hardware at the expense of other droid phones.

Fun times ahead.

 

[ilauzirika]

I fail to see whats new in this, phone companies in the UK have always subsidised iPhones,...

Taking as an example the problem in Spain, Mobile phone companies had always subsidised new mobile phones with new contracts. It was the usual thing, and it worked for a long time (since mobile phones started to be cheap, up until last year).
The problem came when they started subsidising iPhones, expensive samsung phones or expensive blackberries (but the main problems came from iPhones). They realized that even though by contract you had to be with them around 2 years (that was my case) they didn't make enough to pay for the mobile phone they had just given for a really cheap price or for free to this new client. And with the coming of new small and more independent phone companies competence was stronger. As soon as the contract ties ended people fled to the next company that would give them a free mobile phone (better benefits etc). They were giving away mobile phones to people that wouldn't stay with them long enough to pay back the whole cost of the mobile phone. So they decided (the main telephone operators) that the best way to solve this problem was by not subsidising the mobile phones anymore, instead using a no interest loan that would be added to the phone bill until you fully pay your new glossy phone.... the result, we will have to wait and see, but I am sure that they are making way more money now.... I got all this info while I was working for one of those telephone operators. I don't know which is the situation right now, this was last year.

I still remember seeing my iphone 4s bill, 600€+ fully paid by the mobile phone operator... but if you add up all the bills I've paid they haven't yet recovered those 600€+....

 

[filmguy123]

You say it can't happen, well... black magic ring a bell. If they can design a camera thats pretty amazing without any prior experience in cams, then a cell phone company can ceratinly design an amazing phone with features apple doen not have.

Except cameras and phones are totally different. If it was as simple as designing good hardware, this would be a large undertaking but doable. But the reality is hardware is only half the story. They'd need an entire ecosystem and a ton costs that come with becoming a handset provider. Doesn't make sense when they'd likely use android at that point, which there are already lots of android sets for cheaper that are not causing them the profit issues.

On a different note, trying to pin this on Apple is stupid for a few reasons:

1.) AT&T cut the deals, they ran the numbers. If they don't like the results, that is their fault and their incompetence, not Apple's.
2.) The reality is, they subsidize iPhones by more they also make more from the service plans - and in the early years, AT&T gained a massive number of customers due to the iPhone. Which was great for business but also expensive as they needed to expand their infrastructure
3.) The losses are due to a range of factors that is more than likely a result of a massive shift in the industry to data heavy smartphones (not just Apple) and a need to expand aggressively and rapidly. There's a lot of cost involved in that, but the long term prospects for these companies are quite excellent once the infrastructure is in place.