Sprint Cuts iPhone 4S Prices by $50, Fueling iPhone 5 Talk

 
 
By Michelle Maisto  |  Posted 2012-08-08
 
 
 

Sprint reduced the price of its iPhones by $50 on Aug. 6, a move that has encouraged rumors that Apple's next smartphone€”the so called iPhone 5€”is on its way.

Its 16GB iPhone 4S is now available for $150, its 32GB for $250 and its 64GB for $350. Sprint is now also advertising that, for subscribers who purchase online, the carrier will also waive its $36 activation fee.

When asked about the timing of the price cut, a Sprint spokesperson offered no comment.

By any number of accounts, Apple plans to introduce its next iPhone in early September€”the 12th is latest report€”and release it fewer than a dozen days later. The smartphone€”again according to numerous reports, none of them from Apple€”is expected to be faster, larger and thinner, include Long-Term Evolution (LTE) and near-field communication (NFC) technologies, more closely mimic the iPad's aesthetic and have a far better camera.

Such speculations, however, haven't been good for iPhone sales.

Apple reported a record $35 billion in revenue during its fiscal third quarter and sold 26 million iPhones, which was down from the quarter before. During a July 24 earnings call, CEO Tim Cook addressed a question about how much the dip was due to anticipation of the iPhone 5 by telling analysts: "It's difficult to sort this out. There's incredible anticipation out there for future products, given what we've been able to deliver in the past. And so I think it's a reasonable amount."

Analysts have been somewhat less generous, attributing the dip in sales to more a decline in interest than heightened anticipation€”or at least some combination of the two.

"Demand for Apple's flagship smartphone has cooled off now that the device has been available since October, and the rumors around the blogosphere have fueled speculation about a new design and features," IDC reported Aug. 8.

Analyst Charles King, with Pund-It, similarly told eWEEK, €œI'm not sure I buy claims that consumers waiting on the iPhone 5 put that big a dent into Apple sales."

Sprint was the rare carrier that saw its iPhone sales (1.5 million units) remain consistent from the first quarter to the second. Verizon sold 2.7 million iPhones during its second quarter, down from 3.2 million during the first, while AT&T's iPhone sales fell from 4.3 million to 3.6 million during the first quarter.

Still, while AT&T posted income of $6.8 billion on revenue of $31.6 billion and Verizon earned $5.7 billion on revenue of $28.6 billion, Sprint posted an operating loss of $629 million, largely related to expenses related to its closure of its Nextel iDen network.

Even at a discounted rate, sales of a few extra iPhones€”and more importantly the potential for new subscribers€”would be welcome at Sprint. The carrier is hustling to catch up to AT&T and Verizon's LTE rollouts, and still significantly trails in subscriber additions each month. It also took out a big loan to be able to offer the iPhone.

Sprint CEO Dan Hesse, hosting a number of journalists at Sprint headquarters this week, said that decision was the right one.

"We knew our customers wanted the ability to choose the iPhone. We clearly looked at economics, both short term and long term. Over time, it starts to be cash-flow positive. We saw no reason to bet against Apple. You really don't want to be on the outside of that," Hesse said, according to a report from USA Today.

"From a brand perspective, you like having your brand associated with very strong great brands, and nobody can debate just what a great brand Apple has," Hesse added. "We thought the benefits greatly outweighed the risks."

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