Monday, October 3, 2011

Apple "Owns" Sprint

In a move that some believe could be a make-or-break move for Sprint, the company has committed to buy at least 30.5 million iPhones, even though it would likely lose money on the deal until 2014, according to the Wall Street Journal. The deal could represent a commitment of $20 billion at current rates, and Sprint has to buy the devices, whether or not it can sell them.

Apple was paid $632, on average, for each iPhone sold to mobile service providers  in its most recent quarter, according to Credit Suisse. Customers who are not happy with contract plans that allow mobile service providers to recoup the device subsidies can decide, and do decide, that a contract is a better value than paying full price for a new iPhone and avoiding a contract.

To sell that many iPhones, Sprint would have to double its rolls of contract customers, convert all of them to the Apple device or a combination of the two, the Wall Street Journal notes. 

Sprint virtually has to take some big risks as it attempts to get itself back on a growth track. As one of my sons would say, "Apple owns Sprint."

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