Apple iPhone Hurts the Carriers That Offer it, Says Report

Verizon Wireless may want to rethink its desire for an Apple iPhone of its own.
According to a new study from Copenhagen-based Stand Consult, carriers that have paid considerable subsidies in order to offer consumers iPhones have not benefited by their rights to the exclusive and highly sought-after smartphone, Reuters reported on Aug. 17. In some instances, the carriers are worse off for it.
“According to the research we have conducted on the operators, not one of these has increased their market share, revenue or their earnings as a result of introducing the iPhone,” Strand Consult writes in the report. “On the contrary, some operators have sent out profit warnings because of the iPhone.”
AT&T, the exclusive provider of the iPhone in the United States, called the on-sale date of the iPhone 3GS its “best sales day ever,” for both its retail and online stores. For the second quarter of 2009, it reported 2.4 million iPhone activations, but fiscally its results for the quarter were flat.
Reuters reports that SingTel, Southeast Asia’s largest carrier, has reported a profit loss of 3 to 4 percentage points due to the iPhone. TeliaSonera, the top Nordic operator, reports that the iPhone hasn’t help to boost market share or lift revenue, despite a healthy marketing campaign. Sweden’s TeliaSonera, likewise, has reportedly lost a percentage point of market share over two years.
“It does seem a bit counterintuitive,” Ken Hyers, a senior analyst with Technology Business Research, told eWEEK. “Certainly AT&T has benefited, in terms of new subscribers signing up, and signing up for more expensive data plans. The typical iPhone plan costs twice what other subscriber data plans are.”
Hyers says situations likely vary from operator to operator and depend on the portion of marketing, for one, that falls to Apple versus the operator.
“But what it comes down to, is could AT&T have acquired those subscribers without the iPhone?” said Hyers. “Its ability to compete with Verizon would definitely have been impacted.”
Additionally, when a new iPhone comes out, AT&T has not only signed up millions of new subscribers, but enjoyed its current subscribers updating their devices.
“As a retention tool, the iPhone is working very well. Plus, they’re the subscribers who are willing to pay the most,” said Hyers. “And of course the data plan is where the most revenue is coming from.”